By Anit Mukherjee and Alan Gelb
Over the past few weeks, thousands of people across the world took to Airbnb to book more than 60,000 nights at properties in Ukraine. Nearly all of these Airbnb would-be-guests weren’t considering wartime vacations, but instead were using the popular accommodation booking service as a cash transfer mechanism.
This method of philanthropy appears to have originated and gained steam on social media starting on March 2, 2022 when a Twitter user shared the idea to support Ukrainians by booking rooms on Airbnb as a “way to send immediate monetary assistance to people in hard-hit areas.”
In essence, people are using Airbnb as a simple cash transfer system – a mechanism that is commonly used typically in domestic settings to get cash directly to people who need it and one that has been proven as a very effective type of aid to help lift people out of poverty, help people get necessary medical care, and more, as in the case of GiveDirectly’s unconditional cash transfer in Kenya.
As thousands of people around the globe turn to Airbnb in their efforts to aid Ukranians during this difficult time, we wanted to explore a few cautions and what to watch about this innovative application of a long-used aid strategy.
Will Cash from Airbnb Bookings Help Ukrainians?
Cash will only help if there’s something to buy. Reports from Ukraine have exposed major supply shortages from food to medicine to electricity.
And there is an important open question about whether pumping more cash into a war economy might make this situation worse. With limits to supply, the extra cash in the hands of a small group of people (Airbnb hosts) may generate inflation and simply drive up prices of necessities for everyone making a bad economic situation even worse.
Will the Money Go to the Right People?
While many of the Airbnb bookers are cognizant about giving to independent hosts versus management companies that may be located outside of Ukraine (typically discerned by their name and the number of listings they hold), Airbnb hosts in Ukraine still have a lot in common with each other.
Hosts are typically richer and predominantly urban (they own or rent places where foreigners want to stay). Thus, most of the money transferred through Airbnb will go to Ukraine’s top earners. While many of the hosts have gotten back to their bookers, letting them know they will be donating the money on the ground to others in need, there is no way to know if this is actually the case.
Will the Money go to the Wrong People?
Probably not, but it could.
There are very few channels for sending direct cash assistance especially in crisis contexts like Ukraine, and it’s for good reason: it is very costly to do on-the-ground due diligence on the recipients of the money. For hosts with listings prior to the invasion, Airbnb has presumably done some form of due diligence. However, it would be reasonable for Airbnb to bar new host registrations in Ukraine – to prevent potentially bad actors (e.g. Russian war profiteers or simply scammers from anywhere) from receiving cash through this donation channel.
Also, Airbnb might do a host ID check, but that is no guarantee for banks against fake profiles. However, after Airbnb transfers the funds to hosts, new hosts’ local banks might need more assurance on the person’s identity to release the funds per banks’ due diligence obligations, adding an extra layer of verification.
Is Anyone Making a Profit Off These Cash Transfers?
One concern with using Airbnb to transfer funds is the charges that Airbnb puts in place. Airbnb and platforms like it are rent-seekers and profit from users who come to their platforms for money-making opportunities.
Notably, on March 3, 2022 Airbnb announced that it would waive charges for hosts and guests for bookings in Ukraine. But even if Airbnb waives its fees, it’s unclear whether their hosts’ local banks would do the same for international wire transfers or if they’d charge Ukrainian recipients a fee to collect the funds.
There is definitely a need for assistance and people across the globe want to help. Airbnb is serving as a sort of hipper Western Union without the cash windows and bright yellow letters. If we assume that the identities of hosts are real, then we have a one-to-one international remittance mechanism that is quick, extremely innovative, and quite similar to GoFundMe campaigns that we see in the U.S.
This innovation demonstrates what global development experts have been stressing for years: stringent global norms to check the flow of illicit funds are having a deleterious effect on the genuine needs of developing countries. In Ukraine’s case, there are very few channels beyond traditional aid agencies where individuals can send money to affected people, and there is a need for more innovative options for them to do so. Airbnb is filling this “digital compassion space,” albeit in a way that we did not imagine before.