A $500m Olympics deal for Airbnb before their initial public offering (IPO) in 2020 is welcome news for potential investors. The nine-year deal is an astute partnership which will boost the Airbnb image. However, it is not without problems.
The deal is supposed to benefit event organizers and stakeholders within host cities. This is because the availability of Airbnb accommodation reduces the need for considerable investment in new construction projects.
The potential of this partnership was too enticing for Airbnb to overlook. Executives decided the Olympic Games offers a competitive advantage for the company which operates in major cities across the world.
Deal will help to distance Airbnb from bad publicity
In recent times, the Airbnb brand has been associated with negative, high profile incidents which have been widely publicized.
However, joining a high profile corporate list organized by the International Olympic Committee, may be a strategy from Airbnb that can distance the brand from negative exposure. The list includes Coca-Cola, Alibaba and Toyota and it is part of the IOC “worldwide sponsorship programme”.
The partnership will help align the company with its original ethos, focusing on sustainability and social inclusion.
Airbnb and Olympic legacy may lead to future issues
It is likely that this partnership will have a short-term, positive impact by reducing the cost of the Olympics for host cities. However, the long-term impact could prove to be negative.
This summer local authorities in ten European cities stated more help is required from the European Union in a widespread battle against rental sites such as Airbnb. The firm is accused of locking local residents out of housing markets by causing price inflation. They are also unpopular with hoteliers who view them as rivals.
One of these cities, Paris, is hosting the games in 2024. The French capital has been locked in several legal battles with Airbnb. For example, Anne Hidalgo, the mayor of Paris, demanded that Airbnb pay EUR12.5m in fines for allowing owners to rent properties without registering doing so.
The determination to tighten up rules regarding Airbnb, combined with the reliance the Olympic committee now places on Airbnb for accommodation, may lead to further disputes in the future.
This disagreement may be replicated by governments in other host cities that have a negative perception of Airbnb.