Airbnb collapse

I've seen several tweets and tiktoks that seem to suggest that and they're saying that airbnb's infamous fees have basically ruined the company. Is Airbnb really about to go bankrupt?

An unfolding revenue crisis for Airbnb, the popular service that lets property owners rent out their spaces to travelers, could trigger a housing market crash "on par with the 2008 subprime crisis" in some cities, according to one real-estate expert.

From an Inman News article:

Silicon Valley Bank bet big on the future of proptech companies, calling the opportunity created by firms bridging real estate and technology a “$228 trillion opportunity,” in late 2019.

The firm invested in Opendoor and Airbnb among others in the space. In 2020, investor Keith Rabois credited the bank for the early success of Opendoor.

“Silicon Valley Bank also deserves credit for Opendoor,” he wrote on Twitter. “Without their support in the beginning, it would have been nearly impossible to prove we could value homes successfully via a model.”

Get your 🍿 ready!

They're calling it the .

These property empires are almost always built on extremely wobbly foundations. Many operators, enticed by get-rich-quick guides, take out substantial bank loans, negotiate deals with landlords to guarantee market rent for up to three years, and then try to make as much money as possible by renting out the properties short-term on Airbnb. It’s estimated that short-term rentals on Airbnb can return between three and five times the rental rate compared to a long-term tenant. But the scheme only works if you can rent out the apartments.

About 1 in 50 properties in London are listed on Airbnb. I'm sure there are very many legitimate people on airbnb, who I have sympathy for. But for the people who came up with clever schemes to make as much money as possible, who are now asking for sympathy, I'm losing little sleep.

Edit: Someone has since pulled the same numbers and reviewed them and confirmed that the article grossly overstates the situation. . Shout out to homeostasis3434 for sharing 🙏

Here's the article:

Edit: thanks for the discussion. A few notes from commenters:

• the originator of the article is known for calling out crises for views so take with a grain of salt (thanks endlesswander)

• I shouldn’t have used the article headline language in my title post as the headline is unnecessarily alarmist. See complicatedaloofness and Chris_talks_Football’s comments below for some nuances.

I'm thinking about getting in the game.

I find a lot of information about success, both here and on youtube, but I haven't heard any stories of failure. There have to be some.

Were your comps off? Did AirDNA/Alltherooms vastly over estimate occupancy/rates? Did the operating costs come out much higher than you expected? What did you do with the property?

I'm a big believer that you learn more from failure than from success, so it'd be great to hear a bit from the other side.

Thanks!

I’m from the Midwest (US). I booked a 35 night stay in Barcelona many months ago. 2 days before I’m supposed to fly in from a 3-week stay in London, the host reaches out and says there are plumbing issues and can not host me until 12 days after I was originally booked to be there. I’m forced to change that reservation to 24 days, I have to extend my current stay at $260. I have to book another Airbnb in London at $465. I have to change my flight dates, which adds $205 to the flight cost. I’m refunded $332 for the lost days on my original Barcelona stay. And after a week of communication with customer support where they try to have the host cover my losses and the host refuses, I get them to refund me $264 after I had asked them to cover all of my losses. All in all, I lose roughly $335 on a situation that was completely out of my control. The stress of navigating this in cities I’ve never been to put a big damper on the idea of continuing this DN journey beyond what I have mapped out. I spent January with family in the Midwest, February in Montreal, March and April in Brooklyn, May in London. I now have three more weeks in Barcelona and two back in southern England and then I’m back to the Midwest. I realize that $335 is a relatively small amount to lose, but I worry that this will happen again and cost me even more money. And what if I’m not able to pivot, housing-wise, as gracefully as I did this time? I’ve lost trust in Airbnb (host and company). Is this simply the cost of DNing? Simply the risk you take? Or is this just a random unfortunate situation I ended up in? Are there things I can do in the future to ensure I don’t lose money and end up in safe and secure locations should something go awry with the host? Are there more reliable room rental platforms? Thanks for any guidance you can toss my way.

