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Airbnb reputation takes a hit from prostitution scandal.

Summary: In this day and age, any business, from the smallest startup to the largest multinational, needs to be aware of its reputation. Too much bad ...

In this day and age, any business, from the smallest startup to the largest multinational, needs to be aware of its reputation. Too much bad press can damage a brand beyond repair, and if a business gets associated with illicit behavior in the public conscience, it can be difficult to shake that seedy reputation. This paradigm is true for all kinds of behavior, from corporate corruption to shoddy workmanship. But when a brand becomes linked to, say, prostitution, well, you can expect your reputation to take a major hit.

This is the issue facing Airbnb Inc., a website that allows people to rent out lodging, including apartments, castles, boats, tipis, igloos and more to others. The business was founded in 2008 and has received several rounds of venture funding, raising hundreds of millions of dollars from investors such as Ashton Kutcher.

But a recent rash of bad publicity has tarnished the company's reputation. Apparently, individuals are not exclusively using the service to obtain lodging for vacations, parties or business meetings. Well, unless "business meeting" is a euphemism for exchanging money for sex, because prostitutes have been availing themselves of the service to obtain locations for their own brand of business.

The New York Post recently published an article that featured quotes from anonymous prostitutes who found advantages to using Airbnb's services, as opposed to getting a hotel room. The Post also covered an orgy that was recently conducted in an apartment rented via Airbnb.

With this type of publicity, Airbnb is bound to take a reputational hit. In an era when companies are striving to prove that they are beacons of ethical behavior, having a brand associated with hookers is certain to drive customers away. Either Airbnb has to find a way to address this problem (which, in addition to being an issue of reputation, also carries criminal risks) or a way to rebrand and embrace the seedier side of its business model while remaining within the boundaries of the law. Either way, it has an uphill battle on its hands.

For more on ethics and reputation, check out the following:

Whistling an ethical tune

Top automakers release new supply chain standards

Women may dominate the compliance officer field, but it should lead to other corporate opportunities

Dealing with misbehavior in the C-Suite, part 2

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Publication:Inside Counsel
Date:Apr 17, 2014
Words:427
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