Inman Connect New York delivers the perfect blend of outside-the-box thinkers, cutting-edge leaders, and hard-working, successful agents. Join us Jan. 24-26 for crucial content, education, and networking opportunities to help you thrive in today’s changing market. Register here.
The tweet was shared more than 8,000 times. More than 53,000 people liked it. Scores replied. So what did this viral social media post have to say? Simple: “The Airbnbust is upon us.”
The tweet, originally posted on Oct. 16, specifically shares an image of a post from what appears to be a Facebook group for Airbnb hosts. The post shows two different comments claiming that there has recently been a drop off in short-term rental bookings. Most of the responses lean toward schadenfreude, with a multitude of people criticizing Airbnb hosts for excessive fees, outlandish cleaning requirements and gobbling up housing stock. The angst captured in the comments has become so significant that it has spilled over and earned news coverage of its own.
— Texas Runner DFW (@texasrunnerDFW) October 16, 2022
A number of other, similar posts have also recently popped up on platforms such as TikTok. And amid the pile on, the theory that Airbnb and its hosts are in trouble has become widespread on social media. All of this begs the question: Is Airbnb experiencing a bust? Are bookings down? Are hosts facing some sort of apocalypse?
Inman reached out to Airbnb and to a handful of experts who follow the short-term rental space. And the short answer is no, there does not appear to be some sort of “bust” happening. Anecdotal stories of lower booking numbers notwithstanding, overall Airbnb is still generally having a good year.
That said, there are some changing dynamics in the market and there are real reasons some individual hosts might actually be seeing a dip in bookings right now. Here’s what you need to know:
Is the Airbnb bust a real thing?
To get to the bottom of the alleged bust, Inman first contacted Airbnb. In an emailed statement, a spokesperson subsequently pointed to the company’s latest earnings reports and said “guest demand on Airbnb was as high as ever in Q2, and Airbnb significantly outperformed the rest of the travel industry.”
The numbers from the latest earnings report do show that in the second quarter of this year, the company’s booked nights and experiences (the latter of which are activities hosted by locals) were higher than in any other quarter in the company’s past. The numbers also show that 75 percent of newly activated and booked listings were snatched up by travelers in the second quarter of this year at a faster rate than they were a year ago.
These numbers suggest that at least during the second quarter of this year — which spanned from April through June — Airbnb bookings were apparently doing well.
But those numbers alone may not satisfy everyone because in the time since the second quarter the economy has shifted significantly — interest rates are way up as is inflation — and the housing market has slowed down.
To understand what has been happening more recently, Inman spoke with Jamie Lane, vice president of research at AirDNA, a major short-term rental tracking and data firm. And Lane said that Airbnb’s good year has continued through the present.
“Demand is up,” Lane said. “Bookings are higher than they’ve ever been during the month of September. We’re not seeing any drop in booking activity compared to what we typically see at this time.”
A report from AirDNA further shows that in September, travelers spent a collective total of 18.4 million nights in short-term rentals. The report further notes that “September saw a new record for performance in the post-pandemic period, with total demand nights exceeding September 2019 levels by 26.6 percent.”
Other companies are seeing similar trends. Aaron Ru is a principal at RET Ventures, which invests in a number of startups including TurnoverBnB — a company that provides cleaning services and software for tens of thousands of short-term rentals. Ru told Inman that TurnoverBnB not only isn’t seeing any sort of a bust, but in fact, the company’s data shows that “this month is going to be their strongest month ever, even with seasonality.”
“They’re seeing the same thing as AirDNA,” Ru added.
So why are some hosts allegedly seeing fewer bookings?
The takeaway from Lane and Ru is that overall there doesn’t appear to be a bust happening. But that doesn’t mean that for certain hosts it can’t feel like a bust.
Lane said that part of what is happening is that some hosts might be experiencing some seasonality, wherein bookings were up in the summer but are down in the fall.
“There’s a big drop off in demand from July to September and from July to October,” he explained.
Also, some meaningful supply and demand dynamics are at play. Lane explained that the number of short-term rentals has increased lately, which means that while the overall number of bookings is up, “on average everyone is individually each seeing their bookings go down.”
