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Airbnb allowed rampant price gouging following L.A. fires, city attorney alleges
- deleted 1y ago[deleted]
- vouaobrasil 1y agoThe article doesn't make it clear whether it was AirBNB itself that increased prices, or whether it was hosts. And moreover, it also doesn't even give one example of a before and after price. I'd like to see at least one example.
- legitster 1y agoHost here. Almost nobody sets prices manually. You either use Airbnb's pricing algorithm, or one from a third party. Either way it's set automatically based on local occupancy rates/hotel prices/etc. Which is an argument that this is not truly gouging - there's just a demand surge and a supply crunch and the market responds the same way as if it was a business conference in town. Another thing worth pointing out is that the market of available Airbnbs clears out from the cheaper units first. So it may look like prices are shooting up, but really it's just that all the normal priced ones are gone.
- deleted 1y ago[deleted]
- csomar 1y agoIs the price reflective of the market though? I just negotiated an airbnb outside of airbnb at 40% of the platform quoted price and it was not a deal either but the market price. Airbnb massively inflates prices for everyone to create an expectation of how much things cost.
- dmkolobov 1y agoThis reminds me of the time my middle-school history teacher decided to bring in one of the student’s financial advisor parents to defend price-gouging on gas during Hurricane Katrina evacuation and subsequent exodus. It was an unconvincing argument then, and is an unconvincing argument now.
- Rebelgecko 1y agoFWIW this is the most convincing argument I've seen for allowing prices to raise during an emergency: https://www.econlib.org/library/Columns/y2007/Mungergouging.html https://www.econlib.org/library/Columns/y2007/Mungergouging.... Second most convincing argument is people who hoarded toilet paper during COVID
- caterama 1y agoIs this a viable workaround… Charge $XX entry/membership fee for the opportunity to buy ice at the regular price?
- Arainach 1y ago>Second most convincing argument is people who hoarded toilet paper during COVID That's not an argument for price gouging, it's an argument for rationing.
- Auracle 1y agoThat’s awfully hard to do well though, especially setting up a system quickly. Sure, you can limit amount per customer per store. But then someone comes in with their husband and double dips, and then go back through in 10 minutes hitting different checkouts, or just go through self checkout, and then go to different stores… All the toilet paper is still gone, encouraging fear in other people to do the same as the couple above. The alternative would have been “you idiots are buying all the toilet paper? Fine. It’s 5x more expensive now.” People then see that toilet paper is still in stores and prices can come down gradually but rapidly, and if people start being nervous again prices can quickly raise to stamp that out.
- xboxnolifes 1y agoSounds less like price gouging and more like price fixing.
- pentaphobe 1y agoYeah, funny how property markets always seem to have that same response. I bet most of those same people would lose their minds if their favourite restaurant tried to double prices overnight. "Yeah we sold a lot of burgers yesterday..."
- AlotOfReading 1y agoI wonder how much "value" would actually be lost from the market if prices were simply fixed a month or two ahead of time to exclude those price shocks.
- orangecat 1y agoIf a restaurant is so popular that they're often running out of food, it's perfectly reasonable for them to raise their prices.
- hackable_sand 1y agoNot during a famine
- Auracle 1y agoI’d argue that’s a better time to do it? People will eat less, conserving food.
- pentaphobe 1y agopopularity is irrelevant - the context is day-to-day. Prices change slowly over time of course, but that's different. If there was less egg available for a given day, McDonald's [^1] don't charge more for a McMuffin, they sell fewer McMuffins I'd argue AirBnb's approach here is more like Uber's surge rates. Which are clearly more extreme than anything taxi cabs did (bar the occasional bad actor) [^1]: mcdonalds is stretching the "restaurant" analogy here, but they have a higher consistent turnover so seem like a closer comparison
- tbrownaw 1y ago> Which is an argument that this is not truly gouging - there's just a demand surge and a supply crunch and the market responds the same way as if it was a business conference in town. So then real price gouging is... what, when you charge more than everyone else (and drive all your customers away to competitors)?
- hibikir 1y agoGouging: When I have a significant control of the supply, and set prices up in a way that significant parts of the supply get wasted because my profits are maximized anyway. So one can argue that some cartel-like algorithms are price gouging, but it's unlikely to be what a provider of a lone AirBnb unit will do, as for them, going empty is worth zero.