Airbnb Inc. said demand for short-term rentals is strong, rejecting data presented in a viral tweet that suggested revenue for property owners in some US cities was down nearly 50%.

“The data is not consistent with our own data,” said Sam Randall, an Airbnb spokesperson, in response to a Twitter thread that contained data the author said was from short-term rental analytics site AllTheRooms. “As we said during our first-quarter earnings, more guests are traveling on Airbnb than ever before, with nights and experiences booked growing 19% in the first quarter of 2023 compared to a year ago.”

According to the tweet, Sevierville, Tennessee, Phoenix and Austin topped the list of US cities with the biggest declines, with revenue per available listing, or RevPAL, shrinking as much as 48% in May over a three-month average compared with a year earlier. Nick Gerli, the author of the tweet who runs a consulting business and YouTube channel advising home buyers and real estate investors, attributed the slump to a decline in demand and increase in supply.

AllTheRooms, which aggregates property listings from Airbnb and Expedia Group Inc.’s Vrbo on a daily basis, didn’t respond to a request for comment on the veracity of the data and Gerli’s analysis.

Data from another provider, AirDNA, which has been collecting listing data on short-term rentals since 2014, show a more muted decline in the single digits in the same markets, according to a tweet by Chief Economist Jamie Lane.

Airbnb has benefited over the past few years from shifts in work and lifestyle due to the pandemic. It saw a rush of people become hosts to meet a surge in demand for longer stays in rural towns or near popular outdoor tourist destinations like national parks. The platform has seen an acceleration in the year-over-year growth of total active listings, excluding China, in every quarter over the last two years, it said in its first-quarter earnings report. Total active listings grew 18% in the three months ending in March compared with a year earlier, up from 16% in the prior three-month period.

But as more companies call workers back to the office, some pandemic boomtowns have seen dramatic declines in housing prices. And a glut of properties that were listed during the pandemic-fueled boom suddenly caught up with and even overtook demand growth.

Airbnb said the number of nights and experiences booked in the current period will look unfavorable compared with a year ago, when there was a surge in demand following the outbreak of the Covid-19 Omicron variant. As a result, the company expects year-over-year growth in nights and experiences booked to increase at a slower pace in the second quarter than revenue.

Lane said he expects revenue per available room, or RevPAR, to be down about 1% in the first half of this year. “We expect something similar in the back half, about 1%-2%, driven primarily by a decline in occupancy and slightly offset by higher rates.” The decline in occupancy is due to supply growth outpacing demand, he added. Lane declined to comment on the discrepancy between AirDNA’s data and AllTheRooms.

RevPAR is a metric that Airbnb hosts use to measure how much their listings make. It’s the same standard the hotel industry uses to assess performance of its properties. In the context of Airbnb listings, RevPAR takes into account the rental price plus cleaning fees set by hosts, multiplied by the occupancy rate.

It offers a more accurate assessment than RevPAL because it excludes the dates on which the listing is not available for booking, Lane said. A full-year comparison would offer a fairer view than just a three-month period, as Gerli reported, due to seasonality in each market, Lane said.

While Lane said he expects RevPAR growth to continue to be flat in 2024, overall demand will still be strong for short-term rentals. It “will be much more than hotels and we expect short-term rentals to be gaining share over hotels in terms of total accommodations,” he said.

**Just an idiot RE Investor thinking out loud here**

It doesn't take a genius to know that AirBnB is a cyclical business. Less disposable income, unemployment, and recession fears = less travel and revenue for most AirBnB operators:

I personally know some AirBnB operators that have dozens of these homes and they are commenting on the lack of bookings. I know for a fact they can't support dozens of mortgages, so I would wager they would rather sell...to a market where interest rates are at an all-time high.

Also with the labor market continuing to cool off and companies looking to layoff staff, the future looks grim.

Curious to hear from others.

