Airbnb allowed rampant price gouging following L.A. fires, city attorney alleges

55 miguelazo 65 7/20/2025, 3:14:26 AM latimes.com ↗

Comments (65)

jedberg · 3h ago
This happens to any platform using algorithmic pricing. Any time there is an unexpected event that either constrains supply or increases demand (or both), the algos go haywire. Then the the platform has to put in checks to prevent it from happening again.

Remember when Uber was new and the surge pricing could do 20X+ in just a few minutes when there was an emergency? And then they had to fix it so that wouldn't happen, the trade off being that there just weren't cars available.

The thing is, some people aren't price sensitive. In a sudden blizzard, some people are happy to pay $350 for a two mile ride home, just to get home. And some drivers are happy to go out in that weather for their piece of the $350.

The hard question is how do you find the balance?

Y_Y · 3h ago
The sellers are definitely price-sensitive though. The choice isn't between a $350 trip and a $20 one (because demand far outstrips supply at the point), it's $350 or no deal, or at best a lottery ticket to see if you're one of the lucky 5% of people who can get a ride at the old price.

When the rate shoots up like this drivers will get a message, and plenty of them will get out of bed or stop whatever they're doing and get on the road. The platform will probably take a nice cut, but otherwise to meet demand they'd have to subsidise most of the difference. That would be some very expensive PR.

thaumasiotes · 2h ago
> The thing is, some people aren't price sensitive. In a sudden blizzard, some people are happy to pay $350 for a two mile ride home, just to get home. And some drivers are happy to go out in that weather for their piece of the $350.

> The hard question is how do you find the balance?

Why is that a hard question? What balance are you looking to find?

jedberg · 2h ago
Allowing those who are willing to pay any price to do so while still serving the community by not price gouging everyone, especially those who are price sensitive but are still desperate.
hibikir · 1h ago
When the supply of something is lower than the number of people that are price sensitive and desperate, capping prices will still leave desperate people without what they want. Many mechanisms that appear to be more fair, like free lotteries, end up distorting things in other ways: If it's a free lottery, you bet people will sign up without being desperate.

One might have an aesthetically favorite version of deciding who is going to go without, but there's always going to be a problem with just that. What really helps is increasing the supply of what people want. And for that, it's hard to beat increasing rewards to the suppliers.

dontlaugh · 2h ago
Why would you cater to those willing to pay any price? They’re a tiny minority of people.
adammarples · 2h ago
Don't high price signals in an efficient market serve the community by increasing supply? It's hard to argue that there's a better way to do it that doesn't inadvertently decrease the supply and instead become a lottery
redserk · 1h ago
I think this would rely on an assumption that there is always supply available to draw on.

At some point there is no supply to alleviate the problem. Some effects may be dampened by new ride share drivers signing up, but even then, not everyone wants to be a driver regardless of compensation.

I don’t know of a good approach to free-market around a supply limitation in the short-term.

hibikir · 1h ago
Prices cannot solve all supply problems. We cannot have 2 million teenagers dating the starlet-du-jour. But prices typically can increase the supply quite a bit, while most techniques that avoid prices will not increase supply at all.

So if the goal is to maximize how many people get what they want, prices, plus some mechanism to avoid temporal speculation (for instance someone saving their sealed pokemon cards for 20 years hoping for price increases) makes the most sense.

luckylion · 1h ago
That's unlikely for sudden and short-lived surges, isn't it? There probably won't be plenty of new rentals popping up in LA because of potentially high demand during the next wildfire.
thaumasiotes · 2h ago
That is an incoherent, meaningless sentence. You think people should be allowed to pay high prices, but no one should be allowed to accept their money? What do you think it means to be allowed to pay for something?
jasode · 1h ago
>The hard question is how do you find the balance?

Examples of how other industries in other domains found the price "balance" where prices can substantially increase in a very short time without the negative stories of "gouging" :

- bid/ask spreads in exchange markets and letting the exchange's algorithm constantly "match" up all the buyers' bid amounts that meet/exceed the sellers' ask amounts. (https://en.wikipedia.org/wiki/Bid%E2%80%93ask_spread)

- auctions in ebay, Sotheby's/Christie's, Google Adwords ad network platform, etc

The common theme to the above is that the buyers know their own actions affect the price they pay. The potential buyers also know that other buyers actions also affect the prices they pay. This eliminates the whole "gouging" aspect. If the Citadel hedge fund sells NVIDIA stock for 2x the price it was just 3 months ago to a dentist or grandmother's IRA retirement account, nobody bothers to write that "the hedge fund price gouged the dentist". The price (too high? too low?) is whatever the price happens to be because everybody else affected the price.

