US: Short-term rental and aparthotel hospitality brand, Domio, has been accused of allegedly violating Airbnb’s trust and safety standards, which have prompted Airbnb to suspend the startup’s host accounts and listings for the foreseeable future.
The alleged malpractice was reported by digital media company The Information, which is believed to have uncovered a sequence of possible shoddy business practices, such as fake host names and misleading Airbnb accounts, following interviews with more than 20 current and former members of staff, as well as a review of court records.
The article read: “Domio has a history of questionable business practices, which helped it flout short-term rental laws in cities around the country. Those practices include the listing of rental properties using a network of misleading Airbnb host accounts—some featuring fake names and stock photographs—which made it harder to tie them to Domio.”
Airbnb acted by banning Domio’s host accounts and listings, effective immediately and in place indefinitely.
A spokesperson for Airbnb told Skift: “We have indefinitely suspended all of Domio’s associated host accounts and listings as we expand our investigation into their activity dating back to 2016. We will not hesitate to take aggressive action to remove suspicious content from our platform and, depending on the outcome of our investigation, we will determine the appropriate long-term action to take against these accounts.”
New York-based Domio, which designs then rents out aparthotels and furnished apartments on a short-term basis, has progressively pivoted away from a master lease model towards franchising. In October, it was expected to open the first brand managed project that it is not directly leasing, in Tulum, which would also be its first international property,
Speaking about the pivot in an interview with Forbes in June, CEO and co-founder, Jay Roberts, said: “It’s very capital intensive to lease ourselves. This is more asset light and we collect a fee. You get higher valuation doing management franchising and it’s a higher return on investment.”
Prior to that, Domio raised $100 million in December to expand its business in the United States and into 25 global markets by the end of 2020.
The Series B funding included $50 million in equity and $50 million in debt and was led by GGV Capital, with participation from Eldridge Industries, 3L Capital, Tribeca Venture Partners, SoftBank NY, Tenaya Capital and Upper90.
The loss of Airbnb as a distribution platform for its urban inventory represents a significant blow to Domio. The startup relies on indirect as well as direct bookings, but the news may persuade other OTAs, including the likes of Booking.com and Expedia, to pursue their own investigations into the matter.
On top of that, Domio will not be able to take on new reservations while the investigation is still ongoing. Airbnb lists its trust and safety community standards on its website and takes issues of such nature very seriously, so a violation of said standards could lead to a permanent ban if the allegations are proven.
When contacted by ShortTermRentalz for comment, Domio responded in a statement: “Domio was founded to inspire travel and to connect people through delightful stays. Built on a foundation of respect, innovation and collaboration, the company is committed to working collaboratively with local governments to provide safe and secure housing, and to comply with applicable local ordinances.
“We are actively working with Airbnb to resolve any potential issues and consider them a trusted partner,” it added.