Airbnb (see my previous article on Airbnb for a description of the business) creates a new revenue layer in real estate that supplements cash flow for property owners (and even renters).  Yes, vacation rental sites like HomeAway and VRBO have established rental classifieds system but they operate as advertising media and require upfront annual subscription fees of $300+ to participate. Airbnb lowers the barrier to entry for renters by charging no upfront fees. Lowering the cost of property listing to zero markedly increases the number of listings, and according to Airbnb, they are adding 1,000 new listings per month. In addition, Airbnb is building a comprehensive social reputation system that the classifieds systems lack.

With its new VC investment in the works valuing the company in the $1bn range, Airbnb is poised to become the poster child for social travel in the same way Groupon defined social commerce last year (recall Groupon made its mark with a $1.35bn valuation round in April 2010). Both Airbnb and Groupon are disrupting traditional models simply by adding a new revenue layer on the hospitality and local advertising markets respectively. Both have in essence created “exchanges” that in Groupon’s case has become widely adopted, and in Airbnb’s case will soon reach a tipping point when it will become a destination rental resource.

The new revenue layer that Airbnb has exposed isn’t obvious yet – it’s real estate. Anybody, even a renter, can now create a business model based on space rental. This works most efficiently in cities and areas with high tourist or traveler demand – New York City, San Francisco, resorts and college towns. The Airbnb “exchange” makes it simple for listers to price their offering to ensure high occupancy rates.

Property managers and real estate investors should be looking at opportunities to invest into depressed second home markets in Florida, California and coastal resorts. $400,000 can buy an upper end Lake Tahoe 3BR home to create a virtual bed and breakfast.

If the bedrooms are rented out to skiers / nature lovers at an average of $50 per room per night, or the whole home at $150 per night (and these are well below market prices for Tahoe), 50% occupancy would gross about $2,250 (15 nights x $150). With Airbnb and other exchange-based social travel systems that will evolve on Airbnb’s coattails, ensuring high occupancy will nothing more than tinkering with pricing. New kinds of “hotels” can be developed by listing unique properties in various locations within a region.

In conclusion, Airbnb creates real estate liquidity, a completely new concept in commercial real estate. It can potentially usurp traditional leasing models because 1) Exchanges enable transactions to happen instantly, much more efficient than posting classifieds and processing responses, and 2) Daily rate rentals almost always create more revenue than monthly rents; up to now there’s never been a way to ensure occupancy without a lease.

Related: Social travel – how Airbnb changes hospitality, even real estate

Airbnb, according to Techcrunch and others, is planning a mega-round raise at a $1 billion+ valuation, and validated social travel in one swoop. It redefines what a “hotel room” is, even one year ago the only viable short term rental space for the masses. Airbnb allows anybody to rent out living space – a refurbished basement, an in-law, or even a guest room – and relies on a social reputation system of references, reviews and personal connections to ensure both renter and host are reliable and trustworthy. It opens up a brand new segment of the hospitality industry that will inevitably grow and expand the supply of short term (and eventually long term) rental inventory.

Before Airbnb, the owner of a rentable space could realistically only offer monthly leases, and deal with the contractual legalities and problems of landlord tenant issues that may come with it. Airbnb creates a branded exchange for property rental that solves the arduous process of finding reliable tenants, up to now the province of Craigslist and classifieds. Now rental can be accomplished piecemeal, almost always at a better daily rate than what could potentially be received from monthly tenancy. Rental inventory increases because any space, even a guest room in an apartment, can become a virtual hotel room.

AirBnB opens up revenue opportunities for commercial property owners/managers that have rentable property but up to now did not have the distribution opportunities of an exchange to attract short term tenancy. Vacant properties and developments in overbuilt tourist areas in, say, Florida and California can be converted to rental property, even ad hoc bed and breakfasts quickly. For example, I’ve proven that I can easily rent out my previously difficult to rent no-kitchen in-law space in San Francisco for $70 per night, for potential monthly revenues of $2,000. At $70, it’s half the price of a three-star hotel room, and next to Golden Gate Park, where there are few hotels. This changes “cap rates” by augmenting revenue streams, particularly in cities and areas with high tourist or traveler demand, like resorts and college towns. Property managers can source more revenue for their clients simply by managing rental inventory on Airbnb, and charging commissions to do so. Expect new affiliate businesses – property management applications, Airbnb profile designers, local cleaning and other hospitality services – to serve a new virtual hotel room industry.

