What’s the future for Airbnb?

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    Melissa Tredinnick

    Melissa Tredinnick UKBF Newcomer

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    Like every other business in the travel and tourism industry, Airbnb has been severely impacted by COVID-19. Can the platform survive – and what about its hosts?

    Until now, the rise of Airbnb seemed unstoppable. With an innovative business model and very little viable competition, the company’s story was one of success through disruption. 

    For tourists, it promised the opportunity to ‘travel like a local’, offering a wide variety of destinations and a sense of personal connection that’s hard to replicate in a traditional hotel business.

    For hosts, it offered a convenient way to earn some extra money by renting out a spare room, or build a hospitality business at relatively low fees, with the support of Airbnb’s financial protection and customer support services.

    With the outbreak of the pandemic, however, everything changed. Airbnb’s estimated value, which stood at $31 billion in March 2017, dropped to $18bn by the end of April 2020. As bookings plummeted, the company expected its revenue for the year to come to less than half of what it had been in 2019.

    To deal with the impacts, Airbnb has raised $2bn in capital and cut all of its marketing costs for 2020. Its founders have reportedly put their salaries on hold, as well as cutting top executives’ pay by 50%.

    Despite this, Airbnb’s CEO Brian Chesky announced in May that the company still needed to make about 25% of its workforce redundant.

    It’s not just money that Airbnb’s lost throughout the crisis, but also the trust and loyalty of many of its users, after a series of PR problems.

    Its extenuating circumstances policy, which gives guests a full refund if they cancel a reservation made on or before 14 March 2020 with a check-in date between 14 March 2020 and 15 September 2020, sparked outrage among hosts when it was introduced, as they lost their income with little warning, regardless of any existing policy hosts had put in place.

    More recently, it faced backlash against its ‘kindness cards’ campaign, which asked guests to donate to hosts they had given high ratings in the past. 

    “Leave our guests alone, and stop going to them with begging bowls in our names, when most of them are probably every bit as strapped for cash as we are,” said one commenter in a post on Airbnb’s community centre.

    Meanwhile, several reports of illegal house parties hosted via Airbnb throughout lockdown haven’t done much to help the platform’s reputation.

    Is there still enough demand for Airbnb?

    Now that the domestic tourism industry is open again, people who were stuck at home for months during lockdown have been looking for an escape.

    At a time of social distancing, you might expect Airbnb’s focus on human connection to have lost its appeal. Some commentators have predicted a shift back to more traditional forms of travel accommodation, such as hotels, as customers may have more faith in their ability to meet high standards for professional deep cleaning.

    On the other hand, Airbnb properties tend to have much lower footfall than hotels, no crowded communal spaces, and a variety of locations to choose from, including quiet rural areas.

    Although it remains to be seen how the ongoing effects of the pandemic and global recession will change customers’ attitudes in the long term, there are some signs of recovery for Airbnb – and customer demand seems to be there, at least for the time being.

    AirDNA, a holiday rental data provider, reported a 127% rebound in global bookings on online rental platforms in May, with more than 2.08 million bookings made in the week from 18 May, compared to 916,000 during the week from 5 April.

    Airbnb says it is adapting to the ways in which travel is changing as a result of the pandemic, including demand for affordable options and private spaces, a focus on cleanliness, and an increase in last-minute bookings.

    It also reported that more people are looking to escape their usual surroundings without having to travel great distances, with the percentage of nearby stays increasing from 13% to 30% since the pandemic began.

    The platform’s messaging has shifted to suit that trend, with a current homepage tagline reading: “You don’t have to go far to find a world of wonder.”

    Options for Airbnb hosts

    For some of Airbnb’s hosts, recovery might not be as easy. 

    One of the company’s main advantages over other hospitality businesses is that it does not have to pay property costs. Instead, that burden falls to hosts who rent out their homes through the platform, and many have struggled to keep paying their mortgages while their income has been cut off.

    If you’re hoping to attract guests back to your property now that restrictions in most parts of the country are looser, it’s essential to instil confidence through clear, stated hygiene measures and an upfront cancellation policy.

    Airbnb has published a recommended cleaning protocol, and is giving some hosts the option to commit to it and receive a special ‘enhanced cleaning’ highlight on their listings.

    If you find there’s still not enough demand for your property to justify letting it on a short-term basis, you might consider switching to the long-term rental market instead, as many Airbnb hosts have already done. 

    This has different tax implications, however – especially if your property currently counts as a furnished holiday let – so be careful and seek professional advice before you commit to any changes.

  2. Beckie North

    Beckie North UKBF Newcomer

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    Some very good thoughts here. I have had an issue with Airbnb over the past week with people cancelling, etc. But, it is what it is!
    Posted: Aug 26, 2020 By: Beckie North Member since: Aug 26, 2020
  3. bluenun

    bluenun Guest

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    AirBnb , VRBO (HomeAway), booking.com

    Booking.com - the worst possible deal on offer if you have a property to let. They charge 15% commission. If for any reason as an owner I have to cancel a booking, booking.com insist I find the guests alternative accommodation and that I pay for it. It happened to me - which is why I DELETED my account with them.

    VRBO / HomeAway now owned by expedia. As an owner they charge 7% commission as well as charging the guest a booking fee. So for example my apartment £100 a night , VRBO will pay me £93 , BUT they will charge the guest £107 to book.

    AirBnB charge 3% flat rate I believe so I will get paid £97 for my £100 a night apartment. AirBnB certainly brings in more bookings.

    The business used to be better when the owners just paid for an advert to advertise on the HomeAway/VRBO portal - and then the booking payments were taken care of by the owner - rather than the portal. Obviously all the main players realised they were missing out on being to rip off both the owner and the customer.

    The future for all this I think is that owners and customers will go back to specialised sites. So for example https://www.h4house.co.uk is a portal for holiday homes in Wales where you book direct with the owner. No booking / commission fees.

    Or the otherway is with something like holiday cottages wales - where the website owner actually handles all the bookings / change over cleaning / bed linen etc.

    Owners will obviously be taking some extra care to get the place clean etc. I cant see AirBnB or Booking.com taking responsibility whatsoever for the cleanliness of properties advertised on their portals. They are not interested in that - just keeping your money in their account until they finally release it to owner after the guest has left.

    AirBnB , VRBO etc - hopefully their business model is gone after all this and customers can get back to booking direct and saving some commission money.
    Posted: Oct 4, 2020 By: bluenun Member since: Jan 1, 1970