Why An Airbnb IPO Could Be A Colossal Failure

Three horror stories from traumatized customers demonstrate why management first needs to get their house in order.

When asked in January about the company’s timeline to go public, Airbnb CEO Brian Chesky stated that it will be ready for an initial public offering (IPO) sometime later this year.

The long-anticipated Airbnb IPO has been widely expected to hit in 2019, however, very recently there have been murmurs that it has not, in fact, yet been determined if the company will go public this year after all.

It is good that Airbnb may be opting to delay a move towards Wall Street, however, it is not enough. Airbnb should absolutely not go public.

While the company may be reporting sustained profits, the organization runs the risk of falling into a regulatory and liability tailspin that can only end in disaster for customers and stakeholders alike.

Airbnb said that they had to subject themselves to the same fear of being raped in order to request a $2000 refund

Top of the list of concerns that investors should be considering is the abhorrent customer service that Airbnb gets accused of on a near-weekly basis. While not all of the extreme stories necessarily paint an accurate picture of the typical Airbnb experience, where there is smoke there is fire, and in the case of Airbnb, there is so much smoke that it’s impossible to ignore.

The issue with Airbnb customer service has thus far largely been ignored by management who views the negative incidents as statistically insignificant compared to the millions of check-ins. However, the rising popularity of critic sites such as Airbnb Hell and an increasing number of Twitter accounts and blogs aimed at discrediting Airbnb, suggest otherwise.

Below are just three stories that are but a small sampling of the atrocious customer service that Airbnb is becoming widely known for:

Airbnb took sides in a break-up

A Florida man accused Airbnb of helping his ex-girlfriend steal $1700 from him, and according to his story, Airbnb effectively involved themselves in the breakup between him and his girlfriend and sided with the girlfriend. The story was first published on Airbnb Hell, however, it has recently made the rounds on Twitter, Facebook, and Reddit, and is further corroborated by dozens of e-mails and documents.

The man claims that he and his girlfriend shared an Airbnb account, during which time he was the primary account holder, meaning his e-mail address was the one on file. The two also shared a credit card account, from which they each had their own respective cards and card numbers. The card on file with Airbnb was the card that had the man’s name on it, and was, therefore, his credit card.

While still together, the man and his girlfriend confirmed a two-month reservation in Europe, and a partial charge of $1700 was made on his card. Shortly after making the reservations the relationship ended. As part of their breakup, the two separated their credit card account, and he subsequently closed his card.

Afterwards, the man took control of the Airbnb account and updated the information to reflect only his name, and also provided Airbnb with a new credit card number to charge the remaining balance of approximately $800.

About 2 weeks later, the ex-girlfriend contacted Airbnb and claimed that she was the cardholder of the credit card that had previously been on the account, and she further claimed that the charge of $1700 was unauthorized.

Photo by James Lee on Unsplash

The ex-girlfriend was clearly lying, however, Airbnb contacted the man via email and told him that he had 48 hours to reply to a dispute by the “authorized cardholder.” The man replied promptly stating that the dispute was not valid, that he was indeed the authorized cardholder, and that he needed to be contacted via telephone to discuss it further.

While customer service issues are common in many firms, the issues with Airbnb are extreme since Airbnb customers are actually being traumatized.

One hour later, the man received a notification from Airbnb that a refund had been issued to the credit card, and that he now had a balance of $1700 with Airbnb. The problem with this was that the card Airbnb refunded the money to was not the card that he had on file, nor was it was the card that he had previously closed.

Despite the fact that the account and card belonged to the man, Airbnb credited $1700 to his ex-girlfriend's credit card, which she gave to them over the phone.

In this case, a customer was cheated out of $1700 because his ex-girlfriend managed to convince a male employee at Airbnb that her ex-boyfriend had used her card inappropriately, however, this was not true. Airbnb, in fact, refunded the wrong person for a charge that was authorized, and then they subsequently refused to address the matter any further.

Insect infestation and fear of being raped

After being a loyal user of Airbnb for 7 years, Danielle, a Brooklyn resident, says that she lost nearly $2000 because she didn’t feel comfortable or safe in a disgusting house with an unstable hosting situation.

Danielle and several of her friends, one of whom was pregnant, booked a house in upstate New York for three nights at the price of $4000. At the time that they confirmed the rental, there were no guest reviews, however, the first review for the listing was posted shortly after they made the booking.