The problem is that the pricing mechanisms of bids-&-asks and/or auctions are not the favored type of transactions for the masses. Most people prefer fixed prices. Attempts at bids/asks and auctions for mass consumers didn't do that well. Priceline.com's "name your own price" for airline tickets was overtaken by conventional pricing. Ebay started as an auction website but now 85% of its listings are fixed price. (Because ebay sellers want to compete with Amazon Marketplace which has fixed prices.)

So for AirBnB / Uber to avoid the price gouging negativity, the platforms would have to find a way to get a bid/ask mechanism into it so the buyers are self-aware that they caused the high price increases. (It seems harder to do since booking a room has different start/end dates so it's not as fungible as selling NVIDIA stock.) In any case, the potential guest offers a price to pay and the host can accept/reject it. The potential guest has to account for what other guests would be willing to pay. This shifts the "pricing gouging" away from the hosts because the buyer is the one that offered the price amount.

If there's a real high-demand and low-supply situation and the platform doesn't provide a bid/ask/auction mechanism, the informal marketplace will organically re-create more inefficient versions of it ... e.g. scalpers selling Taylor Swift concert tickets and "price gouging" the fans.

renewiltord · 2h ago
It happens all the time, actually. It's what happened to Gamestop. A few people really wanted the stock and the price just shot up. The worst was the Reddit IPO. The price just kept going up and the Reddit team sold stock at high prices instead of serving the community. It's just greed.

People should not be allowed to sell except at the government-mandated price. Of course, a few million may starve, but that is a sacrifice I am willing to make in order to serve the community.

Hopefully, we can make this Great Leap Forward in consumer rights, and prevent Late Stage Capitalism from having a Mask-Off Moment in AI slop enshittification. If you disagree, I'm begging you to read a book. Tell me you're enabling corporate interests to cause trauma without telling me you're enabling corporate interests to cause trauma.

stingraycharles · 2h ago
Highly dependent upon circumstances, the government should really only regulate prices on a few things and that’s it (ie essential needs such as healthcare and energy, which is the case where I’m from).

Having government mandated prices for everything is a very silly approach.

renewiltord · 1h ago
Another essential need is video games and Internet, without which most people cannot survive. Today's people also need access to the AI companion Ani part of the Grok 4 character suite built by x.ai. But we can solve the latter problem by just providing everyone with a $100k/year budget to spend on companionship. Mental health is health. Other platitudes available on demand. If you like, I can also use LLM to say such platitudes in the drawn out style of OP comment so that everyone can gather around and participate in game of Woe The Capitalist. Great enjoyment.
vouaobrasil · 6h ago
The article doesn't make it clear whether it was AirBNB itself that increased prices, or whether it was hosts. And moreover, it also doesn't even give one example of a before and after price. I'd like to see at least one example.
legitster · 6h ago
Host here. Almost nobody sets prices manually. You either use Airbnb's pricing algorithm, or one from a third party. Either way it's set automatically based on local occupancy rates/hotel prices/etc.

Which is an argument that this is not truly gouging - there's just a demand surge and a supply crunch and the market responds the same way as if it was a business conference in town.

Another thing worth pointing out is that the market of available Airbnbs clears out from the cheaper units first. So it may look like prices are shooting up, but really it's just that all the normal priced ones are gone.

tbrownaw · 5h ago
> Which is an argument that this is not truly gouging - there's just a demand surge and a supply crunch and the market responds the same way as if it was a business conference in town.

So then real price gouging is... what, when you charge more than everyone else (and drive all your customers away to competitors)?

hibikir · 1h ago
Gouging: When I have a significant control of the supply, and set prices up in a way that significant parts of the supply get wasted because my profits are maximized anyway.

So one can argue that some cartel-like algorithms are price gouging, but it's unlikely to be what a provider of a lone AirBnb unit will do, as for them, going empty is worth zero.

xboxnolifes · 5h ago
Sounds less like price gouging and more like price fixing.
pentaphobe · 4h ago
Yeah, funny how property markets always seem to have that same response.

I bet most of those same people would lose their minds if their favourite restaurant tried to double prices overnight. "Yeah we sold a lot of burgers yesterday..."

ChrisMarshallNY · 50m ago
That’s actually what happened around here, during inflation.

Restaurants are now double what they were, just a couple of years ago; even the cheaper ones.

The prices shot up, and have yet to back down.

orangecat · 4h ago
If a restaurant is so popular that they're often running out of food, it's perfectly reasonable for them to raise their prices.
hackable_sand · 3h ago
Not during a famine
AuryGlenz · 3h ago
I’d argue that’s a better time to do it? People will eat less, conserving food.
AlotOfReading · 4h ago
I wonder how much "value" would actually be lost from the market if prices were simply fixed a month or two ahead of time to exclude those price shocks.
hcnews · 4h ago
> Almost nobody sets prices manually. You either use Airbnb's pricing algorithm, or one from a third party. Either way it's set automatically based on local occupancy rates/hotel prices/etc.

