Get a Room! How Airbnb Is Changing the Hotel Industry

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Aug. 18 (Bloomberg) -- NYU's Arun Sundararajan and Bloomberg's Cory Johnson explain how Airbnb is transforming the hotel industry and the challenges it faces. They speak with Matt Miller on "Street Smart." (Source: Bloomberg)

A lot of people who are renting their places on airbnb are not legally able to do it and are not claim a income after that.

What do you think about the legality of this business?

I think if you look forward a few years, that new model, sort of creating new mixed-use real estate and that being the foundation of a lot of accommodations, it will be pretty mainstream, and the laws will have caught up with the technology.

So it will be in contracts, if i rent an apartment at 85th and columbus, there will be a part of it that i can do airbnb for at least a few days or a week or something?

I think it would be segmented into apartment buildings that advertise themselves as being airbnb free, and others where they encourage airbnb.

It will be based on what kind of living experience you want and what kind of income generating potential you want.

An incredibly expensive place to live, as is san francisco, and one of equal things i have learned about young professionals in this city is that they are now able to supplement their rent.

They are able to get their own apartment because they can use this, so it is really exciting for people as far as supplemental income.

New york is a very strange place.

New york university is a very strange place, and i am an alumni of both.

We have plenty of weird here.

But i think one of the ways that airbnb looks that this is a look at this as regional problems that they can take on one at a time.

They look at it as easy legislatively than say a federal issue.

If you are going to go to the finger lakes or lake tahoe, there will be some of those restrictions, so they will be able to grow their business.

It is such a fascinating business on so many levels.

Or get whether or not it is successful.

For anyone in any industry to imagine what sharing can mean, it kind of blows the mind.

Directly inspired by airbnb.

Unconstrained by the limits of capital and real estate.

It is an amazing thing and having a dramatic effect on all of the hotel industry.

It is fascinating, and uber sprung up after this, but you had a slew of competitors in the market.

I cannot think of anybody else who does what airbnb does.

Fundamentally, airbnb is much more of a network business.

If all of the cabbies in new york started their own ridesharing platform, a lot would do it.

And they should.

I have been encouraging it.

I am all for the taxicab driver, as well.

And this is far less than a strange place now.

So uber is sort of defending its business model largely based on technology.

Airbnb, they have a footprint in like 190 countries, and it is going to be really hard for someone to compete with them because you're not looking for accommodation in one city.

You are looking for as much variety as possible.

At airbnb, i can set my rates, however i like to set them, whereas uber can change the rates, regardless of what the drivers want.

And you have got the technological advantages.

You have got the economies of scale that our software like, as i described, and you have the marketplace, where the more offerings they have, the more offerings will come to them, like the new york stock exchange, like a nasdaq, like an ebay.

All right, we are out of time, but we can continue this discussion next time you are here.

Thank you for joining us.

This text has been automatically generated. It may not be 100% accurate.

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