Finally, Airbnb socializes travel. The attraction and comfort of staying in the homes of friends and acquaintances becomes easier to accomplish when applied across Facebook’s social graph. Last month, Airbnb introduced Social Connections, a social discovery application that basically identifies friends of friends for rental and home stay. Airbnb is an aiming for the tipping point of adoption when travelers, both business and pleasure, can find like-minded people through their social networks at every “port of call”.

Related:  Quora – is Airbnb’s valuation ridiculous?

Groupon-like deals can work for real estate, but not as a typical $10 for $20 worth of product purchase. Real estate can’t be sold as a 30% off purchase price item (although they certainly tried variations of this at California real estate investment clubs in 2005). Real estate marketing has generally relied on variations of online lead generation, like providing real estate listings, in order to capture contact information. A real estate Groupon would essentially have the same mission of driving the active client out of the woodwork by providing a saving incentive.

Real estate marketing and the need to draw active clients out of the woodwork

The real estate industry is a peculiar local business for couponing because real estate transactions are solitary, even once in a lifetime events, compared to every day activities like eating out. In a nutshell, real estate marketing has been based on community networking and leveraging referrals to build Realtor brand recognition. The big hurdle is building community visibility to achieve that branding. Marketing then became a shotgun numbers game that spawned the traditional pushy  techniques that make consumers cringe. To avoid this spam stream, active home buyers and sellers now try to control who can contact them, and it makes them harder to find.

What will a Groupon for real estate look like?

One major coupon difference is that a consumer can’t assess the market value of a real estate service like a restaurant coupon. Couponing real estate services will likely require either pre-transaction interaction (“feel free to call me to discuss the details before you purchase the coupon”), and/or lead qualification processing.

I see two consumer models for real estate coupon services: 1) Nominal consumer payment upfront for redemption rights of a discounted service, and 2) No consumer payment upfront, but registered leads are qualified by the Realtor, chosen and purchased from the coupon provider. We’re using some examples below from Housetipper.com, one of the first coupon services for real estate.

1) Payment for discounted services model

from Housetipper.com

At first blush, the $25 purchase fee in this ad acts like an option that locks the 4% commission offer for a specified window, say one year. However, no consumer would purchase this kind of offer without due diligence of both the Realty and their standard pricing policy (maybe they always charge 4% commission rate). The deal terms will add language to solicit the potential buyer to “contact” them with details, or to join an on-site discussion thread.

This offer works because it accomplishes two things a Realtor wants: 1) pulls a potential client into a conversation, and 2) qualified client commitment when they actually pay $25.

The business concept works because the Realtor receives leads with no out of pocket fees, and the deals provider receives the full fee revenue from the consumer. However, the business model will be inherently limited due to the small number of coupons that can be sold in a locality (more on this later).

2) Free but transparent lead generation model

The coupon purchase price may dissuade many potential clients from inquiry if they have to actually pay. One way to bring more leads to the table would be to create a free offer, say, a free home inspection if a client signs a listing agreement (note the fine print can cover the Realtor’s out of pocket risk by stipulating that the rebate for home inspection be paid at closing). More potential clients will sign up for the deal without financial commitment.

The transparent lead generation system is a new concept in delivering leads. Once a lead registers, their name, email address and phone #, and if applicable, their social media profiles like Linkedin are presented to the Realtor. The Realtor can choose to either green light or red light the lead, and will pay a specified green light fee, like $25, to activate contact.

The traditional intermediary based lead generation systems that harvest email addresses from website inquiries and sold blind in bulk, are generally stale and poor quality; a 3% hit rate is doing well. Transparent lead generation systems reveal potential clients to due diligence and assure qualification, even to the point of Realtor contact with the lead before green lighting. Coupon providers can work on an honor system because any Realtor who would try to side deal with a client to avoid paying a fee would make an immediate unethical impression.

Final hurdle – distribution and scale

The biggest hurdle with real estate couponing is building an effective subscriber base for deals.

1) In today’s economy, the number of people in the market for real estate is small

2) Subscribers only subscribe when they are in the market, a very short window. And how will they find the real estate coupon, when limited deal revenue won’t support supplemental marketing campaigns?

