The Solution to AirBnB’s Woes – Imitate eBay

Written on August 2, 2011

Both AirBnB and eBay deal with an almost identical issue: they rely on basic human decency and honesty in the running of their service. Recently, AirBnB has encountered multiple issues which are potentially destructive for the business, with tenants destroying the homes of AirBnB renters (read about it here). The solution? Imitate eBay.

The founders and PR representatives of AirBnB having been dealing with the problem as if their issues are unique – as if another company has never dealt with such problems before. The reality is, eBay solves thousands of similar complications every single day. In its early days, fraud was a major issue on eBay – when paying for an item there was a constant worry that the purchase would not be delivered, or it would not arrive as expected (the infamous ‘selling a picture of an expensive item’ comes to mind).

As AirBnB grows, it will begin to encounter more and more of these issues, and the company needs to figure out a way of solving the problem which is workable for all parties involved. Some have suggested that the answer is in blindly compensating those who have their homes damaged, but let’s be honest, that is simply not practicable for a business that operates on such a large scale (nor, really, is it AirBnB’s moral or legal duty to do so). Instead, AirBnB needs to focus on replicating two of eBay’s best user-protection services:

User Reputation Points: This is where EBay has excelled. Giving users the ability to give feedback on sellers for future buyers plays an instrumental role in preventing fraud. It has given sellers a huge incentive to provide great customer service, and allows buyers to choose reputable sellers. In AirBnB’s case, this would allow cautious homeowners to only rent out their homes to proven reliable tenants, and gives tenants an incentive to leave the house looking fantastic. While this method is obviously not foolproof, it would be effective for the large majority of cases.

Homeowner Insurance: While eBay doesn’t have this specific service, it offers something similar in its buyer protection program. AirBnB could easily implement a scaled insurance system, with ‘limited coverage’, ‘complete coverage’ and similar at different price points. This would permit cautious renters some level of confidence – as average home and contents insurance does not cover renting. Alternatively, homeowners could be given the option to only accept ‘tenant liability’ guests, who would be liable for all damage caused to the property (the tenants who accept these conditions would have their credit card kept on file for the duration of their stay).

Naturally the above solutions are by no means perfect (homeowners could theoretically abuse a number of the above suggestions) but AirBnB desperately needs to implement some kind of similar measure, and eBay is a fantastic company to model themselves on.