The Appetite For Division: Airbnb

A Bloomberg report earlier this year revealed that Airbnb expects to earn as much as 3.5 billion US dollars by 2020. This is profit before interest, tax and depreciation and is more, explained Bloomberg, than 85% of companies in the Fortune 500. It would represent a 3,400% increase in profit from 2016.

Brian Chesky, the CEO of Airbnb, is said to have a net worth of 3.3 billion US dollars. For the head of a business that was only founded nine years ago, his worth and that of the company is truly staggering. If one is looking for some sort of vague comparison, the Mallorcan hotel chain Iberostar was founded in the 1980s. Its president, Miquel Fluxá, is reckoned to be worth the same as Chesky. In 1956, Gabriel Escarrer Julia started what was to become Meliá Hotels International. He is said to be worth half of this - 1.7 billion.

One isn't of course comparing like with like, but the figures nonetheless tell a story. Another figure is the net profit for Spain's largest hotel group (Meliá) in 2016. It was one hundred million euros. Airbnb's was roughly the same - in dollars - and it was earned from 1.7 billion in revenues. Meliá's revenues for 2016 grew by something over 3.5% to 1.8 billion euros. In the case of Airbnb, its revenues could be as high as 8.5 billion dollars in 2020.

Chesky is a classic of the American entrepreneurial dream. He and his co-founders stumbled across an idea - airbeds and breakfast - and realised the idea via the internet. The company spends money, quite clearly it does, and as of end-2015 it had almost 2,400 employees worldwide. But it doesn't have the physical real-estate assets (apart from some offices) that demand maintenance and investment. Its fixed costs are very low.

This is a business built on an idea, on good technology and marketing. It is a fantastic idea, but for all the worthy and grand words about the collaborative, sharing economy and the income this creates for private individuals, there's no escaping one simple fact. Its founders are making a hell of a lot of money out of not having properties.

The name Airbnb now defines an industry. There are numerous other accommodation sites, but Airbnb has become synonymous with a sector in a similar way that, for example, Xerox and Hoover came to define photocopying and vacuum cleaning. Reference to Airbnb is therefore short hand for an entire sector, for a concept - the so-called collaborative, sharing economy of accommodation.

One imagines that neither Xerox nor Hoover would ever have particularly divided opinion. Airbnb (and its industry) has. Grey area between black or white, where some Mallorcan politicians are concerned, gives a nod in the direction of a societally conscious collaborative economy by proposing that under the rentals' legislation some owners (in Palma, it would seem) might be able to rent out to visitors for a maximum of sixty days. This assumes that these flats are their habitual places of residence. Otherwise, you're either for or against, with most of the political class to the left against. With the PP on the right it's impossible to know where they stand.

But it obviously isn't only the politicians. They aren't the ones putting up Stop Airbnb stickers, even if some have been accused of fomenting anti-Airbnb attitudes. And these antagonistic attitudes might not have emerged had Airbnb remained what it was. But it didn't. The collaborative economy concept isn't now a total sham but it has gone a long way to being so. The voracious appetite for cashing in on the rentals' market dynamic, fostered to no small degree by Airbnb, and for Airbnb itself to grow in an extraordinary fashion has for the most part undermined and even destroyed what was once a fantastic idea.

There is no debating the fact that there is demand for short-term apartment rentals. There is also no debating the fact not everyone wants to stay in a hotel. The market has been like this for years. But a huge distortion has been created.

Chesky can demonstrate his consciousness and anti-Trumpism by offering to put up Muslim travellers, but one can't be blind to another fact: he has a business that is making vast profits and which needs to keep growing ballistically (with a possible stock market flotation that would make him astronomically wealthy). It is a business which disingenuously disassociates itself from any flouting of regulations. It is a mere intermediary. Yes, and look at the money rolling in and the societal divisions being created.

One doesn't exonerate the hoteliers from their at times less than wonderful labour terms and conditions, but their employment is on a wholly different level to anything that the Airbnb economy could ever hope to reach. Yes, there are very wealthy hoteliers, but so also are there very wealthy website CEOs. Surprised that some people might protest? I'm not.