The idea of a neighbor renting out their place while away, turning time from home into money seems like a great idea. In fact, at one point in recent history, the sharing economy concept floated a market valuation of around $50 billion dollars for Airbnb. That ship has sailed.

Like most travel businesses, business at Airbnb is far from normal at the moment, and it’s doubtful it will ever be the same, as the world collectively becomes obsessive compulsive around health and reliable standards of cleanliness.

With hardly any occupancy in name brand hotels, things are even worse for Airbnb hosts. Worse, unlike hotel employees, there isn’t much help on the way, aside from a $250 million global fund to help support hosts impacted by cancellations. With millions of listings, it may not reach far enough.

Unlike the original simple idea of Airbnb, where someone would simply list their own place for when they weren’t around, many took the concept and ran with it, as the next big business boom. Many left jobs, took out multiple mortgages and for a while, it was working. Bankers were making more money as Airbnb hosts than money mavens.

For some “super hosts” who went big, using their near perfect credit scores to finance multiple Airbnb driven properties, the economic downturn could mean a molotov cocktail, not just for them and their ability to pay their mortgages, but the entire mortgage market along with it.

It’s all reminiscent of a famous scene from the Big Short.

Airbnb: the good, and the bad…

The pros and cons of Airbnb were massive in each corner prior to the global health crisis, and that’s not changing. Access to incredible neighborhoods, unique spaces and multiple rooms transformed travel for the better.

Airbnb made travel more affordable for families, and that’s priceless.

Selfishly, I love being able to pick a local neighborhood where hotels don’t exist, knowing exactly where I want to stay, and be able to. It’s the difference between Santa Monica, where hotels are plentiful, and Ocean Park, where they are not, but there’s much more of a neighborhood feel.

It’s a huge plus in the Airbnb debate for enriching the experience of travel, but also a negative in its impacts on communities around the world. I doubt Chris Martin from Coldplay is too happy when someone shows up next door with suitcases every week. Hello, “neighbor”…

Who would want to pay for two hotel rooms when they could have a house with four rooms and a pool, often for less, or at least break even? Add in Airbnb Plus standards of amenity, which bridged the gap between hotel and sharing economy standards in sheets, pillows and coffee, and it was becoming an even easier sell to mass market travel.

The cons of course, are all about people and not the simple, brilliant idea of sharing.

Recognizing the incredible, world record demand for global travel in recent years, landlords began kicking out locals in favor of creating Airbnb accommodations. Why charge $1000 per month when you can charge $200 per night. Even if only half the month is occupied, you’re making a 50% boost.

In fact, many super hosts reported earnings of $42,000… per day. Some hotels would be envious.

In traditionally local, quiet neighborhoods, the clanking of suitcases began to dominate, literally changing the face and feel of cities, seemingly overnight. Before you judge, think about your locale where you currently reside.

Imagine being priced out, or “vibed” out, along with virtually everyone around you, in a matter of months in favor of transient visitors. Even if it wasn’t about being priced out, the feel, safety and noise were never going to be the same, were they?

Cities like Barcelona, Miami, Los Angeles and Tokyo were uprooted in the span of months, with simple markets and local restaurants closing behind the moving van doors. Eventually, local governments were forced to act, but even then, too many loopholes regularly remained.

Airbnb mega-hosts were turning apartment buildings built for locals into hotels in everything but name. No locals, no community – just people in, people out. Of course, unlike commercials hotels, many of these properties lacked the extensive health and safety certifications, let alone standardized cleaning practices.

Not only were they uprooting communities, they were creating health hazards. One could easily say this was the fault of authorities, and not that of Airbnb, but ultimately the impacts were the same.

Without travelers, which essentially don’t exist right now, many of these purpose built Airbnb businesses are being forced to return spaces to their original intention, as residential spaces for the people. In some cases, where local governments found solid compromises, such as those in Los Angeles, that’s not entirely positive either.

Residents who rent out their spaces, or use Airbnb for a second home aren’t able to make vital supplemental income to support their livelihoods and dreams right now, and that’s precisely what was making Airbnb great.

Proactive communities had already reached agreeable terms on short term stays, and the original intention of Airbnb was being realized in a sustainable way. For those playing by the intended “rules”, it’s hard times, potential economic peril, and there’s nothing good about that.

For communities which were less proactive, the global health crisis did the rest. A place making some money is better than a space making none, and with every day borders are closed, a new, or old space becomes available to locals once again.

Basically, communities may reemerge in cities around the world, at prices locals can stomach, and that’s probably a good thing.

An Airbnb In Bali.

Will people ever come back to Airbnb?

Everybody has a price, or a location, and Airbnb will always be a part of the world. In fact, it was built on the heels of the 2008 financial crisis, so this isn’t even particularly uncharted territory, compared to many businesses.

The sharing economy giant, however, will be forced to adapt.

Like all travel industry businesses, new trends in what people care about will emerge, and hosts who dedicate their lives to the platform will want more in return, even if that means lower fees. Already, a clear focus on consistency, cleanliness standards and safety are top priority for most travelers.

Airbnb was already making a foray into this world with the introduction of Luxe and Plus standards guests could expect, but it’s more than likely  that similar minimum expectation standards will have to be introduced across all listings.

Ratings do a bit of that naturally, but in a world where the top ranked restaurant in London never existed, ratings can’t always be that dependable.

Everyone has a price, but Airbnb will need to attach new guarantees if it wants to come back when travel does. No one wants to worry about clean sheets or whether the last guest had the sniffles.

