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People from all over the world book Airbnbs in Ukraine to help those in need. Will it work?

By on March 11, 2022 0

Over the past few weeks, thousands of people around the world have taken to Airbnb to book more than 60,000 nights at properties in Ukraine. Almost all of these future Airbnb guests weren’t considering a wartime vacation, but instead used the popular accommodation booking service as a money-transfer mechanism.

This method of philanthropy seems to have been born and developed on social networks from March 2, 2022, when a Twitter user shared the idea of ​​supporting Ukrainians by booking rooms on Airbnb as “means of sending immediate monetary aid to people in hard-hit areas.”

Essentially, people use Airbnb as a simple money transfer system – a mechanism commonly used generally in national contexts to send money directly to people in need and which has proven to be a type of help. very effective in helping people move around. lifting people out of poverty, helping people get needed medical care, and more, like in the case of GiveDirectly’s unconditional money transfer in Kenya.

As thousands of people around the world turn to Airbnb in their efforts to help Ukrainians during this difficult time, we wanted to explore a few precautions and what to watch out for about this innovative application of an insurance strategy. used aid for a long time.

Will money from Airbnb bookings help Ukrainians?

It depends.

Cash will only help if there is something to buy. Reports from Ukraine revealed major supply shortages, ranging from food to medicine to electricity.

And there is an important open question whether pumping more money into a war economy could make this situation worse. With supply limits, the extra money in the hands of a small group of people (Airbnb hosts) can drive inflation and simply drive up the prices of basic necessities for everyone, making it worse. still a bad economic situation.

Will the money go to the right people?

May be.

While many Airbnb buyers are aware of giving to independent hosts versus management companies that may be located outside of Ukraine (usually discerned by their name and the number of listings they hold), Airbnb hosts in Ukraine still have a lot in common with each other.

The hosts are generally wealthier and predominantly urban (they own or rent accommodation where foreigners wish to stay). Thus, most of the money transferred through Airbnb will go to the highest earners in Ukraine. While many hosts have responded to their bookings, letting them know they’ll donate the money on the pitch to others in need, there’s no way to tell if that’s actually the case.

Will the money go to the wrong people?

Probably not, but it could.

There are very few channels to send direct cash assistance, especially in crisis contexts like Ukraine, and for good reason: it is very expensive to do on-the-ground due diligence on recipients money. For hosts with listings prior to the invasion, Airbnb presumably did some form of due diligence. However, it would be reasonable for Airbnb to prohibit the registration of new hosts in Ukraine – to prevent potentially malicious actors (e.g. Russian war profiteers or just scammers from anywhere) from receiving money via this donation channel.

Additionally, Airbnb may perform host identity verification, but this is not a safeguard for banks against fake profiles. However, after Airbnb transfers the funds to hosts, the local banks of the new hosts may need more assurance on the identity of the person to release the funds in accordance with banks’ due diligence obligations, adding a layer additional verification.

Does anyone profit from these cash transfers?

Probably.

One of the concerns with using Airbnb to transfer funds is the fees that Airbnb puts in place. Airbnb and platforms like it are rent seekers and take advantage of users who come to their platforms for money-making opportunities.

Notably, on March 3, 2022, Airbnb announced that it would be waiving host and guest fees for bookings in Ukraine. But even if Airbnb is waiving its fees, it’s unclear whether their hosts’ local banks would do the same for international wire transfers or charge Ukrainian recipients a fee to collect the funds.

There is definitely a need for assistance and people all over the world want to help. Airbnb serves as a sort of hipper Western Union without the checkout counters and bright yellow lettering. If we assume that the host identities are real, then we have an individual international money transfer mechanism that is fast, extremely innovative, and quite similar to the GoFundMe campaigns we see in the United States.

This innovation demonstrates what global development experts have been insisting for years: strict global standards to control the flow of illicit funds have a deleterious effect on the real needs of developing countries. In the case of Ukraine, there are very few channels beyond traditional aid agencies where individuals can send money to those affected, and there is a need to provide them with more innovative options to do so. . Airbnb fulfills this “digital compassionate space”, albeit in ways we hadn’t imagined before.

*CGD blog posts reflect the views of the authors, drawing on previous research and experience in their areas of expertise. The CGD is a non-partisan and independent organization and does not take institutional positions.

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