3) Real estate is inherently local, the coupon provider can’t market locally in every city (unless they are Groupon) so the marketing effort will fall on the Realtor and local media. This is a lot of resource coordination, and Realtor “sharing” the deal through Facebook won’t likely tip a deal into significant numbers.

Solution to Scale

Coupon providers will need to augment their distribution through affiliate relationships. For example, deal syndication networks can be developed with real estate listings sites like Trulia or Zillow, brokerages, and hyperlocal networks like Patch and the Breaking News Network that can distribute deals locally. Scaling will require a coupon provider to collect in aggregate enough small fees (much smaller than traditional Groupon yields) to cover centralized operating expenses. Building national client offerings from housing related retailers like Home Depot will also support scale.

Based on my work with the real estate industry, I see enthusiastic demand for real estate Groupons from Realtors, as well as mortgage brokers, insurance and other real estate related services. And why not? Realtors will try any free or cheap marketing opportunities that enhance their lead quality.

Real estate brokers and agents are an identifiable categorical group in the social media, everybody recognizes their presence talking shop or chatting up the local community. The industry’s relationship with the Internet has historically been mercenary; the principal reason for online presence, whether with a website in 2001, a blog in 2007 or a Facebook page in 2009, is lead generation.

Examine the broker/agent’s marketing mindset. Their commercial mission is to stay “top of mind” to literally tens of thousands of people in their focus community on the off-chance one of them makes the decision to buy or sell a home. Pre-Internet, they did this with post cards; pre-social media, they drip email marketed their community to death, and always asked for referrals. The business has always been perceived as a numbers game based on how wide that network net was cast.

No wonder the real estate industry leads all other businesses (except tech and porn) in the adoption of new ways to expand online presence. The early adopters in real estate are hyper-practical and they figure out what works long before the social media pundits can see the utility. Every real estate social media conference I’ve attended has much richer content than the talking heads at typical tech conferences. Most of my colleagues in real estate will concur.

The paradox is everybody believes the real estate industry are slow adopters, and always describe it metaphorically as the classic aircraft carrier. This is also true. Most real estate agents are slow adopters (say, 95%) because they believe that their job is selling, not wasting time chatting online. They ask questions like “give me one example where somebody got a lead from Twitter”.

Real estate agents are slow to react because they are conservative, only acting on the fear of losing competitive advantage. With literally hundreds of competitors in a zip code, they need that advantage. So the aircraft carrier analogy is apt because the agent community will all react at once. When agents see their competition on Twitter and Facebook, they are obliged to follow until eventually the tipping point is reached when the paradigm of using social media as a marketing tool becomes the norm.

At today’s REBarCamp Silicon Valley, one of many social media barcamp venues focusing on real estate, the majority of the attendees were new to the BarCamp concept. Previous REBarCamps from even last spring were collegial affairs, with all the early adopters knowing each other intimately. Today, the newcomers were there… and that signals the tipping point has been reached. It also signals a kinder industry who are using (and being trained to use) social media to attract clients as opposed to spamming them with unwanted emails and new listings.

This slideshow is a presentation we’ll be making for the California Association of Realtors next month. Marketing local business services like real estate to a community is changing. Pushing to a community via drip email marketing and shopping cart advertisements is time consuming and frankly more intrusive to the recipient than broadcasting the same information out as a media channel. What’s the difference in positioning? Media channels are in a much better position to provide favors and opportunities by virtue of their being a hub in their community. This in return attracts business. It’s the subtle difference between pushing your name out there and pulling in people who share business interests with you.

In his updates from the CUNY New Business Models for News forum in Aspen, Jeff Jarvis discusses how a Salt Lake City newspaper acquired a real estate agency in order to sell houses as an alternative commercial venture.

Also here at Aspen, I was amazed and impressed to hear newspaper owner Dean Singleton tell some of us that his Salt Lake City paper has bought a realty agency and will list homes for a flat fee of a few thousand. Yes, the paper undercuts other agencies’ listings businesss. But, hey, the agencies have pretty much abandoned newspapers and newspapers still have readers and the ability to market homes in print and online. In Salt Lake’s case, the paper will send buyers – rather than sellers – to agencies that advertise.

