Fairbnb: Saving major cities from ghost hotels?

Since Airbnb established its business model around the world, the company has faced major critics for their impact on local communities. In September 2019 Fairbnb launched its own apartment booking platform, which aims at connecting local hosts and tourists while strengthening the local community.

The name of Fairbnb already suggests what this cooperative tries to achieve: combining the business model of Airbnb with a fairness aspect. 

Fairbnb aims at addressing the critics Airbnb and other accommodation platforms face in an increasing number of larger cities. Some of the critics are that accommodation platforms contribute significantly to increasing rents, worsening housing shortage and driving gentrification. 

A metaphor often used by critics is the term “ghost hotels”, which refers to the problem that a significant part of apartments in major cities has no long-term tenants. Critics accuse Airbnb of incentivizing landlords to make apartments available on accommodation platforms instead of renting them out to regular citizens, which results in unused rental space.

What Fairbnb wants to change

Fairbnb and its founder Sito Veracruz have the vision that both the platform and the cities should benefit from tourism. Veracrus describes the idea behind the platform as “to get local communities to work together and think on how they want to handle tourism, the effects of tourism, and how they want to profit from it”.

To achieve their vision, Fairbnb adapted the business model of classical accommodation platforms and integrated three features that aim at creating more fairness. First, they focus on transparency and work with local governments. This includes a ‘one host, one home’ policy, securing that every host is legally allowed to rent out their property and paying taxes on the local level. Second, they use fifty percent of the commission to fund community projects such as housing for neighborhood associations, non-profit food cooperatives, or community gardens. And third, Fairbnb is organized as a cooperative which means that the platform is owned by a group of people contributing to this project, salaries in the cooperative are limited, and everything about the cooperative is transparent, such as salaries and membership.

Where Fairbnb is today

After starting as a movement to contain mass-tourism in 2016, Fairbnb officially launched its platform in five European pilot cities. Since September 2019 travelers can book their apartments in Bolonga, Venezia, Barcelona, Valencia and Amsterdam with Fairbnb. 

The impact the platform will make in those cities is yet to be seen, but its founder strongly believes that it is realistic to expect market breakthrough within two years. However, Fairbnb’s market breakthrough depends largely on the entry barriers Airbnb and other acommodation platforms can create. Only recently, Airbnb has increased its effort to work together with local governments and to further integrate into local communities. However, Veracruz sees those efforts critical and claims in an interview with the German newspaper ZEIT that Airbnb is driven by its many shareholders which seek exponential growth and concludes that Airbnb therefore has no real interest in working with local governments and communities. An argument supporting a quick market breakthrough is the fact that customers have comparable prices to Airbnb, which makes it a considerable alternative for travelers. 

With the pilot launched and the goal of expanding globally it will be interesting to see if Fairbnb is able to save major cities from ghost hotels. 










Moritz Krohn