A rental property was vandalized, and HomeAway
The stock has shed nearly 12% of its value since the ransacking story was posted Wednesday on popular blog TechCrunch. Ready for the clincher? We're not even talking about a HomeAway listing. It's HomeAway rival Airbnb that's dealing with a bruised reputation after mishandling the mother of all horror stories.
If you're not familiar with Airbnb, you're probably not an adventurous yet thrifty traveler. Airbnb allows folks to rent out rooms or entire homes to guests for short-term stays. It is entirely free to list on Airbnb, explaining why the new site has quickly accumulated tens of thousands of listings. If a booking is successful, the owner of the property will keep 97% of the proceeds to cover processing costs. Renters pay Airbnb 6% to 12% on top of the rental rates.
The model sounds quirky, but it's been a viral rock star. The company recently raised $112 million in its latest financing round, valuing the company at roughly $1.3 billion.
However, all of that is debatable after a single incident has blown up in Airbnb's face. Back in June, someone rented out an apartment for a few days while the owner was away. The owner returned to find her home gutted. Valuable belongings were swiped, personal identification was likely photocopied, and the place was completely trashed.
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Airbnb blew it by waiting until the media firestorm erupted in recent days before rolling out a new policy yesterday. All rentals will now carry the Airbnb Guarantee, offering up to $50,000 in protection for the theft or vandalism or personal property.
Problem solved? Not so fast. Isn't a $50,000 guarantee going to bring out the worst in fraudulent property owners? Isn't the fact that this story is getting so much play going to draw more burglars and identity thieves into the Airbnb fold? A single incident -- rare as it may have been -- may be enough to spook owners from making listings, nipping this viral wonder in the bud.
Some would argue that Airbnb's pain would be HomeAway's gain, but won't property owners be just as wary of lending out their vacation homes?
HomeAway offers insurance at a premium to both renters and owners, and this incident may actually encourage more users to pay extra for protection. It may be a nuisance for property owners who are already shelling out $295 a year to list on HomeAway, but it may also transform peace of mind into a lucrative profit center for the company.
The sharing trend is undeniable. Whether it's Zipcar
Airbnb's unfortunate incident is drawing attention to the sharing model's downside, but it's also giving potential HomeAway investors a shot to buy into a fast-growing company at a compelling price.
Have you ever used HomeAway, VRBO, or Airbnb for a getaway rental? What did you think? Share your thoughts in the comments box below.