When I worked in the newspaper industry way back at the start of the consumer web, I tried to convince papers to just this: to get into the real estate business to get homes into the listings and to get access to listings data. I thought I was going to be killed. But I believe that this was an inevitability.

Singleton’s move is the ecommerce strategy we presented in our models made substantial and real. We talked with the Telegraph’s Edward Roussel about their sales of wine, hangers, and hats. Selling homes is certainly bigger ticket. It monetizes the relationship papers have with readers in a new and smart way.

With the Breaking News Media Network, real estate brokerages and agents are using the same strategy, only opposite that of the media companies. They are building Breaking News city sites like Chico Breaking News in order to develop their community media presence as a branding vehicle. Note that the real estate participants in the Breaking News Network adhere to the idea that the sites are community services, so with a few exceptions, it’s almost impossible to see that a real estate brokerage or agent is behind them. Yet, their presence is always there because they are communicating with the community through the site. This is the new wave of marketing that real estate is beginning to adopt to attract the community for business rather than spam them to death with drip marketing techniques.

(tx h/t Tom Royce)

We see Twitter positioning itself as a local advertising platform: it’s simple to use, requires little time commitment to Tweet, and free. Here’s a guide for local merchants on how to use Twitter to reach their local audience:

1) How different local merchants should use Twitter

2) How to build a local Twitter consumer community around you

3) How to survey for business opportunities

4) How to make your Twitter campaign more efficient

1) Services

Walk in / appointment based services: Barbers, beauticians, spas, nail salons, auto maintenance / lube,

Tweet schedule openings for the day. Offer daily special and coupons.

Examples: @truemassage, @polishednails

Articles: Putting Twitter’s world to use

Medical / health services: Optometrists, dentists, chiropractors, doctors

Create a professional profile befitting your standing in the community. Discuss the tools and trends of your practice. Demystify.

Examples: @scottgreenhalgh (Cosmetic dentistry), @evansclinic

Professional services: Accountants, attorneys, financial planners

The problem with arcane professions like the law and accounting is the “boring” factor. Twitter should be used to connect with the community for branding purposes. Become a “business calendar”; accountants can broadcast changes in tax codes and alert important filing dates.

Examples: @cordellparvin, @kanoisandeep (Tax guru)

Articles: Attorney marketing on Twitter. Valuable or waste of time?

Transaction based services: Real estate, mortgages, travel agencies, recruiters

Transaction based service providers suffer from a spammy reputation because it’s easy to incessantly tweet out home listings, job posts or travel deals. The focus should be on providing information and data relevant and interesting to, say a prospective home buyer, by talking about communities or market conditions. Interacting like a “real” person is paramount to establishing a welcome identity as a hub, not a spammer, in the community.

Examples: @mortgagereports, @scottkato

Arts and entertainment services: Night clubs, events organizers, symphonies

Tweet schedule of events and shows, offer quizzes, advertise discounted tickets, create contests – give away two free tickets to a local follower

Examples: @yoshisjazz @sanfransymphony

(note: arts groups should design great backgrounds!)

Articles: Cultural groups tap social networking

Hospitality: Restaurants, hotels, taco trucks, street food vendors

Tweet the day’s lunch menu @ 11am, and dinner menu @ 1 pm, 4pm. Link to recipes. Offer coupon code.

Examples: @divinopiazza, @kogibbq, @nakedpizza

Articles: Naked Pizza erects Twitter billboard, List of street food vendors using Twitter

Retail

Advertise your deals of the day, weekend sales, etc. Your Twitter feed’s timeline chronicles what your store offers so consumers will use this as a consumer and comparison shopping resource. Consumers may use Twitter to ask questions in lieu of a phone call because it’s more efficient. Be sure to intersperse deals tweets with interesting links. @ABC_Carpet twitpics its rugs!