- JumpCrisscross 1y ago> then real price gouging is... what, when you charge more than everyone else Honestly, a myth. It’s aesthetically pleasing (outside perishable personal essentials, like staples in a crisis). But if you have less housing than the population, the problem is the lack of housing. Getting uppity about pricing while builders wait months to get permits issued is performative at best.
- msgodel 1y ago>Almost nobody sets prices manually. Huh. I know a number of AirBNB hosts (the new kind that treat it like a business, not the old kind) and they all absolutely do model the market out months in advance and 100% manually set the prices.
- hcnews 1y ago> Almost nobody sets prices manually. You either use Airbnb's pricing algorithm, or one from a third party. Either way it's set automatically based on local occupancy rates/hotel prices/etc. This seems pretty undesirable. Very easy for Airbnb/third party to increase prices even without demand just to increase their prices. We recently saw a similar price fixing lawsuit for renters. Landlords, co-ordinating together, ended up increasing prices of Condos across major American cities (via means of a third party). The consumer ends up paying unnecessarily high prices in an inelastic market.
- austhrow743 1y agoWhat definition of gouging are you using that conflicts with “there's just a demand surge and a supply crunch”? “the market responds the same way as if it was a business conference in town.” Normal people definitely complain about that and use the word gouging when they do so.
- fake-name 1y agoUh, you are describing gouging, you've just handed it off to an algorithm so you can pretend it's not exactly what it is.
- fsckboy 1y ago>The article doesn't make it clear we don't need to know. if airbnb raised the prices and the market isn't there, rental income will go down and vacancy rates will go up and airbnb will lower prices again. if airbnb raised the prices and the market stayed strong, they'd raise the prices more. the higher the prices go, the more people with extra space to rent out will take notice and clean up their garage, or go stay at grandma's or whatever, creating more housing out of thin air (actually, on the margin) helping alleviate the housing shortage. the same pattern would happen if hosts raise the prices themselves. also, if all the cheap places get rented, the market will appear to have higher prices even if nothing has changed. let markets figure out prices, period. that's what markets do, it's one of mankind's stellar achievments. It's why the west is successful and communism fails. if airbnb has monopoly power and is manipulating prices, fix that problem any day of the week, don't use a massive fire that destroys housing as evidence of anything, it means nothing, that's normal market correction.
- JackYoustra 1y ago(while I think this isn't the affordability driver) this point about prices isn't really true - compare the graphs of two markets: one with a horizontal demand curve (perfect competition) and one with a downward-sloping demand curve (monopoly) - the first will have no deadweight loss, the second will have substantial deadweight loss. Markets tend to the second and need state intervention in order to prevent the proliferation of monopolies. Functionally this is intervention every time price coordination happens, which... is pretty clearly what AirBNB is doing!
- fsckboy 1y agothere is no reason to think LA real estate matches those special cases you've contructed
- tsimionescu 1y agoThis is all economy 101, rational preference BS. The reality is that suppliers very often collude to increase prices universally (particularly for things like housing, where there is almsot a natural monopoly - you can't bring in more land to the same city), and buyers have no way of knowing or acting on this. Airbnb is perfect for organizing such collusion, acting as a virtual cartel.
- diziet 1y agoAirbnb claims it charges about 16% fee on top of the actual rental price. https://www.airbnb.com/resources/hosting-homes/a/how-much-does-airbnb-charge-hosts-288 https://www.airbnb.com/resources/hosting-homes/a/how-much-do...
- ipaddr 1y agoWhich is fair for what they do.
- VarFarYonder 1y agoSeems like basic supply and demand rather than something nefarious? But I guess if we accepted that, nobody would be to blame.
- BallsInIt 1y agohttps://www.caloes.ca.gov/office-of-the-director/policy-administration/legal-affairs/price-gouging/ https://www.caloes.ca.gov/office-of-the-director/policy-admi...
- DragonStrength 1y agoThank you. This thread is full of people acting as though price gouging during emergencies hasn't been illegal since before the Internet. Not a California thing either. Southern states have similar laws thanks to common natural disasters like hurricanes.
