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What does the future hold for the popular holiday booking website?
In recent times, you may have come across numerous social media posts and articles proclaiming the death of Airbnb. Stories of dissatisfied hosts, plummeting bookings and anti-Airbnb sentiment have garnered attention, leaving many to question if the Airbnb bubble has burst. But before we jump to any conclusions, it’s crucial to separate social media hype from the reality on the ground. So is the Airbnb dream dead? Let’s find out.
KEY TAKEAWAYS
- Evolution of Airbnb: Airbnb has transformed significantly over 15 years. The initial vibe of local experiences and affordable stays has shifted towards a more luxurious feel, marked by increased prices and fees.
- Growing Host Frustration: Dissatisfaction among guests is rising, citing issues such as high cleaning fees, dirty apartments, excessive rules, and last-minute cancellations. The once positive sentiment toward Airbnb appears to be waning.
- Revenue Figures: Despite some hosts reporting a 50% drop in bookings and revenues in certain regions, total demand for short-term rentals rose by 24% in September 2023 compared to the previous year. Average daily rates increased significantly, challenging the narrative of Airbnb’s decline.
- Limited Alternatives: Despite discontent, Airbnb remains a preferred choice for many travelers due to a lack of appealing alternatives. Traditional hotels have downsides like no cooking facilities, and competing platforms like Flipkey, Plum Guide, or Agoda may not offer significantly better options.
- Concerns about Collapse: Recent social media discussions suggest concerns about the collapse of Airbnb, with reported revenue drops in several regions. However, it’s argued that the post-COVID revenue dip might be a natural consequence of the surge during the pandemic, rather than a sign of Airbnb’s demise
- Growing Gap in the Market: There’s a recognized gap in the market for holiday accommodations combining the flexibility and homely feel of Airbnb with the serviced convenience of a hotel. This emerging trend might shape the future of vacation rentals.
Airbnb—the end of the honeymoon?
We’ll start by looking at the changes Airbnb has gone through since it was launched in 2008 as a plucky upstart brand challenging the hotel industry. Travellers who remember it from those early days will tell you that it was a very different beast then. The vibe was cosier, more DIY, with hosts generally being home owners who rented out a room—or their whole apartment—to holiday makers who wanted to save a bit of cash, live like a local and have the benefits of a kitchen to cook in. Over the past 15 years, the site has gone through huge changes, with increasing amounts of property developers and professional landlords buying up places to rent out as Airbnbs. As a result, much of the site has a more luxury vibe these days—with the increased prices and fees to match,
Yet there has been growing frustration from some holidaymakers, who are becoming increasingly unhappy with Airbnb. They are taking to sites like Reddit to complain about things like the high cleaning fees charged by hosts—who then still expect you to clean the apartment thoroughly before leaving. Other horror stories abound around filthy apartments, long lists of rules or hosts cancelling at the very last minute. In many respects, it seems like the Airbnb honeymoon could be over. But does that mean that the actual business model has collapsed?
The reality of Airbnb revenue figures
While it’s true that some Airbnb hosts have reported a drop in bookings this year—with revenues down by almost 50% in cities like Phoenix and Austin—this doesn’t tell the whole story. Total demand for short-term rentals actually rose by an impressive 24% in September 2023, compared to the same month the previous year. This was according to a recent report by AirDNA, a holiday rental data platform. Average daily rates also witnessed a remarkable 31.9% increase when compared to 2019.
So what’s the deal? Social media may be buzzing with discontent, but in the real world, Airbnb seems to be thriving. This paradox is not unfamiliar; it brings to mind the “Batterygate” scandal that Apple faced in 2017. Despite the widespread backlash on social media, Apple’s value soared, indicating that users were reluctant to switch to alternatives they liked even less.
Lack of Airbnb alternatives
The fact is that if someone is planning a fun weekend in Oslo, a romantic getaway in Paris or a budget backpacking adventure in South America, Airbnb still stands as one of the preferred choices. Good alternatives just seem to be limited—at least for now.
Much like Apple users, Airbnb guests might have their grievances, but the alternatives are not much more appealing. Switching from Airbnb might mean returning to traditional hotels which have their own downsides (for instance, no space to cook, meaning the added expense of restaurants). Or it might mean trying Airbnb’s competitors like Flipkey, Plum Guide or Agoda, which aren’t necessarily significantly better.
Hostel takeover of Airbnb?
But just as Airbnb was once the upstart, could there be a new challenger looming on the horizon? And could it be the once humble hostel? Many hostels worldwide are now trying to reinvent themselves. Gone are the stereotypical images of grimy dorms and noisy common rooms. Instead, many hostels now offer stylish yet affordable accommodation with a focus on connecting guests with the neighbourhood. They might also offer private rooms or even whole studio apartments.
What sets them apart are the professional on-site hosts, no cleaning fees and convenient services like luggage storage post-checkout. Ironically, Airbnb has paved the way for this transition, particularly among younger travellers who might have used the site often or grew up with their parents using it.
Hostels primarily challenge the low-frills aspect of Airbnb’s business model, catering to budget-conscious travellers seeking a more affordable hotel alternative. Nevertheless, legacy hotel brands are not conceding defeat. They are actively promoting the reliability and consistency of hotel rooms in a bid to win back Airbnb customers. Some hotel chains like Hawthorn Suites by Wyndham are also offering options like kitchenettes to create more of a studio apartment, Airbnb-style experience.
Is it time for a more streamlined holiday apartment experience?
Another option is serviced holiday apartments, which don’t come with Airbnb’s big cleaning fees—or an Airbnb host’s demand that you clean up after yourself before checking out. Since many serviced apartments offer conveniences like a 24-hour reception, fresh towels, fresh linen, kitchens and luxury features, they can fill the gap between the serviced hotel experience and the ‘at home away from home’ Airbnb experience.
As Airbnb has grown from a disruptive startup to a holiday rental giant, it may be time for a new model to emerge. The future of Airbnb depends on the choices made by paying guests.
The Collapse of Airbnb?
Recently, US social media has been ablaze with concerns about the collapse of Airbnbs, with some claiming that revenues are down by nearly 50% in cities like Phoenix and Austin. The worst-hit regions include Eastern Tennessee, Central Texas, the Pacific Northwest and the Mountain Regions.
However, it’s worth remembering that Airbnb revenues surged during the COVID-19 pandemic. This was because people were experimenting with remote work and renting more frequently as a result. So it was perhaps natural that we were going to see a post-Covid revenue dip—it doesn’t necessarily sound the death knell of Airbnb.
In conclusion, while rumours of Airbnb’s demise are circulating, the reality is more complex. Airbnb certainly faces challenges, but its dominance in the market and the limited alternatives suggest that it’s far from dead in 2024. As the travel industry continues to evolve, only time will tell what the future holds for Airbnb and the vacation rental landscape.
One thing is clear though—there seems to be a growing gap in the market for holiday accommodation that offers the flexible, homey feel of an Airbnb with the serviced convenience of a hotel. Perhaps that is now the trend to watch.
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By: Georgia Austin updated on 13.11.2023