So if you follow Right-move, the market is currently being flooded with desirable flats in nice locations - some of it will be flats coming empty but an awful lot of looks like AirBnB owners shitting the bed.

What do you think happens next? (or is it obvious).

I would assume there are a fair number of homeowners who have a second home and rent it out on AirBnB. They have a normal job with a decent income or are retired, have plenty of savings and investments, and can financially handle not having rental income for 2-4 months, possibly longer if we go into a recession. They will be able to keep paying the mortgages on their second homes.

I would also assume there are a fair number of business people who are overleveraged on homes they rent out on AirBnB as their primary source of income and will not be able to financially handle not renting them out for 2-4+ months. These people will lose the homes when they are unable to pay the mortgages.

Does anyone know approximately what percentage of AirBnB houses are the former vs the latter? I don't know of any current government bailouts which would help much, but perhaps there are some or there will be some in the future.

Last night a random drunk driver crashed into the carport and took out one of the beams holding it up as well as denting a shed. I don't have her insurance info but I have the police report#. She's been booked for a DUI and property damage. What's the order of operations here? Contact my insurance company and give them the police report#? Send a contractor out and put a beam in so the structure doesn't collapse? I also have a guest booking coming up later this week so not sure what to do about that either. First time dealing with something like this so any advice would be appreciated.

Our current place has no remotes for a television. We've had broken furniture, appliances and missing items. Today's host shared this response:

"Hi [name] I’m sorry I don’t believe there is. I had moved that extra TV in there last week because someone wanted to hook their Xbox to it. I forgot to take it back out cause I never could find the remote"

Our last stay was selected because it had on site laundry. Wouldn't you believe, the guest RIGHT before us broke the washer! Host spent "all morning" trying to fix it and a repair guy was coming the day after our stay.

Does this happen often to other travelers or are we on a streak of bad luck?

Have used AirBnb for years, always opting for Airbnb over hotels. Seldom ever had any issues, but if I did support was quick and fair! Have probably stayed at close to 100 airbnbs!

Posting a warning as support has gone significantly downhill, and Airbnb is not here to support you! If you take anything away from this: IF you use AirBnb AT ALL please only book FULLY REFUNDABLE stays from here on out. Please learn from my experience.

Backstory (facts only to keep this short):

• Went to check-in (lockbox property, self check in), cabinet was LOCKED by the host.

• Unable to access property.

• NEVER accessed property at any time.

• Contacted host, no response.

• AirBnb contacted host, no response.

• AirBnb advised booking alternate accommodation, promised refund.

• Host messages in the morning and say “this is not possible”.

• I share photo evidence with host and Airbnb support (sent this at initial check-in attempt for time stamping via AirBnb App).

• Host claims he has 5 start reviews all over, this is not possible. This is the only defense offered by the host.

• AirBnb sides with host, no refund.

• I make my argument to over FIVE different support people (all who are not talking with each other, all are very confused, each one says “wait you never accessed the property??”.)

• One support person says, on the call, this host is HOSTILE and for your safety do not stay here! Stay in alternative accommodation!

• We did book and stay in last minute (expensive) alternative accommodation for our entire stay.

• Spent literal hours on the phone with Airbnb support during our vacation time.

• As of today the final outcome is HALF of a refund, and I still have random support people calling me despite the case being closed.

We were left stranded in the streets of a foreign city at 2am. We had PHOTO EVIDENCE. We had the initial support person who told us to book elsewhere. We had a support person on a recorded call TELL US NOT TO STAY AT THE PROPERTY due to the hostile host and for our safety. What else do you need for a FULL REFUND?

Honestly the worst experience I’ve ever had with Airbnb. Their business model has changed significantly!!! Please be very careful!! Support stated we could have had a full refund IF the host had a policy of full refunds… so if you are going to use AirBnb, only look at properties with full refunds available.

Thank you for reading, happy travels, and stick with hotels!