Airbnb is almost operating in all the countries in the world except Iran and North Korea. Since the CEO, Brian Chesky, stated that they want to expand into Iran when the conditions permit, we are going to explore the challenges they might be facing entering Iran.
Airbnb is almost active in every country. There are 195 countries in the world if you don’t count Taiwan, and Airbnb is operating in 191+ countries, cities 34,000+, castles 1,400+ and has 2,000,000+ listings worldwide. The countries that they are active in is nearly more than twice the number of Uber’s.
So what’s Airbnb?
Basically, Airbnb is peer-to-peer accommodation marketplace that connects hosts (it might be air beds and shared spaces to a variety of properties including an entire home and apartment, private rooms, castles, boats, manors, tree houses, tipis, igloos, private islands and other properties) to travelers via its platform.
They provide a payment system for the hosts and travelers too and they would charge a service fee without owning any properties. The company is making money by a 6% to 12% commission of the guest payment and 3% of what the host receives (3% from each guest booking for credit card processing).
The security of the travelers or the hosts is not always checked by Airbnb but rather left to travelers by reading the reviews that other travelers left for the hosts on the website. The company does not own any properties as mentioned before, they just need to register more hosts and travelers for expanding the business.
About the origin of the Airbnb name, the name was Airbedandbreakfast. A bed and breakfast (typically shortened to B&B but also spelled BnB in Internet usage) is a small lodging establishment that offers overnight accommodation and inclusive breakfast. And the ‘air’ comes from the fact that at first they made their living room into a bed and breakfast, accommodating three guests on air mattresses and providing homemade breakfast.
Iran and its visitors
Iran is one of the oldest countries in the world with over 4 thousand years history. The culture, artifacts and historical places have been mesmerizing the tourists for many years. We have full four season experience in the country, you can visit deserts, mountains, seas, jungles and basically every kind of natural texture and as you might guess the people living in different areas of Iran have various cultures, dialects, religions and local history.
That being said still many people who are visiting Iran have a different perspective about Iran before and after coming to the country. Even many people that have visited us so far mentioned that they were afraid (especially their families) and didn’t expect what they have experienced here. But after one visit their whole idea about Iran changed massively due to the fact that it was nothing similar to what the western media are describing of the country.
The country is so safe that even with the fact that all the neighbouring countries are dealing with their security and terrorist attacks, Iran is handling its security so well that we haven’t had any kind of terrorist attacks in the recent years. Each person that has come to Iran brought many people back to the country, so we might be seeing Iran on the list of a place-to-go for backpacking and tourist destination in years to come.
Airbnb and its challenges for entering Iran
The first and most obvious problem facing Airbnb entering Iran is the payment system. Currently, there are no payment solutions for the company to be functional in Iran, without a method of online international payment there is no revenue. While 30 million guests who reserved a place through Airbnb in 2015 paid the company in 32 different currencies and Airbnb paid out to hosts in a total of 65 currencies, there is no initiative for Iran, even in US dollars nevertheless in Rial. So at first there should be a payment in dollars at least and then they should implement the payment in Rial, mostly because most of the places that travelers want to go are in rural areas and they won’t open an international account even if they could right now.
It can actually help the country a lot. People in the rural areas can use the side income and it can move the economy forward. Even a local equivalent of Airbnb for domestic use can help everyone whether if it’s for the budget-conscious travelers inside the country or for the hosts. Right now there is no such service for even domestic use. The only thing close to Airbnb is OrientStay which we covered the news few months back and it’s only for foreigners and Iranians can’t use the service. The good thing about OrientStay is that they provide an international payment method for their customers outside of Iran.
There are many issues regarding the local governments and state regulators. First is that the government wants to track the foreigners coming into Iran for the safety and security of course. There is not enough manpower to track and provide the security of travelers in rural areas and keep in mind that Iran is a vast country. Currently, there is no solution for overcoming the challenges in this regard.
Regarding the regulations, there is no law that could legalize renting a place in a short term or in an Airbnb-style. Even the people coming to Iran are having a hard time finding a place to rent [from a landlord] for a short period of time because mainly it’s not common to rent a place even for a month. And I’m not even talking about tenants who are renting a place and want to do Airbnb. That scenario is almost a different story and it’s not even legal. And even if it was legal it would have complicated the landlord and tenants relationships. Talking about taxes, people who want to rent their place for a short period of time should pay taxes, and there is no law governing the tax side for this matter.
Influx of travellers
As many countries that are dealing with an influx of travelers, Iran would be facing this problem too because of its high potential of becoming a tourist destination. Imagine in perspective to the past, many tourists and backpackers coming to Iran, what would happen? They would probably disturb the neighborhoods, change the culture and the way of life in those destinations. Nevertheless that those neighborhoods are not ready to accept that many tourists.
Also, the influx of tourists might increase rents and causing housing shortages as Airbnb caused Berlin these kinds of problems. Housing prices, supply and neighborhood quality of life are other issues that might cause trouble in Iran as well.
People are using Airbnb because of the real experience that they have using the platform. Most of the people in rural areas can’t talk in English, most of the contents about the neighborhoods are not written down and it’s not even on the internet. Maybe we have some contents on the web that are location based but yet it’s not in English. It would be a good business for Iranian startups to work on the location-based user generated contents. We have some startups in this sector such as Hamgardi but we still need more activity in the tourism sector.
As renting a room or bed from a household who is living in the same house is not common in Iran, training them to offer required services might be tricky. Customer service is bad in Iran even in many hotels and training normal people for the required services is a big challenge, as they won’t do it easily by reading the terms of the agreement.
Hotel and hospitality associations
It’s a fact that in every part of the world, hotel associations wouldn’t stand still and see Airbnb coming in to disturb their business. Same as the other parts of the world, hotel associations in Iran have their lobby in here and they won’t easily give up their perfect market. They will stand against issuing the licenses for the households to host the travelers. If somehow Airbnb could enter Iran this might shake them to offer better services and lower their prices as competition is always good for the customers.
We know that Airbnb wouldn’t make any move for the time being to enter the Iranian market, but these articles might help other businesses to get an overview of the situation and at least take the first steps towards preparing and launching similar businesses in Iran.