This seems pretty undesirable. Very easy for Airbnb/third party to increase prices even without demand just to increase their prices.

We recently saw a similar price fixing lawsuit for renters. Landlords, co-ordinating together, ended up increasing prices of Condos across major American cities (via means of a third party). The consumer ends up paying unnecessarily high prices in an inelastic market.

austhrow743 · 3h ago
What definition of gouging are you using that conflicts with “there's just a demand surge and a supply crunch”?

“the market responds the same way as if it was a business conference in town.” Normal people definitely complain about that and use the word gouging when they do so.

dmkolobov · 5h ago
This reminds me of the time my middle-school history teacher decided to bring in one of the student’s financial advisor parents to defend price-gouging on gas during Hurricane Katrina evacuation and subsequent exodus.

It was an unconvincing argument then, and is an unconvincing argument now.

Rebelgecko · 4h ago
FWIW this is the most convincing argument I've seen for allowing prices to raise during an emergency: https://www.econlib.org/library/Columns/y2007/Mungergouging....

Second most convincing argument is people who hoarded toilet paper during COVID

Arainach · 3h ago
>Second most convincing argument is people who hoarded toilet paper during COVID

That's not an argument for price gouging, it's an argument for rationing.

AuryGlenz · 3h ago
That’s awfully hard to do well though, especially setting up a system quickly.

Sure, you can limit amount per customer per store. But then someone comes in with their husband and double dips, and then go back through in 10 minutes hitting different checkouts, or just go through self checkout, and then go to different stores…

All the toilet paper is still gone, encouraging fear in other people to do the same as the couple above.

The alternative would have been “you idiots are buying all the toilet paper? Fine. It’s 5x more expensive now.”

People then see that toilet paper is still in stores and prices can come down gradually but rapidly, and if people start being nervous again prices can quickly raise to stamp that out.

rightbyte · 2h ago
> But then someone comes in with their husband and double dips, and then go back through in 10 minutes hitting different checkouts, or just go through self checkout, and then go to different stores…

During a panic toilet paper shooping spree that would allow like 100 other customers to also get toilet paper.

caterama · 4h ago
Is this a viable workaround… Charge $XX entry/membership fee for the opportunity to buy ice at the regular price?
csomar · 5h ago
Is the price reflective of the market though? I just negotiated an airbnb outside of airbnb at 40% of the platform quoted price and it was not a deal either but the market price. Airbnb massively inflates prices for everyone to create an expectation of how much things cost.
msgodel · 4h ago
>Almost nobody sets prices manually.

Huh. I know a number of AirBNB hosts (the new kind that treat it like a business, not the old kind) and they all absolutely do model the market out months in advance and 100% manually set the prices.

fake-name · 2h ago
Uh, you are describing gouging, you've just handed it off to an algorithm so you can pretend it's not exactly what it is.
fsckboy · 5h ago
>The article doesn't make it clear

we don't need to know.

if airbnb raised the prices and the market isn't there, rental income will go down and vacancy rates will go up and airbnb will lower prices again.

if airbnb raised the prices and the market stayed strong, they'd raise the prices more.

the higher the prices go, the more people with extra space to rent out will take notice and clean up their garage, or go stay at grandma's or whatever, creating more housing out of thin air (actually, on the margin) helping alleviate the housing shortage.

the same pattern would happen if hosts raise the prices themselves. also, if all the cheap places get rented, the market will appear to have higher prices even if nothing has changed.

let markets figure out prices, period. that's what markets do, it's one of mankind's stellar achievments. It's why the west is successful and communism fails.

if airbnb has monopoly power and is manipulating prices, fix that problem any day of the week, don't use a massive fire that destroys housing as evidence of anything, it means nothing, that's normal market correction.

JackYoustra · 4h ago
(while I think this isn't the affordability driver) this point about prices isn't really true - compare the graphs of two markets: one with a horizontal demand curve (perfect competition) and one with a downward-sloping demand curve (monopoly) - the first will have no deadweight loss, the second will have substantial deadweight loss.

Markets tend to the second and need state intervention in order to prevent the proliferation of monopolies. Functionally this is intervention every time price coordination happens, which... is pretty clearly what AirBNB is doing!

tsimionescu · 3h ago
This is all economy 101, rational preference BS. The reality is that suppliers very often collude to increase prices universally (particularly for things like housing, where there is almsot a natural monopoly - you can't bring in more land to the same city), and buyers have no way of knowing or acting on this. Airbnb is perfect for organizing such collusion, acting as a virtual cartel.
whatever1 · 3h ago
Is anyone tracking these platforms? Today coincidentally I got a Lyft from the airport to home and due to traffic it would take 1 hour, the price asked was $125. Ok steep, but the poor driver would be stuck with me for an hour.

