Airbnb Wrestles With House Party Problem Ahead of IPO

Even though fewer people are traveling, the number of complaints about parties at Airbnb and rivals including Vrbo grew 239% during the three-month period spanning May, June and July compared with the same period in 2019, according to an analysis of 87 U.S. cities and counties by Host Compliance, which runs a complaint hotline some cities make available to local residents. NoiseAware, which sells noise-monitoring devices to hosts of short-term rentals, found a 45% increase in late-night disruptive noise events in July, compared with the same month the previous year. 

Some parties at Airbnb rentals have grabbed national headlines, like a 700-person gathering last month at a mansion in New Jersey. Police confirmed shootings at Airbnb rentals in Sacramento, Calif., and Las Vegas recently. In North Carolina, police seized guns from a party at an Airbnb rental with more than 200 people. 

The rising number of incidents marks the latest threat to Airbnb’s reputation with consumers and regulators, which already has been strained by battles over the impact short-term rentals have on neighborhoods and housing prices.

Airbnb is starting to take a harsher stance against illegal behavior by guests. The company said Wednesday it would pursue legal action against a guest who booked a house in Sacramento last weekend, where a shooting broke out during a party. Airbnb said it was the first time it had initiated legal proceedings against a guest who organized an unauthorized party. 

On Thursday, Airbnb also disclosed that its top executive in charge of safety, Margaret Richardson, planned to leave the company. She had been in the role for around a year. 

Alternative to Bars

The growing number of unruly and sometimes violent incidents comes as some people seek out house-based parties as a replacement for bars, clubs and other gathering spots that have been closed because of the Covid-19 pandemic. “Social gathering demand has been pushed into rentals,” said Andrew Schulz, CEO of NoiseAware. 

But the phenomenon highlights broader risks in how Airbnb has chosen to grow its business. Airbnb built a near-seamless way for people to rent strangers’ homes, sometimes just for a night. Unlike Vrbo, which is owned by Expedia, Airbnb allows customers to make same-day bookings. 

The ease of setting up rentals and making reservations transformed Airbnb from a site where people primarily rented out spare rooms or second homes to one where it was common for professional hosts to manage dozens or even hundreds of properties remotely. 

In a key moment for the company, Airbnb in 2014 introduced a tool called Instant Book, which allowed people to book homes without prior approval from hosts. The feature drove rapid booking growth, requiring Airbnb to do more to ensure hosts’ safety. To try to keep hosts comfortable with the tool, Airbnb gave them the ability to limit instant bookings to guests with verified identities or positive reviews from other hosts. But recent incidents suggest these safeguards aren't enough. Some hosts now are calling for stronger measures to screen guests.

Three former Airbnb employees who recently worked on safety and policy issues said the company has historically prioritized growth over safety measures that could make it harder for people to book. The company also was slow to assign a significant number of software engineers to build the kind of algorithms that would address the issue of safety, the former employees said. In 2017, the company had fewer than 90 engineers working on security or risk issues, about 12% of the total number of engineers it employed then. 

Airbnb spokesperson Ben Breit said the company has more than 200 engineers dedicated to trust and community support, and has put more safeguards in place to quash potential parties and conduct background checks to weed out any guests or hosts who have committed serious crimes. 

“While we know no identity system is perfect, we are continually striving to make our systems more effective at validating our users’ identities,” Breit said. 

He added that the company had seen a “meaningful drop” in unauthorized parties booked by U.S. and Canadian guests under age 25 since last month, when Airbnb instituted a new policy banning them from booking entire homes in their local area unless they have a history of positive reviews. 

Some hosts are wondering whether too many people are able to game the system. Sean Rakidzich manages more than 100 Airbnb properties in the Houston, Dallas and Philadelphia areas. 

He said there were 10 party attempts over a recent weekend at his properties in Philadelphia. In Fort Worth, Texas, 110 people came to a recent pool party at his property at 1 a.m. He hired private security to try to address the issue, and blocked customers from being able to book one-night stays. He said other hosts have been buzzing about the party problem, too. “It’s currently the biggest problem of our time for hosts. It’s out of corona, into parties,” he said. 

Cocaine and Blaring Music

Hosts who live in the properties they rent out are frustrated, too. Louise Drolz has rented the apartment beneath her home in Sydney, Australia, for six years on Airbnb with few problems. Last month, local guests threw an unauthorized party at her place, blaring music past midnight, ripping pages out of a coffee-table book to snort cocaine, and burning cigarettes into bed linens, she said. She added that Airbnb’s customer service agents were slow to address the problem. It has her rethinking whether she should be listing her home on Airbnb. “It made me realize that Airbnb may no longer have the capacity to deal with even the most serious customer issues,” she said.

Airbnb has been struggling to handle the rush of complaints about parties and other issues. When the company laid off about a quarter of its staff in early May, the cuts hit its customer service staff particularly hard. Customers and hosts who call Airbnb with problems have had to deal with longer wait times in recent months. Soon after the layoffs, Airbnb managers asked some customer support staff to stay on until the fall.

Airbnb executives have acknowledged that support hasn’t been adequate. “We weren’t ready to provide the support we needed to,” said Catherine Powell, Airbnb’s global head of hosting, in a recent video message to hosts. “We’re focused on addressing this issue and are working around the clock to rebuild the team.” 

Halloween Shooting

More than 2 million people stay at Airbnb rentals every night, equal to the population of Houston. Things can and will go wrong, a premise that is built into Airbnb’s business model. Airbnb devoted about 12% of its operating budget to operations and support last year, which includes work on safety, customer service and damage claims.

Roughly one in five check-ins at Airbnb rentals leads to an effort by guests or hosts to contact the company, a rate Airbnb has tried to lower, a person familiar with the matter said. The company’s customer service staff—most of whom are employed through outsourced agencies around the world—handle the barrage of queries. The vast majority of problems are mundane and relatively easy to address, such as cancellation issues or host complaints that a guest scratched a table, which can lead to Airbnb sending a $500 check. 

Then there are rarer but more extreme situations, including those where the company has to involve law enforcement: rapes, suicides, murders and carbon monoxide poisoning. In-house operations staff often handle those matters. Breit said the company’s “specialized teams that manage online and offline user safety are the same size now as before the layoffs.”

Stays that lead to safety issues or significant property damage amount to a tiny fraction of the more than 100 million or so stays people book with the platform each year. Airbnb has previously said hosts or guests report safety incidents for about 0.06% of trips booked through its site, while the company pays $500 or more in property damages for about 0.03% of stays. That equals at least tens of thousands of those types of episodes per year. 

One particular incident hit hard last Halloween, when five people were shot and killed in an Orinda, Calif. Airbnb rental, about 15 miles from the company’s San Francisco headquarters. After the shootings, Airbnb CEO Brian Chesky promised changes, including more human review of high-risk bookings and a hotline that neighbors can call to report parties. 

Dangerous incidents also sometimes lead to stricter regulation by local authorities. Amy Worth, a city council member in Orinda, said the incident shocked the community and caused the small town to ban Airbnb rentals unless the owner was present on the property. “For cities, monetizing homes in this way came on them quickly,” Worth said. “Platforms have a responsibility. I just think they do.”