As Airbnb disrupts the hotel industry it increases D.C. lobbying

By Steve Brachmann
May 23, 2016

airbnb_vertical_lockup_webAirbnb, Inc. of San Francisco, CA, provides an online service to consumers who are looking to find lodging accommodations in 34,000 cities and 190 countries. Last December, Airbnb disclosed paperwork to the U.S. Securities and Exchange Commission which confirmed reports that the company had raised $1.5 billion in a round of private venture capital funding last June, helping the company to reach a total valuation of $25.5 billion. The Wall Street Journal further reported an Airbnb investor’s presentation obtained by the publication which showed $340 million in revenue and $2.2 billion in bookings occurring in last year’s third quarter.

Airbnb has proved to be pretty disruptive to the hotel and lodging industry. A report released last October by the Hotel Association of New York City put a $2.1 billion price tag on the negative impact which Airbnb was having on NYC hotels and related economic sectors. The hotel industry may be taking a sizable hit from Airbnb but consumers love the service, as is evidenced by the company’s disclosure in early May that it doubled bookings and almost doubled listings on Long Island in one year’s time.

With Airbnb pulling so much focus in the lodging industry, it’s not surprising to see business operations turn into a political football match, much the way it has for other disruptive tech startups like Uber. In early May, the city of Los Angeles was mulling over an ordinance that would impose stiff fines on anyone hosting guests from Airbnb on more than 90 days in one year. Proponents of that rule argue that Airbnb can inflate rent in an area when landlords decide to take properties off the long-term market to make them available for short-term rentals. Chicago mayor Rahm Emanuel recently ordered restrictions on Airbnb rentals, although the latest rules draft eliminated a similar proposed 90-day rental maximum per year. The state of Arizona, on the other hand, recently passed a law that prevents cities and counties in that state from banning such short-term rentals and sets up state taxation rules for those offering rentals.

This increased political exposure across the nation is likely a big reason why Airbnb is increasing its DC lobbying arsenal by hiring former Congressman Vin Weber and the public affairs firm Mercury. These moves were reported by The Hill after registration forms disclosing the moves recently became available in the Senate’s lobbying disclosure database. The increased lobbying presence isn’t actively pursuing any legislative changes but it appears the company is trying to stay ahead of any possible federal actions.

Airbnb might just get its first test in national politics on the issue of racial discrimination. In mid-May, BuzzFeed News reported comments sent to its online newsroom in an e-mail from Congressman Eric Swalwell (D-CA) urging Airbnb to respond to allegations that some hosts have declined vacancies to customers based on race. The same day those reports surfaced, the company published a blog post penned by David King, recently hired to serve as Airbnb’s director of diversity, addressing the allegations and highlighting actions the company would be taking to curb such discrimination. These include offering unconscious bias training to Airbnb hosts and an Instant Book feature which enables on-demand booking without host approval.

host preferencesAirbnb hosts are given a large say in who gets to stay in their rental accommodations, as is evidenced by the filing of U.S. Patent Application No. 20160098649, entitled Determining Host Preferences for Accommodation Listings. This would protect a computer implemented method of identifying listings sharing a common attribute, determining patterns in host acceptance or rejection of reservation requests and then creating a cluster pattern value which determines whether a new reservation request is likely to be accepted or rejected by the host. Interestingly, this invention is designed to incorporate a host’s “implicit” preferences which “are not easily quantifiable.”

To support its overall cause and business model, Airbnb makes the case that its presence boosts local economies. Even as LA grapples with how the online lodging accommodation website affects rents, Airbnb released data in early May indicating that its rental platform added $920 million to that city’s economy during 2015, triple the economic boost which the company says its home-sharing business added to LA’s economy between May 2013 and April 2014.

As a private business with a greater than billion-dollar valuation, Airbnb is a unicorn and, as was reported here on IPWatchdog last November, nearly one-third of all unicorns have no patent assets. This had been true of Airbnb until this March, when it was issued U.S. Patent No. 9288217, entitled Identity and Trustworthiness Verification Using Online and Offline Components. It protects a computer implemented method of receiving multiple online identities of a person and comparing those identities to an offline identity of a user which is obtained from a driver’s license, a passport or another government-issued piece of identification. This system of accurately identifying individuals despite any illusory information contained in an online profile when those individuals ask for either lodging accommodations or a rideshare. This technology seems to be closely related to Airbnb’s Verify ID service, which asks for government-issued ID and online profile information before conferring a Verify ID badge upon a user, indicating to other Airbnb users that the person’s profile information is accurate.

Although Airbnb’s core operations of providing overnight lodging rental accommodations will remain in place, the company may look to expand upon its ability to deliver leisure activities to consumers. Remarks from Airbnb’s chief technology officer Nathan Blecharczyk which have been reported by multiple publications indicate that the company may attempt to match renters with hosts based on activities such as tours, sports and more. The move seems to be inspired by consumer demand for greater and deeper personal connections between travelers and the areas which they visit.

re-ranking search resultsMore accurate systems for ranking accommodations based on personal preferences have been developed by Airbnb as is evidenced by the filing of U.S. Patent Application No. 20150317400, titled Re-Ranking Search Results for Location Refining and Diversity. It would protect a computer implemented method of receiving a search query indicating a geographic area, determining listing scores for listings within that region and then modifying a subset of top listings to add listings from the aforementioned geographic area. This system allows users to search for listings within a predetermined distance to tourist destinations or other attractions without skewing search results towards a location which isn’t included in the search query.

Airbnb is hoping that a new tool for its hosts will put more money in their pockets and pad the company’s wallet a bit as well. Smart Pricing, which Airbnb was in the process of rolling out as of this writing, allows hosts to set up a dynamic pricing framework which automatically adjusts rates based on trends, offered amenities and other parameters set by the host. Remarks from Airbnb executives indicate that the company thinks that the new smart pricing system can increase revenue by an average of 13 percent.

The Author

Steve Brachmann

Steve Brachmann is a writer located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He has become a regular contributor to IPWatchdog.com, writing about technology, innovation and is the primary author of the Companies We Follow series. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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