- goodpoint 1y agoBasic supply and demand is nefarious when it comes to survival.
- 5350-uiop-1130 1y agocalling the airbnb landlord a "host" and not instead a "parasite" :/
- shlant 1y agoso brave of you. Everyone is clapping
- deleted 1y ago[deleted]
- 5350-uiop-1130 1y ago"I have been using AirBNB for years (top 5% guest at one point)" from my view you are a great "host"
- rcpt 1y agoThe fires burned in some of the wealthiest parts of the US. Dumping a ton of multimillionaires on the short term rental market will raise prices yes.
- baron816 1y agoThe supply of housing is more elastic than you think. Some people have spare bedrooms, or second homes in LA. They may have previously chosen to leave them vacant, but for many people the higher rates they can get on Airbnb can entice them to list them. This happens at the margins—it’s not an all or nothing thing. So the higher people can earn renting out available space, the more they’ll be willing to rent. At some price point, even a billionaire will rent out their garage.
- jedberg 1y agoThis happens to any platform using algorithmic pricing. Any time there is an unexpected event that either constrains supply or increases demand (or both), the algos go haywire. Then the the platform has to put in checks to prevent it from happening again. Remember when Uber was new and the surge pricing could do 20X+ in just a few minutes when there was an emergency? And then they had to fix it so that wouldn't happen, the trade off being that there just weren't cars available. The thing is, some people aren't price sensitive. In a sudden blizzard, some people are happy to pay $350 for a two mile ride home, just to get home. And some drivers are happy to go out in that weather for their piece of the $350. The hard question is how do you find the balance?
- Y_Y 1y agoThe sellers are definitely price-sensitive though. The choice isn't between a $350 trip and a $20 one (because demand far outstrips supply at the point), it's $350 or no deal, or at best a lottery ticket to see if you're one of the lucky 5% of people who can get a ride at the old price. When the rate shoots up like this drivers will get a message, and plenty of them will get out of bed or stop whatever they're doing and get on the road. The platform will probably take a nice cut, but otherwise to meet demand they'd have to subsidise most of the difference. That would be some very expensive PR.
- thaumasiotes 1y ago> The thing is, some people aren't price sensitive. In a sudden blizzard, some people are happy to pay $350 for a two mile ride home, just to get home. And some drivers are happy to go out in that weather for their piece of the $350. > The hard question is how do you find the balance? Why is that a hard question? What balance are you looking to find?
- jedberg 1y agoAllowing those who are willing to pay any price to do so while still serving the community by not price gouging everyone, especially those who are price sensitive but are still desperate.
- aurareturn 1y agoIs it Airbnb that increased the price or hosts? Regardless, I don't see any problem here. The price increases, more people with a spare apartment, home, or room will be incentivized to host which increases supply. If you suppress the price artificially, then the supply won't increase which won't do people who lost their homes any favors.
- MangoToupe 1y ago> If you suppress the price artificially, then the supply won't increase which won't do people who lost their homes any favors. Supply's not increasing substantially in the near future to help regardless. Folks place far too much faith in market effects that history has demonstrated again and again only take effect in the long term. You know what would actually guarantee an increase in supply? Government-funded public housing. But that would deflate property prices, which is far more reprehensible to americans than the institutions of poverty and homelessness. We are a disgusting and reprehensible people.
- shlant 1y ago> You know what would actually guarantee an increase in supply? Government-funded public housing Or just removing needless restrictions so the market can provide the incentive for private entities to build housing? The government is not the primary builder of housing, nor should it be.
- MangoToupe 1y agoI simply do not share your faith, and I think any government that does not build housing for its people hates its people.
- sanp 1y agoIsn’t the underlying assumption here that supply is essentially infinite (or at least comparable to demand)? I think is the underlying assumption with any such statement. If the assumption doesn’t hold true then I am not sure the statement holds true (perhaps only till there is some supply).
- whatever1 1y agoIs anyone tracking these platforms? Today coincidentally I got a Lyft from the airport to home and due to traffic it would take 1 hour, the price asked was $125. Ok steep, but the poor driver would be stuck with me for an hour. BUT NO! I asked the driver and at the end of the trip he kindly showed me how much Lyft gave him. $62 before tip.
