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Uber VS Airbnb’s - Which Business Model is Better?

Airbnb’s sharing economy model allows hosts to monetize an asset (or many assets) and leads to upward mobility, whereby Uber relies on monetizing a driver’s time.  The Airbnb ecosystem of hosts was designed with upward mobility in mind for us hosts, whereas Uber’s sharing economy was designed to extract value from it’s drivers.  

The main difference between Airbnb and Uber’s business model, in my opinion, is that Airbnb’s business model has proven its ability to drive upward mobility for it’s hosts, whereas Uber drivers must continuously be driving in order to earn a living. Upward mobility for us hosts leads to a sustainable business model for Airbnb, and it is my belief that Airbnb’s upcoming IPO this week will prove just how successful a business built with hosts in mind in the sharing economy can actually work. 

Washington Way, Venice, California.

I started Open Air Homes with one home for rent. Fortunately for me, I did own that first home. Homeownership is still out of reach for most millennials, but that is a topic for a whole other debate. 

While I acknowledge my idyllic situation, I was still faced with the obstacle of continuing to afford my mortgage payment. It wasn’t until I put my home on Airbnb for rent in 2013 that I realized I had a business opportunity.  This business literally was created out of necessity for me, and over the past 7 years I have grown it into a successful business that employs over 50 people full and part time. 

 

In the early days I impressed guests with my attention to hospitality, clean design and great upkeep of my first home.  Many of these first guests ended up buying property in LA and asking Open Air Home to manage their home, and my business grew by word of mouth.  

The degree of upward mobility available within the ecosystem of Airbnb is not something I observe within Uber’s ecosystem. Uber monetizes a drivers time, and sure a driver can impress people with their service, but unfortunately, this driver has little chance at upward mobility within the Uber ecosystem.  One of the long term potential successes of Airbnb is its ability to attract hosts who too are looking to not just survive, but thrive financially and grow a business.  

Open Air Homes’s Shared Revenue Model

At Open Air Homes, we have always relied on the shared revenue model vs and arbitraged lease model.  Simply put, we partner with homeowners who wish to share in the success when we rent their property out.  We do not have a lease in place where we arbitrage the rental difference, and we have proven that this approach is less risky and leads towards a long term viable business built around joint success. 

Open Air Homes has never believed in or agreed with the principles of the arbitraged lease model. I get into all the reasons why I believe the shared revenue model is better for the industry at large here.  By sharing in the success with our homeowner partners, Open Air Homes has an incentive to prevent bad actors from trying to squeeze every available dollar out of a rental home. 

We utilize a shared revenue model when partnering with our homeowners, allowing us to succeed only when our homeowners do first. We work with each of our homeowners throughout the onboarding process, to ensure that every home is up to our standard of comfort and design. We offer an elevated hospitality experience 24 hours a day along with unending access to our customer service line for all guests.

The Next Modern Version of a Hospitality Company: Open Air Homes

“The next modern version of a hotel company will be some form of Airbnb, and what they are are completely technological on the front end, so the consumer interface is completely tecnologicial, but on the back end there is no financial engineering to be done because they’re asset light. They’ve completely put the responsibility of the actual real estate into the hands of individuals and many many individuals who then just do it for themselves” (Chamath Palihapitiya from Social Capital speaking on Kara Swisher’s NY Times Podcast Sway, Nov 15th 2020).

At Open Air Homes, we view ourselves as a hospitality brand that also does property management.  We are looking towards the hotel industry for inspiration as we set the standard for short term rentals of the future.  

We are just getting started, and would love to hear from you about your expectations when staying in a rental home, and the techniques you are adopting as you work to impress each and every guest coming in your home.