IOC/Airbnb Partnership: A Step in the Right Direction or a Can of Worms?
27 Nov, 2019By: Mary Helen Sprecher
Maybe the IOC is finding a way to work with people in host cities, after all. In the process, though, it appears to have opened a really nasty can of worms.
With an announcement last week of the $500 million global sponsorship deal between the IOC and Airbnb, it’s likely that private homeowners in host cities will be able to leverage some benefit when the circus that is the Olympics comes to town.
The news is a shrewd move on the part of the IOC which has seen cities backing away from the hosting bargaining table in record numbers over the past few years, often propelled by referendums in which citizen-led groups, many modelled after No Boston Olympics, decried the expense and disruption of the Games. While it’s unlikely that many cities will have an immediate change of heart about hosting, the new arrangement will bring awareness to the ways homeowners can benefit as a result of the Airbnb platform when large events are nearby.
The deal is "economically empowering, socially inclusive and environmentally sustainable," the IOC and Airbnb said in a joint statement.
But it's by no means free of controversy. Within days of its announcement, French hoteliers announced they would stop working with Paris 2024. Inside The Games notes that the Union of Hotel-related Trades and Industries (UMIH), whose world congress was going on at the time of the Airbnb announcement, posted an announcement on its website, describing the new partnership as "inopportune.” It added, “It is outrageous to make this enterprise which uses deregulation in every country of the world a worldwide partner of the IOC. Where is the morality?"
UMIH said the partnership was particularly “disrespectful towards the professionals of the hotel trade who have worked with the Paris 2024 organizing team since the bidding phase. The regional hotel sector was moreover an asset in the Paris Candidature File. Now, (there are) two different sets of rules for the same match – where is the fair play?"
On the side of the hotels is Paris Mayor Anne Hidalgo, who, according to USA TODAY, has voiced concerns that the platform is already contributing to a spike in rents in the French capital. Airbnb, she has stated repeatedly, needed regulation. Paris took legal action against Airbnb in 2019, in a bid to have the company fined the equivalent of $14 million for allowing owners to rent their properties without having them properly registered.
In her letter to the IOC, Hidalgo expressed her “absolute determination to make sure regulations relating to rental platforms are reinforced.”
Jean-Francois Martins, the deputy mayor for sports and tourism, told the AP that Hidalgo is planning to hold a referendum on Airbnb’s presence in Paris if she wins re-election next year.
Unless the IOC can resolve the problem of appearing to flaunt its disrespect for established hotel chains, it is likely to resurface in Los Angeles in 2028. And since the hospitality industry is a powerful lobbying force in the U.S. as well, it will behoove the IOC to address the situation sooner, rather than later. Unfortunately, the IOC is not one for reversing its decisions, and the lucrative opportunity presented by the Airbnb partnership is one that it is unlikely to back away from.
And while on the surface, the sponsorship might look like a move to help residents in host cities benefit from the Olympics, pundits in the industry have suggested that the $500 million price tag attached makes it obvious there is less than a philanthropic interest at work.
Relations between the IOC and Airbnb are not entirely new. According to Inside The Games, the sponsorship simply makes more pronounced Airbnb's involvement with the Olympic Games, an involvement that began in Rio 2016 when they were the "Official Alternative Accommodation Service" provider. A total of 48,000 Airbnb listings housed 85,000 of the city's estimated half-a-million visitors during the Olympics, according to the company. AIrbnb was also involved with last year's Winter Olympic Games in PyeongChang, working with the local community to provide accommodation options for visitors.
But don’t get the idea that homeowners will be seeing athletes as guests (although certainly, the marketing idea of the figure skater hanging her costume in the closet of an Airbnb is almost too good to resist); the arrangement so far is only for workers in the Olympics and visitors, according to CNN Business. It would, however, reduce the need to build new hotels and accommodations for workers – something that cities have long decried as an IOC ‘land grab’ when the Games come to town.
CNN notes that the deal begins at next year's summer Games in Tokyo and covers five summer and winter Games through 2028 in some of the world's top tourist cities, including Paris, Milan and Los Angeles.
“In the past, people have travelled to the Olympics on Airbnb, of course,” Joe Gebbia, Airbnb’s co-founder, was quoted as saying, in an article in the Financial Times. “But we have never been able to officially market to host cities or potential hosts about the opportunity of taking visitors. Through this partnership, we actually can.”
Gebbia notes the company has 200,000 Airbnb hosts in the five upcoming Olympic host cities, a number he hopes to vastly increase through its IOC sponsorship.
And this isn’t Airbnb’s first foray into sports business – not by a long shot. In 2014, the platform was used to unlock an enormous number of rooms during the World Cup in Rio. In all, 20 percent of World Cup attendees used Airbnb for accommodations. The platform was also a sponsor of the 2015 Airbnb Brooklyn Half Marathon.
One demographic Airbnb is going to have in its corner – at least in the U.S. – is the Millennials. That group, which prioritizes individual experiences, is an enormous user of the platform. Airbnb, which markets unique accommodations as a key part of the travel experience, has tapped into the perfect growth formula. And since the IOC has been searching for a younger demographic, it’s obvious they may have found the perfect portal to reach it -- if they can only resolve the problems with the hotel community.
Overall, the sharing economy has had quite a week, news-wise; London announced it won't renew Uber's operating license over "several breaches that have placed passengers and their safety at risk." Uber says it is appealing the decision, and in 2017, when the same non-renewal was threatened, it successfully defeated it. Uber has already been banned, or stopped service in, other countries, including Bulgaria, Hungary and Denmark.