BUT NO! I asked the driver and at the end of the trip he kindly showed me how much Lyft gave him.

$62 before tip.

vladvasiliu · 2h ago
That looks suspiciously close to 50%. Does anyone know what's the usual cut of these platforms?
shivasaxena · 1h ago
I would like to know that too. I would have never thought it was 50%

I would love to see some innovation in this space like India's ONDC and more Direct-to-Driver apps.

https://nammayatri.in/open?cc=

aurareturn · 3h ago
Is it Airbnb that increased the price or hosts?

Regardless, I don't see any problem here. The price increases, more people with a spare apartment, home, or room will be incentivized to host which increases supply.

If you suppress the price artificially, then the supply won't increase which won't do people who lost their homes any favors.

sanp · 3h ago
Isn’t the underlying assumption here that supply is essentially infinite (or at least comparable to demand)? I think is the underlying assumption with any such statement. If the assumption doesn’t hold true then I am not sure the statement holds true (perhaps only till there is some supply).
aurareturn · 3h ago
No, that's not the assumption. The assumption is that higher prices will draw out more supplies. This is how a free market works.
sanp · 17m ago
Well that assumes that there are more suppliers available (within the time period under consideration). Over what time period do we assume that more suppliers will be drawn out? An hour? A day? A month?
MangoToupe · 3h ago
> If you suppress the price artificially, then the supply won't increase which won't do people who lost their homes any favors.

Supply's not increasing substantially in the near future to help regardless. Folks place far too much faith in market effects that history has demonstrated again and again only take effect in the long term.

You know what would actually guarantee an increase in supply? Government-funded public housing. But that would deflate property prices, which is far more reprehensible to americans than the institutions of poverty and homelessness. We are a disgusting and reprehensible people.

shlant · 2h ago
> You know what would actually guarantee an increase in supply? Government-funded public housing

Or just removing needless restrictions so the market can provide the incentive for private entities to build housing? The government is not the primary builder of housing, nor should it be.

Ccecil · 42m ago
Up here in North Idaho...my landlord that I was leaving told me how much more expensive things are going to be since the fires in California...everyone wanting to move here. I already found another house cheaper/better.

It isn't just a regional problem.

TrackerFF · 1h ago
How is it any different than "congestion pricing"? Last time I experienced such, was on my way from the airport to the city. Unfortunately someone had jumped on the tracks, and the trains were locked down for 3 hours while the police etc. came to investigate the scene. During peak hours. Lines to the taxi and bus must have been 200 meters long and 5 meters wide. Checked out Uber, got something like $250 for a 30 min drive.

Not that I necessarily support extortionate pricing like that, but we do live in a capitalistic society.

VarFarYonder · 4h ago
Seems like basic supply and demand rather than something nefarious?

But I guess if we accepted that, nobody would be to blame.

BallsInIt · 4h ago
DragonStrength · 3h ago
Thank you. This thread is full of people acting as though price gouging during emergencies hasn't been illegal since before the Internet.

Not a California thing either. Southern states have similar laws thanks to common natural disasters like hurricanes.

rcpt · 4h ago
The fires burned in some of the wealthiest parts of the US. Dumping a ton of multimillionaires on the short term rental market will raise prices yes.
diziet · 5h ago
Airbnb claims it charges about 16% fee on top of the actual rental price. https://www.airbnb.com/resources/hosting-homes/a/how-much-do...
ipaddr · 4h ago
Which is fair for what they do.
baron816 · 4h ago
The supply of housing is more elastic than you think. Some people have spare bedrooms, or second homes in LA. They may have previously chosen to leave them vacant, but for many people the higher rates they can get on Airbnb can entice them to list them. This happens at the margins—it’s not an all or nothing thing. So the higher people can earn renting out available space, the more they’ll be willing to rent. At some price point, even a billionaire will rent out their garage.
sschueller · 3h ago
AirBnB is also listed in the UN special rappoteur report [1] as profiteering from the Palestinian occupied territory. Israeli settlers are able to rent out their homes that are on UN recognized occupied territory violating international law.

Per international law the executives of these companies are supposed to be prosecuted by the countries they are operating out of. Even if the US does nothing, the tide is turning and these executives may face arrest when stepping into another country.

[1] https://www.un.org/unispal/document/a-hrc-59-23-from-economy...

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tropicalfruit · 4h ago
calling the airbnb landlord a "host" and not instead a "parasite" :/
shlant · 2h ago
so brave of you. Everyone is clapping