As Home-As-B&B Service Grows, So Does Controversy

The online service for short-term rentals in private homes known as Airbnb got a boost when it was featured at the recent Apple conference. But the company has also drawn in attention in cities like San Francisco, where legal concerns over everything from liability and safety to upset landlords have led to scrutiny. Audie Cornish speaks with Fast Company reporter Austin Carr about what Airbnb is up against.

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AUDIE CORNISH, HOST:

Now, the story of an Internet company we called Airbnb that has turned couch surfing into a lucrative business. It's an online service that allows people to turn their house, apartments, spare bedroom or airbed into a short-term rental to visiting strangers. The company got a boost this week when Apple company leaders highlighted Airbnb at its big developers' conference.

In this promotional video, a woman waxes on about her treehouse guesthouse.

(SOUNDBITE OF A PROMOTIONAL VIDEO)

UNIDENTIFIED WOMAN: Airbnb makes it very easy for us to do bookings and they take care of all the financial aspects of it. We don't really think of it as a business. It's more like meeting new friends.

CORNISH: The problem is, is that it is a business - at least according to many cities and landlords who are trying to get their heads and laws around what's being called the shared economy. They're trying to figure out whether Airbnb should be tamped down because of questions of zoning, legality and liability.

Here to talk more about this is Austin Carr. He's a writer for Fast Company magazine. Hello there, Austin.

AUSTIN CARR: Hi there.

CORNISH: So to start, there have been websites that have helped people equal, you know, do couch surfing and house swapping for years. So what's different about what Airbnb does that's allowed it to get so big?

CARR: Well, I would say the big thing is that it's allowed a lot of users to make a lot of money. So that's why a lot of landlords out there are saying, hey, we're missing out on this new revenue stream - what can we do to change that?

The thing about Airbnb is it's grown to about 100,000 active listings in 192 countries around the world. There's been about 4.5 million bookings within the last year or so. And the average New York City host alone is making about $21,000 a year from renting out his or her room.

CORNISH: So it's lucrative for its customers but just how much money is the company itself making?

CARR: Well, you know, figures vary. But last year, they've reportedly - Airbnb helped facilitate about $500 million in transactions, on which it charges up to a 15 percent fee split between the host and guest. So it is making a decent amount of money. It's also raised a lot of money. Venture capitalists poured about - more than $100 million into the company recently at an estimated $1.3 billion valuation.

CORNISH: Airbnb has drawn some critics in its hometown of San Francisco. And I want you to tell us, like, what exactly are the top legal concerns that are being raised about how this system works?

CARR: On the whole, it's the same way you see with any marketplace out there - some people are going to take advantage of the service. And Airbnb recommends that you use it within the legal limits and the limits of your lease agreement with your landlord.

I guess the issue is that, you know, these laws not only vary by town by town, but city by city, and building by building and unit by unit.

CORNISH: But beyond landlord agreements, I have to wonder about liability, about safety. You know, who's responsible if something goes wrong?

CARR: Absolutely. I mean, you know, everyone's first concern when they hear about Airbnb is they think, oh, my God - do I actually want to let strangers live in my house? Or do I want to stay in a stranger's house? But Airbnb has been increasingly careful about this and they've implemented strong safety measures, such as liability guarantees. They've implemented a very rich review system, so you can see who the host and who the guest is and what their reviews are. And they also have voice and video verification systems, as well as 24-hour customer support.

CORNISH: Austin Carr, he's a writer at Fast Company magazine. Austin, thank you for talking with us.

CARR: Thank you.

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