In mid-October, right around the time New York State Attorney General Eric T. Schneiderman released a damning report declaring nearly three-quarters of Airbnb rentals in New York City to be illegal, an operation called City CoPilot opened in a small storefront on Orchard Street. The company, which bills itself as "Your neighborhood front desk," assists neighborhood residents (mostly Airbnb hosts), with matters like key exchanges, housecleaning, signing for deliveries, and daily luggage storage for guests.
City CoPilot is just the latest in a growing crop of businesses that have sprung up to offer support to Airbnb users, both hosts and guests. These services, which handle everything from key handoffs to housecleaning to correspondence with guests, are spreading across Airbnb markets in the U.S. and internationally, and are yet another sign of the sharing economy's deepening roots. Despite crackdowns on the short-term rental service not just in New York, but also in places like Berlin and Barcelona, the AirBnB sub-economy is not just growing—it’s flourishing, as entrepreneurs step in to help users position themselves more competitively in this increasingly professionalized space.
As anyone who's ever used Airbnb knows, key exchanges—getting keys from hosts to guests—is one of the least seamless parts of an otherwise pretty smooth rental process. Methods range from leaving keys in combination lockboxes to sending them through the mail, having them couriered, arranging for a handoff at a local cafe, or wrangling an acquaintance to handle the exchange in the host's absence. But the issue remains the kind of problem entrepreneurs are always looking to solve.
Started by two 30-something women who live in the area—and are Airbnb hosts themselves—City CoPilot collected over 100 sets of keys in its first 90 days, mostly from Airbnb hosts (they also serve users of other sharing economy businesses, including the cleaning and home repair service Handy), at $9.99 per pick-up/drop-off. "The sharing economy was just missing that trust aspect on the last 10 yards," says Friedman. "We wished there were a business like ours, so we just created it."
"Access is the real big issue," says Jason Crabb, a former marketing executive who founded yet another key-hand-off service, KeyCafe, two years ago. The Vancouver, B.C.-based company maintains a network of secure lockboxes at cafes in Vancouver, New York, San Francisco, Seattle, and soon Austin, Texas. Crabb’s customers, who pay $8.95 a month for KeyCafe’s service, can grant users access to keys by doling out unique, identity-verifying PIN numbers through the company's website or smartphone app, and receive a text and email when keys are electronically checked in or out.
Issues with key exchanges also led Randy Engler to venture into the Airbnb sub-economy economy with Proprly, which he launched in April 2013. For $40 to $100 per drop (depending on the time of day), Proprly's specially trained couriers not only bring keys, but also welcome guests, carry suitcases, and explain home basics like WiFi passwords. After guests leave, Engler’s staff cleans up. "We train all of our cleaners in hospitality standards: There's no hair, there's no dust," he says. "If you go with a cheapie cleaning service, it's the first thing guests notice." It's operating in New York right now, with plans to expand this year to San Francisco and Paris.
If all of these companies sound similar, it’s because they are, although Crabb insists that for the time being at least there’s no sense of competitions. From a market differentiation standpoint, perhaps the cleverest business in the Airbnb sub-economy is Guesty. Twin brothers Amiad and Koby Soto founded Guesty in Tel Aviv in 2012 after their own experiences as Airbnb hosts. Unlike businesses that aim to solve the back-end issues of renting one's home, Guesty's involvement is all on the front end. For 3% of what someone nets from Airbnb or another home rental service, the company manages a host's entire profile, responding to queries within minutes, screening guests, handling correspondence, and even leaving reviews of guests on hosts’ behalf after a visit is over. While Guesty takes on many of the host's regular duties, it relies on other businesses to handle on-the-ground logistics. KeyCafe, City CoPilot, and Proprly all partner with Guesty, and the company is building a network of cleaning companies in the markets it serves.
Guesty exists to solve a relatively new problem, one that was irrelevant in the early days of the sharing economy. "One of the biggest complaints Airbnb hosts have is about host fatigue," Amiad says. "If you need to respond within an hour to keep your ranking, always being next to your phone is frustrating." Guesty solves that problem. "It's a layer on top of Airbnb," he explains, allowing an individualized process to function at scale. The company did a stint with Y Combinator in 2014, and has since signed up 1,700 hosts in 35 countries, hired more than 15 full-time employees—plus 15 additional part-timers spread all over the world—and established offices in San Francisco and Tel Aviv.
The growth of the Airbnb sub-economy points to an issue vexing local government officials, who have struggled to place effective regulations on Airbnb rentals: namely, that the sharing economy is pretty well entrenched in urban life. Schneiderman's report revealed that between 2010 and May 2014, "private bookings in New York City saw a nearly twelvefold spike," leading to competition among hosts. One of the primary functions of the Airbnb sub-economy is to help hosts add value to their listings, which can lead to higher ratings and boost their profile in prospective guests' search results.
"A lot of hosts have been saying that their ratings have been going up and people have been specifically mentioning City CoPilot," Friedman says. The company grew so much in its first few months that Friedman quit her full-time job in medical-device marketing to handle demand. She and business partner Maggie Barnett, a lawyer, are looking to expand to other neighborhoods, starting with Williamsburg. "There's kind of an endless amount of things we can do," she says of the services City CoPilot continues to add, which now include scheduling city tours and airport transportation for guests. Proprly users get a code for 20% off their first ride with Uber, or two free months with Beyond Pricing, which uses historical occupancy and pricing data to help Airbnb users optimize their nightly rates.
As for the current questionable legality of Airbnb in New York City (which the housing service has continued to fight, most recently during a hearing in mid-January) the prevailing sentiment seems to be optimism. "When markets evolve, the initial instinct is to be afraid," Engler says, "but I think what comes out of it is legislation. If Airbnb is going to do an IPO, they have to resolve legal issues in New York."
Soto is confident that the service "will become regulated" in NYC and elsewhere, and Crabb says, "They want to pay taxes; they want to do the right thing. It's just a matter of working it out." Only Friedman seems to have any doubts, pointing out that, "a big chunk of our business is dependent on the home-sharing economy—but another part of it is not. It will be interesting to see what happens."