Examples: @brooksrunning, @ABC_Carpet, @wfm_oakland (most Whole Foods Market branches have their own Twitter feed)

Twitter marketing no-no: Abandoning a Twitter feed at @bestbuybayarea

Articles: List of US retailers on Twitter,  Retailer Twitter aggregation

2) How to Build a Local Follower Base:

• Follow the followers of other local Twitter feeds in your city.
• Contests: Offer two free tickets to concert or lunch in a weekly drawing to a local follower. The locals will follow you.
• Quizzes: Post picture of city landmark, or quiz about interesting local facts.
• Give to the community: Support other local Twitterers by retweeting their local interest stories and events.
• Provide links to interesting articles related to your business, market conditions or city. For example, link to reviews of cameras if you’re a camera shop.
• Position your Twitter account as your online point of contact by adding your feed info to business cards and storefront signs. Twitter names are much easier to remember than phone #s. Article: Twitter to replace 800 #s as point of corporate contact.
• Tweet using hashtags at a Breaking News site for your city, and request placement of your feed into the City site.
• Personalize: Of course, make sure you’re not tweeting about business all the time or it may come across as spammy. It’s best to create two accounts – a business account like @yoshisjazz that sticks to the subject, and a personal account to have conversations that reveal your personality.

3) Surveying for Business Opportunities

• Monitor Twitter search terms for your business. Many Twitterers ask for help to their follower base. If you’re a tax accountant in Chicago, monitor the search terms “Chicago tax accountant” by creating an RSS feed at Search.Twitter.com and tracking it in your RSS reader.

• Use the hashtag conventions #ihave and #yourcity occasionally (add them to a tweet once per week or so) to alert others who monitor this hashtag convention for services or goods you provide.
• Register your Twitter feed at Jobaba, the social marketplace for local services. More of these localized service sites will appear.

4) Twitter Efficiency Tools

• Use a Twitter scheduling application like Hootsuite or Tweetlater to schedule your tweets for the week. Especially useful for restaurants that know their menu offering for the week.
• For larger companies or stores, use a collaborative Twitter application like CoTweet so your Twitter account can be monitored and updated by multiple employees. Example: @ocreggie has five monitors.

Yes, we know how easy it is to build a web application today. WeFollow.com, launched by digg’s Kevin Rose, became a hit and got cloned quickly by Twitr.org:

Although the barriers to entry for developing a web application are low, it’s still difficult for non-technical “normal” people to build their own web application easily.

Most DIY application development solutions like Ning and blog platforms provide templated designs with feature limitations, and they all look the same. The WordPress platform offers open source application feature sets that allow non-programmers to cobble together working applications.

EVOLVING WEB DESIGN

This is the next phase of web design – facilitating non-techies in the building of applications. WordPress, functional but unslick, is so far the most accessible to the masses. We’re building Breaking News City sites on the WordPress platform because we can share it easily with non-programmers, and we can efficiently teach them how to build, customize and maintain a site in 4-5 hours.

What happens when anybody can build a web application? VC-funded stealth projects become more risky when anybody can easily clone them. The obsession with keeping traffic on site is threatened. The new paradigm will be for entrepreneurs to build applications that are easily owned, adopted and customized by anybody, and perhaps charge a subscription fee for the privilege. In this world, real estate agents would be able to create a fully functioning real estate listings search site similar to Trulia.com, but host it on their OWN domain. Facebook pages could be spun off onto their own domain.

Owning the domain will become analogous to “owning the house”. Traffic becomes equity, and more important, the houseowner sets the rules. The Domus Breaking News Project is based on creating the new accessible applications that can be shared freely through networks and society. Our business model is to consult with enterprises to adapt and customize these new applications for their business.

The Domus Breaking News Network is an initiative by the Domus Consulting Group to create new online media to broadcast real time information. The emergence of social media applications like Twitter that provide instantaneous ways to broadcast and communicate any kind of news is changing the way people digest information. For example, advertising as a blast-out commercial media will transform into customized solicitations where merchants discuss their “deals of the day” directly with interested customers over, say, Twitter. The new media becomes more relevant than “days old” Google searches. Try finding a sale on tennis racquets in your city… Google fails; you still have to call each store and ask them for pricing.

The Domus Breaking News Network is a unique “instant” data distribution and marketing platform. Three reasons why the Network is innovative and changing the way web applications are being developed:

1. Breaking News sites like Breaking San Francisco News aggregate the best Twitter feeds in a city. They filter the Twitter experience so you’re not seeing the noise.
2. The Breaking News Network is grass roots application design. We give it away to media/publishing companies and real estate brokerages and agents, and they can build a Breaking News site in 5 hours. And they OWN the sites; it’s on the WordPress platform so it’s easily accessible to non-programmers and customizable to the market. Once up, that real estate brokerage or media company provides a community service and instantly becomes the hub of their Twitter community in their city.
3. As the Breaking News Network expands to cover every city in America (as well as overseas), the network begins to look like the Craigslist for Twitter feeds. We plan to overlay new business models across this network.

