The ongoing “Airbnbust” continues—with thousands of homeowners struggling with declining revenues and fewer customers.
Key Details
- Airbnb reported strong numbers in the second quarter, with 115 million bookings—an 11% increase from the second quarter of 2022—and 6.6 million global active listings for properties as of late last year.
- The short-term rental market is still strong, but it is becoming more difficult for homeowners and operators to make revenues, as some cities show a 13% decline in rentals.
- This “host crunch” is not affecting the entire country, but specific markets are heavily affected. Some markets are holding strong, but others are suffering badly, Bloomberg reports.
- Six major cities have seen revenues collapse more than 40% in the past year—Sevierville, Tennessee; Phoenix, Arizona; Austin, Texas; Myrtle Beach, South Carolina; San Antonio, Texas; and Asheville, North Carolina.
- Airbnb has begun assisting afflicted hosts, increasing support agents, offering liability insurance and damage protection, and providing reimbursements.
Why It’s Important
COVID-19 proved to be a major instigator of Airbnb’s recent success, with millions of people moving out of cities and into new homes, eventually returning after the pandemic. This high turnover and demand helped spark the rise of short-term rental speculators—people buying homes specifically to use them for Airbnbs with the promise of thousands of dollars per month in revenue.
Unfortunately, this trend has died down as the market was flooded with available properties. Declining travel in some areas has resulted in revenue issues for thousands of owners. Many Airbnb operators are considering selling their properties to avoid further losses and break even. Other renters have even begun backing away entirely from renovating homes specifically to open them as rentals.
As we previously reported, market forces are inevitable. They are creating a painful correction in the face of a ballooning market bubble. An oversupply in the rental market has ballooned in some markets and negatively impacted rental prices and demand, while other regions have capped the number of permitted properties available.
Notable Quote
“It was made to sound like you would be booked all the time, and you could make five, ten grand a month. It’s not as much as we were expecting,” says Joan Robertson, who tells Bloomberg that her Airbnb near Disney World has not seen a single booking for the month of August. Her rental usually grosses between $1,000 to $3,500 per month, but she does not plan to quit hosting it for now.