Brazil Screws Up World Cup Prep, Airbnb Saves Their Butts

Innovative peer-to-peer companies like
Uber, Lyft, and Airbnb have faced many challenges by taxi unions,
hotels, and bureaucrats over the past couple years. Occasionally
though, business communities and governments welcome the sharing
economy to help make up for their shortcomings. This is exactly
what is happening in Brazil right now, as the government is happy
to have Airbnb relieve some of the pressure from its inadequate
preparation leading up to the World Cup.

Christian Gessner, general director for Airbnb Brazil, said that
the number of listings in Latin America’s biggest country grew from
3,000 to 35,000 over the last two years, and listings in Rio alone
increased by 11,000 in just the last year. The quality of housing
varies greatly, with some places being offered for less than

$10 a night, and some, such as the home of Brazilian soccer
star Ronaldinho, going for $15,000 a
night. 

Brazil is a lucrative market for the transactional service, and
it will likely continue to grow as Rio prepares to host the summer
Olympics in 2016. As the market expands for the sharing economy
though, traditional, well-established businesses will amp up their
attacks.

Airbnb is looking abroad even as it experiences pushback at
home. In San Francisco, it is illegal to rent out your home for
less than 30 days, and new legislation
would make it so that you can only rent out your home if you live
there three-quarters of the year. Airbnb finally settled a
nearly year long dispute with New York law enforcement
officials that ended with the company agreeing to turn over large
amounts of data about their users.

Empirical studies haven’t reported too much disruption of
entrenched business by Airbnb, however. Georgios Zervas, a
professor at the University of Boston, completed a
study that showed every 1 percent increase in Airbnb’s listings
results in a .05 percent decrease in quarterly hotel
revenues. 

Excessive regulations created a static transportation industry
and a sluggish market for housing and accommodations—it was only a
matter of time before entrepreneurial spirits seized the
opportunity to innovate and offer a better service. With
Airbnb’s valuation at $10 billion, and
Uber’s valuation at $18.2 billion, it looks like the market
agrees that it’s time to disrupt the status quo.