About airbnb’s $20 Billion Valuation

Airbnb And The Problem Of Data

From the Tech Crunch, June 11, 2015

Ultimately, how San Francisco, Los Angeles, New York and other economically prosperous and land-constrained cities decide to regulate Airbnb will impact how much the company can grow its inventory in its most lucrative markets. While Los Angeles city council members are currently considering new rules, New York Mayor Bill de Blasio’s administration does not yet have a position on short-term rentals.

In any case, all of these discussions may affect how much the company is worth in an eventual IPO. CEO Brian Chesky said last month that the company is on track to host 1 million guests per night. With more than 1.2 million rooms on its platform, Airbnb’s inventory is now larger than branded chain hotels like Intercontinental, Marriott and Hilton. If it was successful in raising additional funding at a $20 billion valuation as we and Bloomberg have reported, that implies that its latest investors are probably betting on a 2 or 3X return or more.

The key questions here are:

  • Should there be a cap on how many days a host can rent out their unit on concern that short-term rentals will erode the existing housing stock?
  • If so, what should it be?
  • Should hosting platforms be compelled to share data with the city?
  • Should it be in an aggregated, anonymized way or at an individual level?
  • How should permitting work?
  • Should hosting platforms be penalized if they list units that aren’t registered with the city?
  • How should complaints and enforcement work?
  • Should neighbors have the right to file complaints?
  • Should they be entitled to financial relief if they win and find that a nearby host is violating city law?