What was said on that review was alarming.

The previous tenants reported experiencing “bizarre and intrusive owners” who stayed at the rental for hours the first night. The house was infested with a variety of insects including mosquitos, beetles, ants, and spiders, and worse yet, the owners continued to show up unannounced at all hours. If that wasn’t bad enough, apparently the owners were actually in the midst of going through a divorce, and the rental was a central piece of the dispute.

To make matters worse, construction workers were entering the property early in the morning and late in the evening to perform renovations and other work on basic services such as water, heat, and electricity, which meant that those things were shut off for hours at a time.

Image by L.L. Bartlett from Pixabay

If all that wasn’t enough, the reviewers further reported that they were concerned about being raped while they were there, and feared for their safety.

Airbnb should be viewed as a high-risk investment because a major component of their business depends on shirking liability.

Alarmed, Danielle contacted Airbnb and requested that they allow her and her friends to cancel without incurring a cancellation fee, which was 50% of the rental. She made this request three full months prior to the first day of the scheduled stay.

Airbnb customer service responded however by saying that “the owner was innocent until proven guilty,” and further said that Danielle and her friends couldn’t request a refund unless they actually went to the house and were subjected to the same thing.

In other words, Airbnb said that they had to subject themselves to the same fear of being raped in order to request a $2000 refund.

To add insult to injury, the owner apparently took the property down after the review, so it cannot be rented any further. Regardless, Airbnb has yet to issue a refund. Danielle’s reservation is set for August 2019, around the same time that Chesky has stated that we should be looking for an IPO.

Stranded in a foreign land with a baby

A married couple from Chicago decided to use Airbnb for a vacation to Bali, and after a 30-hour journey to the other side of the world with a nine-month-old baby, the couple arrived at their destination on the other side of the world.

The couple booked nearly a year in advance, however, while en route they received an email that their reservation had been canceled due to not updating payment information. The couple was able to demonstrate that they had in fact updated their payment information one week earlier, and so after over an hour long wait on hold, they were told by Airbnb customer service that there was a glitch in the system and that everything should be fine.

This information was wrong, however, and the glitch in Airbnb’s system did actually cancel the reservation, which further made it impossible for the couple to contact the host via the Airbnb system.

The couple called back and spoke with another Airbnb customer service member who they said was condescending and stated that there was no way to reinstate the booking.

The couple called back a third time and spoke to another associate who said that “all we can do is wait now” for the owner to reach out to them. This, of course, was a bit uncomfortable for a couple with a baby in a foreign country after a 30-hour trip.

Photo by Gem & Lauris RK on Unsplash

The couple called back a fourth time and asked to speak to a manager, who promised that they would get the issue resolved, and said he would call them back shortly. The couple never received a call.

The couple ultimately needed to find other accommodations quickly, and because the cancellation happened late, the couple reported that Airbnb had not refunded any of their deposit.

These are but three recent stories randomly selected from what is, in fact, a mountain of customer horror stories. All three of these tales are regarding being a guest on Airbnb, however, matters don’t seem to be any better for hosts, of which hundreds have levied formal complaints, and in some instances, lawsuits.

While customer service issues are common in many firms, the issues with Airbnb are extreme since Airbnb customers are actually being traumatized.

City governments are also having difficulty regulating Airbnb, and a recent scandal in New York City demonstrates clearly how the darling of the sharing economy can actually be used to swindle thousands of people out of millions of dollars.

Photo by Gem & Lauris RK on Unsplash

While Airbnb may boast a whopping $2.6 billion in revenue against low costs of operation, they should be viewed as a high-risk investment because a major component of their business depends on shirking liability.

While it’s been effective thus far, rising customer dissatisfaction makes them an easy target for ambitious policymakers looking to score with their constituents. One bad piece of legislation could bring the entire operation to its knees, and threaten to bleed the California company for more than what Wall Street will consider tolerable.

An Airbnb IPO could provide the company with the capital it needs to resolve its customer service and liability issues, however, it’s just as likely that bad press will drive the stock price into the gutter, starving the organization of working capital and thus placing the company on the auction block for the highest bidder.

Joshua Dopkowski is a business instructor, social critic, and freelance writer. To read more of what Joshua writes, follow him here, join his e-mail list, visit his blog, or all three. Thank you for reading.

Trying to tell the truth, and be truthful about it. www.joshuadopkowski.com www.bluntogre.com

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