Spare space can be profitable

Airbnb chief executive and co-founder Brian Chesky.
Airbnb chief executive and co-founder Brian Chesky. 

NASA space shuttle engineers, Swiss opera singers, dentists, academics, students, retirees – during the past year Ross McDowall, 40, has seen them all come and go from the spare room at his penthouse at Surry Hills in Sydney.

McDowall is one of 5000 Australians who are listing their houses, apartments, spare rooms and couches for rent through Airbnb, a property-letting website in Silicon Valley recently valued at $US1.3 billion. It opened an Australian office at Ultimo in inner Sydney on Friday.

“Australia's our second most popular market after the US,” said the chief executive and co-founder, Brian Chesky.

“Tonight, we have 3000 Aussies staying in Airbnb homes around the world, and 1000 of those are here in Australia. [The site] is growing very quickly here so we wanted to follow the momentum."

So far Australians account for more than 1 million guest nights booked on Airbnb, which presents a direct challenge to established Australian holiday letting sites such as the Stayz Group, owned by Fairfax Media.

Chesky's concept is simple: anyone can list spare space – a couch in the city for $25 a night, a tree house in the Yarra Valley or a funky warehouse in Richmond in Melbourne for $95 a night, or a beach mansion in Coogee for $2200 a night – for travellers to rent.

Around the world the offers could extend to castles, boats, or even whole villages or private islands.

It's free to list your property. Airbnb sends a photographer to take a picture of the space and handles any transactions, taking 6 to 12 per cent commission, depending on the total spent.

To date, the company has had more than 10 million nights booked in more than 30,000 cities in 190 countries, mostly in Europe. It has offices in London, Paris, Moscow, Sao Paulo and India.

Chesky keeps an apartment in San Francisco but he said , “for almost a year I lived exclusively on Airbnb, moving around every five days or so”.

Among his favourite experiences were an architect's studio in a Napa Valley vineyard, the mansion in Los Angeles in which the television show Entourage was filmed, and an apartment in Paris.

Airbnb started in 2007 when Chesky and Joe Gebbia, both then 27, were struggling to pay their rent in San Francisco. One weekend the city's hotels were booked out for an international conference. So they had an idea. "What if we turned our apartment into a bed and breakfast?" They put three airbeds on the living room floor and rented them out through a website they created the next day, airbedandbreakfast.com. A week later, they were hosting people from around the world for $80 each a night.

“It was like we got to travel without leaving our home, we met all these great people and we made enough money to pay our rent,” said Chesky.

“After they left we realised, 'wow, we're ordinary guys. Maybe there's other ordinary people like us who want to meet people, and are happy to share their space.”

“I don't know if we truly appreciated how fast it would grow,” said Chesky, who is now a multimillionaire, on paper at least. He was previously an industrial designer.

“We really started it to solve our own problem but we were certainly mindful, when we came up with a solution, that this really was maybe a better way to live, a more sustainable way to live, around the world.”

The timing of their launch was just right, said Chesky. The “collaborative consumption” trend, based on sharing, swapping, lending and renting, was starting to take off.

But it hasn't all been smooth sailing. A number of US jurisdictions have recently challenged Airbnb to start collecting and paying hotel taxes and other fees.

Airbnb has also begun insuring hosts after a female renter returned from holidays to find her apartment robbed, ransacked and destroyed.

A month later, a man from Oakland in California blogged that his house had been vandalised by an Airbnb guest. He was compensated and has since rented his apartment through the site again.

In August two women returned home to Stockholm to a note from the police saying their apartment, which they had rented out through Airbnb, had allegedly been used as a “temporary brothel”.

So with risks like these, why do people open their doors to strangers?

For Ross McDowall, who has been renting his spare room for $90 a night since September, it's the simplest way of ensuring his hefty mortgage is paid.

The income is much greater than it would be from renting the room out full time.

“Also, we didn't want a flatmate because we didn't want someone living full time with us. One of the good things about Airbnb is that we can take nights off and not have people around.”

Financial reasons were also behind the decision of Loren O'Keeffe, 28, and her female partner to rent out the second bedroom of their flat at Richmond in Melbourne. O'Keeffe has now quit her job because she knows Airbnb will cover the interest on their mortgage. "We get $300 to $400 a week," she said.

Initially, they didn't accept single, straight males. “You're opening up your house to strangers. It can be a bit worrying because you make yourself pretty vulnerable. But after the first two months we realised the average person on Airbnb is open-minded and lovely, so that rule went out the window and there have been no problems. We've never felt uncomfortable.”

But she makes sure she checks out renters before accepting them, and prefers it when they write first to introduce themselves. “I like to know a bit more about them before I say, 'here are the keys to my house, come on in!' ”

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