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Airbnb's Brian Chesky, Left, and Chip Conley have guest rooms available in nearly every country on earth.

The Secret To Airbnb's Freakishly Rapid Orgy Response: "Scenario Planning"

Airbnb uses strategic thinking to shield the company—and its renters—against scandals such as orgies, prostitution, and even suicides.

Airbnb host Ari Teman handed over the keys to his Manhattan apartment last Friday to a guest visiting New York ostensibly for a wedding. But when Teman returned to his apartment that evening, he was aghast to learn that the guest had rented his apartment so he could host an all-night orgy that was open to the public.

The horror story made instant fodder for the press, with Drudge Report, Mashable, and the New York Post splashing headlines about the "XXX Freak Fest" that played into people's worst fears about renting out their spaces to strangers on Airbnb, the popular home-rental service. Such negative media attention is never welcomed by any startup, and this brand of PR nightmare has quickly spun out of Airbnb's control in the past. Which is why the company spent the past year preparing for scandals not just related to sex parties, but also to prostitution and even suicide. "Because we're a high-profile company, there are things that will go wrong," Airbnb hospitality chief Chip Conley told me recently. "So how do we deal with the aftermath of things that don't go well?"

The answer in Teman's case: swiftly and comprehensively. His experience had all the hallmarks of a lawsuit in the making. The surprise orgy brought with it property damage, with condoms and liquor bottles strewn throughout his apartment, along with a visit from the NYPD. But "to [Airbnb's] credit," as Gawker reported: "Airbnb's response to Teman was quick, almost absurdly so. Within 24 hours...Airbnb had sent a locksmith to change his locks, made plans to put him up in a hotel for a week, and wired him $23,817."

In a statement, Airbnb also noted how "incredibly rare" these incidents are, adding that "the individual who rented this space has been permanently removed from our site...In the days ahead, we'll continue to work with the host to assist him with his additional needs and we will work cooperatively with any law enforcement agencies that investigate this matter."

The rapid response shows how much the company has matured since 2011, when an Airbnb guest infamously destroyed a host’s apartment, causing a media firestorm that all but left the service branded with a scarlet letter. The response from the founders and one of its investors was haphazard and inconsistent; it was unclear whether the company would reimburse the host for the apartment destruction, or whether its cofounders even felt responsible. Eventually, Airbnb apologized for the incident and added comprehensive insurance coverage and 24/7 customer support to mitigate future problems.

But by that point, the damage had been done to the Airbnb brand. So much so that when Conley joined the company last year as its hospitality head, it was one of the first issues he wanted to address. "I asked [CEO Brian Chesky], 'Why didn't you jump on it quicker?" Conley recalls. "It wasn't handled as quickly as it could have been and it turned into a media fiasco."

Conley, the founder of the innovative boutique-hotel line Joie de Vivre, has decades of experience dealing with every type of incident in the hotel environment. His first boutique hotel, The Phoenix, was known for its rockstar clientele, and played host to the likes of Johnny Depp and River Phoenix. He and Chesky quickly set out to make sure the company was able to respond to complaints faster in the future. To make Airbnb into a service capable of providing the same level of hospitality as hotels would require expecting the unexpected. "One of my first questions when I joined the company was, 'Have we dealt with every potential situation? Have we thought about X, Y, and Z?'" Conley recalls.

Conley began "scenario planning," a strategic form of thinking used by everyone from the military to global corporations to simulate long-term outcomes. He and Chesky came up with a game plan for how to respond to a range of incidents. The aim was to make sure its hosts and guests feel safe and cared for in any situation. Conley applied his experience from the hotel space. "In the hotel environment, people commit suicide. Prostitution can happen a lot. [There are] statistics around [guests] trashing hotel rooms or getting arrested," he says. "A lot of this stuff happens, and you just have to deal with it."

The response to Teman's situation shows how much Airbnb has matured. And it's not the first time since 2011 that Airbnb has had to deal with similar problems—it's just an incident that received a lot of media attention. Conley also recalls recent cases of prostitution in Sweden and Washington D.C., where Airbnb reacted equally quickly despite less news coverage. "We're going to have bad situations that don't get press, and bad situations that do," says Conley says, contending they must be afforded the same attention regardless.

And the fact is, incidents like this will happen again and again. Airbnb will work to weed out bad apples but it's not immune to hosts or guests acting irresponsibly, and neither are hotels.

But the company recognizes there's a greater degree of anxiety when it comes to such incidents happening in your spare bedroom rather than at a Hilton penthouse.

"It's scarier because it's in someone's home—it feels more personal," Conley acknowledges. "We have a higher sense of responsibility around how our guests treat [a host's] space than the hotels do."

To learn more about Airbnb's challenges competing with the hotel players, check out our profile of the company and its CEO Brian Chesky.

[Photo by Ian Allen]