- vladvasiliu 1y agoThat looks suspiciously close to 50%. Does anyone know what's the usual cut of these platforms?
- shivasaxena 1y agoI would like to know that too. I would have never thought it was 50% I would love to see some innovation in this space like India's ONDC and more Direct-to-Driver apps. https://nammayatri.in/open?cc= https://nammayatri.in/open?cc=
- sschueller 1y ago[flagged]
- csmpltn 1y ago[flagged]
- sschueller 1y agoShooting the messenger is always what is done when the facts on the ground can no longer be ignored, but acknowledging them would threaten the comfort of denial.
- csmpltn 1y ago"Shooting the messenger" (to quote you) is what happens when the messenger is an incompetent idiot, who fails miserably at their job and takes down the entire UN with them. Being a corrupt terrorist sympathizer who is funded by Hamas doesn't help said messenger either.
- harabat 1y agoGetting into any kind of online discussion with the "$X is khamass" crowd is generally futile.
- sschueller 1y agoJust pointing out a fact about AirBnB with source seems to be futile. Interesting, I would love to see the up/down votes and how they progress over time.
- csmpltn 1y ago[flagged]
- ksniwmidjd 1y ago[dead]
- TrackerFF 1y agoHow is it any different than "congestion pricing"? Last time I experienced such, was on my way from the airport to the city. Unfortunately someone had jumped on the tracks, and the trains were locked down for 3 hours while the police etc. came to investigate the scene. During peak hours. Lines to the taxi and bus must have been 200 meters long and 5 meters wide. Checked out Uber, got something like $250 for a 30 min drive. Not that I necessarily support extortionate pricing like that, but we do live in a capitalistic society.
- Ccecil 1y agoUp here in North Idaho...my landlord that I was leaving told me how much more expensive things are going to be since the fires in California...everyone wanting to move here. I already found another house cheaper/better. It isn't just a regional problem.
- Hilift 1y agoThis is an absurd diversion from how poorly LA leadership is performing. Six months on, and no permits have been drawn for the Palisades/Malibu reconstruction. There are 7,000 destroyed homes, in the most bureaucratic municipality for a permitting and development process. This will be particularly true for anything that requires Coastal Commission oversight. Their job is to get you to leave. LA city sold $1 billion in bonds this year, not for strategic efforts, but to keep the lights on and water running. They basically punted and said part of the DPW is a project and we want to sell $1 billion in bonds. In previous years, LA city annual spend includes $700+ million for homeless, and $350+ million for liability payments. It's basically a giant pot of money for a huge feeding frenzy. Sure, the fire department has an insufficient budget, but no-one talks about 30% of all fires are started by the homeless, and why are they allowed to live under an interstate overpass anyway? Some of those 7,000 homeowners displaced by the fire may give up and leave. Those that remain are going after LA leadership in court. LA will see massive lawsuits from homeowners and businesses, possibly the state government.
- nerdsniper 1y ago> why are they allowed to live under an interstate overpass anyway? Genuine question because you seem passionate about it and I don’t have a good answer for this, I wrestle with it often. Where should they put themselves instead? Or where should the state allow them to be?
- Hilift 1y agohttps://www.nfpa.org/news-blogs-and-articles/blogs/2023/11/15/ecosystem-failures-cause-la-highway-blaze https://www.nfpa.org/news-blogs-and-articles/blogs/2023/11/1... "...sources with knowledge of the incident have told news outlets that it appears to have been intentionally set and that the storage of wood pallets and hand sanitizer under the overpass contributed to the intensity of the blaze. Both wood pallets and hand sanitizer are known to fuel fires." Why was there bulk pallets and hand sanitizer? It's basically kindling, with a napalm icing. Look at the photo. It is likely this product was stored there due to it was removed from somewhere else where it was illegally stored. And it was likely to be a business operating illegally, without the proper licenses and permits. Or they needed to dispose of the product and simply did not want to pay for it. Governor Newsom has already acknowledged this was and is a failure of governance.
- exabrial 1y agoSo? Let the free market define the correct price. It’s not like there’s thousands of alternatives to their platform that are better for both renter and landlord, and by regulating them into controlled prices all you’re doing is cementing their monopoly position. Haven’t we learned this lesson yet?
- deleted 1y ago[deleted]