“Because supply grew faster than demand, we saw overall occupancy decline,” Lane explained.
A useful analogy might be a grocery store that offers bread from three different companies. If the store starts selling bread from six companies, the grocery store will probably end up with more sales, but the individual bread companies might end up with fewer each. In this case, Airbnb is the grocery store and the hosts are the bread companies.
Ru mentioned a similar trend, saying that due to an increase in the supply of short-term rentals, “bookings per host are slightly down.”
Still, the operative word there is “slightly”; AirDNA’s data shows that occupancy stood at 58.1 percent in September. That’s a mere 1.2 percent dip compared to the same period last year, and it’s actually up 11.1 percent compared to 2019.
The takeaway, then, is that seasonality, rising supply and last year’s boom may all be shaping the immediate-term experiences of some hosts, even as the overall trend has been an upward one.
What about the fees and cleaning requirements everyone hates?
A big part of the social media discussion over the so-called Airbnb bust involves complaints about cleaning requirements and excessive fees. The general idea is that requiring guests to clean and pay fees is driving people away from Airbnbs and toward hotels.
“AirBnB nowadays really feels like a scam,” one person replied to the viral tweet. “Greedy house owners squeezing out as much as they can with doing less than [the] minimum.”
“Over $100/night in fees,” another wrote. “Just not a reasonable proposition. Wtf is a ‘service fee’ anyway.”
“They also expect you to clean dishes, throw the garbage, do laundry,” yet a third complained. “Should I also cook [a] 3 course meal before I leave?”
The numbers on demand and occupancy above suggest that overall these complaints haven’t translated into a broad movement away from Airbnb. But as always, there are winners and losers. For example, Lane noted that thanks to a large supply, there’s “a lot of competition for accommodating guests” right now.
“Now I think hosts are learning that if they want to book out their home they’ve got to try a bit harder than they did last year,” he noted.
Cleaning and fees play a part in trying harder, with Lane noting that hosts who include their fees up front are doing better.
“Hosts that do that are seeing significantly higher bookings than hosts who don’t,” Lane explained, “because that’s what guests want.”
Lane also said properties with amenities, such as pools and good views are doing better than more generic listings. Ru made a similar point about amenities acting as strong selling points, and added that there seems to be a widening gap between amateur and smaller-time hosts and “professional hosts with differentiated Airbnbs.”
One self-described host who replied to the original viral tweet also mentioned that cutting back on cleaning and maintenance requirements prompted bookings to go up.
Saw a decrease in listings this summer so I dropped a few of the more extreme chore requirements, ie mow the lawn, brush/vacuum the pool and the bookings went back to normal. The market is still strong but you can't expect renters to do as much
— J (@grewhar) October 17, 2022
The end of the coronavirus pandemic may also simply be shifting preferences. Peter Rex is the founder and CEO of property management and software company Rex (no relation to the REX Real Estate that’s locked in a legal battle with Zillow). Among other things, Rex’s company operates both short-term rentals and a hotel, and he said some of the more remote listings that became popular during the pandemic might be losing their appeal as the health crisis fades and people return to cities.
“We’ve seen a rejiggering with where people are going,” he said.
Rex also said some hosts are realizing that operating a short-term rental is more work than they realized and that it costs more money — prompting them, in turn, to potentially raise their prices.
“Running a hotel, it’s a tremendous amount of work, and so is running an Airbnb,” he added.
All of which is to say that fees and cleaning requirements may not be sinking the Airbnb business model. But along with shifting tastes, such factors could be helping sort the industry, driving guests to certain types of units over others. And the result of all of these trends is that some consumers are fed up, and some hosts perhaps aren’t seeing the kind of bookings they might have wanted.
Nevertheless, all of the experts who spoke with Inman for this story indicated they expect the short-term rental concept to stick around. The business model has already survived through multiple economic cycles — Wired even asked back in 2020 “is this the end of Airbnb?” — and so far the numbers suggest it’s only continuing to grow.
“Short term rentals,” Rex concluded, “are not going to go away.”