The Breaking News Network Awarded “Most Innovative Media 2009″ by Inman News

Ongoing documentation on the Breaking News Project can be found at Media Transparent.com.

Hyperlocal Breaking News – bringing cities and communities into real time conversation

Breaking Topical News – aggregating the best breaking news on a variety of topics

BreakingSFNews.com, BreakingLANews.com and BreakingNYCNews.com broadcast what is happening in each city in real time through a survey of local Twitter feeds and contributions from Twitterers who add tweets to the scrolling news feed using a specific #hashtag system.

The Advent of the Breaking News websites

We’re just beginning to see the development of “breaking news” sites that chronicle and monitor the Tweets and other conversations on a topical or geographical level. MuckRack, apparently launched yesterday, aggregates the Twitter feeds of prominent mainstream media journalists.

Genesis of Breaking News on a Hyperlocal Level

My company, Domus Consulting Group adopted the mission to provide regular folks who happen to be hubs of their community a way to gather their community into compelling online applications like BreakingSFNews. We were early advocates of Twitter and clearly understood how the micro-blogging (aka micro-networking) platforms can tie communities together in a big virtual neighborhood. We also recognized that Twitter’s unique function to facilitate citizen breaking news was compelling (just listen to the buzz today).

The Transparent Development Process

We don’t develop applications in stealth. We develop in iteration by explaining in this blog our concepts, create prototypes as necessary, listen to feedback, and improve the product or service. The chronology for develop BreakingSFNews is literally detailed from this blog’s timeline:

4/10/2009: Real Time Local Advertising – A New Business Model

4/05/2009: BreakingShoppingNews.com: Twitter for Local Advertising

1/10/2009: The New Web 2.5 Opportunity: Creating Media Hubs

12/10/2008: “Breaking News” is a Mass Media Play

12/04/2008: Incorporating Breaking News into Websites and Make Them Compelling Reads

The Give it Away Business Model

We developed the breaking news template that BreakingSFNews is built upon with the intent of giving it away free. We’ve discussed that sharing website development with the people is a new model for spurring adoption of a new marketing paradigm; Ning for DIY social network creation fits into this paradigm. We believe empowering individuals by providing them with plug and play web applications will become more common because it “shares the wealth” and will somewhat disrupt the old VC-based method of stealth website development (why try to build a “monopoly” web property when it can be replicated and given away free in the future?)

A lot of our consulting work so far has been in real estate and in media/advertising, industries that rely on hyperlocal networking for business. We’ve developed hyperlocal Breaking News sites so companies and individuals can tie their communities together with very little financial risk. We even develop the business model behind Breaking News (in progress) so it minimizes business risk as well. And we’ll fully disclose and share all new business models for the benefit of those who adopt Breaking News sites.

Why We Believe Hyperlocal Breaking News is Compelling – it’s in Local Advertising

We discussed this one week ago. Simply put, there is now a void in where local merchants can advertise. They are pulling out of print publications, Yellow Pages and Penny Savers, and can’t figure out how to reach their customer base online. With hyperlocal breaking news sites, local merchants can address their community using Twitter to publish their “daily deals”. Yesterday’s NY Times provided anecdotes on how effective this kind of “advertising” can be. As friend Roberta Murphy put it, “in a Breaking News site, the local merchants aren’t pushing obnoxious ads any more, they are sharing their deals and inviting conversation”. And guess what? It’s free!

(Caveat: Of course, local merchants will need to understand the protocols of social media so they don’t spam and generally act uncouth…)

Everybody is looking for a deal these days; the hope is Breaking News sites will connect local merchants with consumers on the watch for deals.

How You Can Participate

As discussed, the Breaking News template is free to use for anybody interested in building a Breaking News site for their city, i.e. OCBreakingNews.com, SantaBarbaraBreakingNews.com, etc. It literally took me only three hours to set up each of the Breaking News sites, and we teach how to do this.

Join us for a free webinar next Wednesday, April 22 at 10:30pdt/1:30edt and we’ll explain the methodology to get a Breaking News city site up and running. Register here: https://www2.gotomeeting.com/register/526096234.