Airbnb uses the FIFA World Cup to bring the sharing economy to Brazil

As online room-sharing service Airbnb Inc. battles the US authorities, the company is taking advantage of the upcoming FIFA World Cup to slip relatively comfortably into one of the world’s major markets.

In Brazil, which hosts the internationally renowned month-long soccer tournament starting Thursday, Airbnb has seen a significant boom in tenant numbers, government acceptance and a limited setback in the local hotel industry.

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Airbnb Brazil: In the Business section of June 11, an article on Airbnb’s operations in Brazil during the World Cup referred to Sao Paulo as the country’s capital. Brasilia is the capital. Additionally, Boston University professor Giorgos Zervas’s first name was misspelled as Giorgis.
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With Latin America’s largest country widely accused of failing to adequately upgrade its infrastructure for the FIFA event, the government is content to allow Airbnb to step in and meet additional demand from 3.5 million foreigners and locals estimated to be looking for accommodation.

For Airbnb, expanding into a friendly international market provides a widely visible opportunity to market and spread the idea of ​​the so-called sharing economy into new, potentially lucrative markets – an opportunity to build hosts and customers. Airbnb loyalists and build trust in its service.

Plus, she avoids the kind of battles she faces in U.S. cities such as New York, San Francisco, and Malibu, where regulators accuse the company of circumventing hotel laws and taxes.

“It will be a learning experience for the hosts,” said Christian Gessner, managing director of Airbnb Brazil, speaking at the company’s local headquarters in a converted small house away from the main business district of São Paulo. “Our goal is to develop the Brazilian host and guest community … In Brazil, we see trust and hospitality as key factors for growth.”

Airbnb expects more than 50,000 people to stay in Airbnb accommodation on big World Cup nights. Perhaps the best-known location is that of Ronaldinho, one of Brazil’s most famous footballers. He recently offered his house in Rio for $ 15,000 a day at the FIFA event.

But most hosts in Brazil offer something much cheaper, taking advantage of tourists’ reluctance to pay for expensive hotels.

Retired, 58-year-old Margarida Dodnar rents single rooms in her Cuiabá home for just over $ 100 a night. Since finding out about the Airbnb site, she said, she has turned her old house into compartments.

“I worked in telecoms, I worked in four star hotels as an executive assistant, but now I live entirely on that money,” said Dodnar. “During the World Cup, we will be full of foreigners – Americans, Colombians, a Chinese couple, Austrians, some from Bosnia.”

Cuiabá is one of 12 World Cup host cities whose critics doubted they would have the capacity to host such a big event. The city’s infrastructure remains, obviously, a work in progress.

There is academic evidence that international events like the World Cup can serve as an effective catalyst for the sharing economy.

In a recent report on Airbnb’s effect on hotels in the Texas area, Giorgis Zervas, a professor at Boston University, found that events such as auto races and the South by Southwest festival in Austin had helped boost Airbnb activity there.

“Because there is a lot of demand, maybe you leave your room on Airbnb,” he said. “Those events where you make a lot of money for your room could motivate you to enter the sharing economy.”

But Zervas’ study also gave credence to the argument of hotel operators who say Airbnb is cutting back on their business. His article concluded that every 1% increase in Airbnb’s marketplace would result in a 0.05% decrease in hotel revenue.

Meanwhile, the company has run into problems in heavily populated cities such as San Francisco and New York, where hotel companies say Airbnb ignores or does not pay hotel taxes.

In San Francisco, where short-term rentals are illegal, authorities have fined Airbnb hosts and allowed landlords to evict them in a hot housing market where rents are skyrocketing.

Partly in response to these legal issues, Airbnb launched a shared city initiative in Portland, Ore., In which the company collects room taxes from hosts and pays the city directly. In a statement, the company said it wants to work with all host cities, whether or not they’re excited about the Airbnb idea.

San Francisco-based Airbnb is one of the West Coast’s fastest growing online startups and recently closed an investment valuing the company at $ 10 billion. Revenue and profit comes from a 3% reduction in guest bookings and 6-12% guest fees.

The company began to accelerate its international expansion in 2011, and has more than a dozen offices in Europe and Asia with more than 600 employees worldwide. Airbnb boasts that rooms are available in 192 countries.

Brazilian hoteliers may be more accepting of Airbnb than their US counterparts, but that may only last for the time of the World Cup.

Brazil’s national hotel association president Enrico Fermi said sites such as Airbnb operating in the region pose no threat to the country’s hotel industry.

“There is no demand for this kind of product in Brazil. Very rarely, a foreign traveler or tourist will want to stay in someone’s house, without information, when there is a hotel, ”Fermi said. “We do not think that an increase in the supply of… available rooms in the houses is a cause for concern.”

However, the president of the hotel association of São Paulo, the capital of the country located in the largest state of Brazil, said he had filed official complaints against sites like Airbnb with the country’s prosecution.

“Renting homes like this is illegal, and those who do so should be fined or sanctioned,” said regional president Bruno Omori. “We oppose any illegal action, and this one in particular means tax evasion.”

Gessner countered that his company’s activities are completely legal in Brazil.

“There are specific laws that support us. Everyone is allowed to have people in their homes for 30 days, ”he said.

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Times writer Riley Snyder contributed to this report.

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