Gilbert Ott

Gilbert Ott is an ever curious traveler and one of the world's leading travel experts. His adventures take him all over the globe, often spanning over 200,000 miles a year and his travel exploits are regularly...

Join the Conversation

22 Comments

  1. For three years I was a Super Host of a single London property. For the most part I thoroughly enjoyed the experience of renting out my home to guests from all over the world. My property was extremely popular and I took great pride from the beginning in providing a service above the rest, and I quickly gained and then maintained my Super Host status. I love to travel and I always stay in 5 star hotels, so this was the standard of which I aimed for all be it in a different format as a host of a flat.

    The downside you ask? Well, AirBnB is a pretty lousy organisation. I mean really quite scuzzy; they have no respect for the hard work of hosts, and when something goes wrong, you’re on your own. Initially they will say all of the ‘right’ things on how they are there for you and will make sure you are taken care of but, over time the will weasel out of their commitments and leave you hanging.

    Covid-19 is an awful situation, and my heart goes out to all of those affected whether by health or employment. But, the one singular silver lining I can see is that unethical businesses such as AirBnB are getting the comeuppance I have longed for. Karma bitch.

  2. Demise… You keep using that word. I do not think it means what you think it mean. Or do you know something we don’t?

        1. Demise means death. That would be big news. Airbnb is no more than mostly dead.

          Good article, we’re having a silly argument.

        2. great content and ideas on your blog, don’t want to take away from that at all. The dictionary can often give various meanings that are not common usage, downfall is much more appropriate than demise in this case and glad you edited that. Just one more thing, I’ve noticed that you’ve been using circa a lot lately as a synonym for about or approximately. That is only the case when it applies to time, such as “that church was founded circa 1325”, and not in cases such as “the restaurant is located circa 5 miles north of the airport”. Thanks, love the blog otherwise…no need for a thesaurus.

    1. Gilbert Ott, I think you are confusing the title of “Super Host” with something else. Super Host is not necessarily a host who went big. It is about standards. One can just rent out their spare bedroom and be a “Super Host “. Worth checking the facts before writing.

  3. Only stayed at an Airbnb the once, turns out the pictures were by Airbnb but 5 years before, place hadnt been touched since, just awful, clearly a multiple room host, they couldn’t fix, Airbnb were hopeless no hotels available locally stuck in a grubby space for 3 nights, never again.

  4. Airbnb’s business model assumed not collecting sales taxes, not collecting lodging fees, declaring income offshore to avoid paying income taxes. A majority of its listers built their business with the same philosophy of skirting their obligations to the collectivity. Little sympathy for them now.

    I enjoy following your work Gilbert.

  5. I am on the negative side of airbnb. Live in condo & have owned for 20 + years . An AH bought condo next door to me, who rents by the night for less than Motel 6. I now share walls with different creeps. I hope airbnb goes bankrupt tomorrow.

  6. Airbnb isn’t going anywhere. It’s a great way to stay at nice places all over the world. For someone like me who stays for a few weeks, sometimes more, it’s the best value.

  7. we stayed at Airbnb all over the US, and a few times in Europe as well (Spain, UK). Always enjoyed meeting local hosts. Once we had bad experience with the hosts, in Spain. Airbnb as an organization was useless in resolving the issue. But there’s a big difference, imho, b/w people who try to accommodate us, and organization which only cares about bottom line.
    Also, VRBO and bunch of others will pick up the slack where Airbnb fails.

  8. I don’t know why anyone is praying for the demise of Airbnb. It’s not like other industries haven’t made us mad from time to time. Look how much bad press various airlines have had in recent years, including dragging one passenger, a Doctor, off of a plane one time. Look at the bad press Wall Street gets. Or the insurance industry not paying customers and instead giving them a run around after the customers suffered a catastrophic loss due to natural disasters or other events. And speaking of standards I guess everyone has forgotten about the hotels out there with bedbugs, filthy sheets, and overall poor service. Yeah no one is praying for companies in these industries to go out of business.
    Airbnb has not been perfect, but as a Airbnb host for the past eight years or so it has helped me to pay my mortgage, thereby spending more time with family. I’m not saying that they’re perfect, because there has been times when I have had my disputes with them involving a reservation, or cancellation. I have disagreed with them, yes. But generally speaking my impression is that the company strives to do the right thing. That’s been my experience.
    And I’m sure the reason people like Gilbert write about Airbnb, without mentioning their competitor, is because the truth is Airbnb stands head and shoulders above its closest competitor. I’ve tried the others like VRBO, booking.com, and their customer service, their user interface on their websites, and just overall experience pales in comparison to what Airbnb offers. You’re not expecting the hotel industry to fade away, so your fantasy of Airbnb disappearing is just that- pure fantasy.

  9. Homeaway / VRBO are a million times better than AirBnb and their fees are a fraction of the price, so better for both owners and guests. Many properties are on both, so if I find one I like on Airbnb, I always look for it in VRBO and book it through there where you can contact the owner directly and even negotiate on the price, which I’ve done a number of times.

  10. Airbnb is convenient and has a way better UI than competitors. But I agree, VRBO way better for owners.

  11. Great article and pretty much sums up the situation. Hosts and guests have both been at the sharp end of the crisis in the Airbnb ecosystem. Airbnb is not going away, it is morphing and we will definitely see a re-thinking of insurances, T&C’s, its loss making experiences and where to focus on revenue improvement.

    I do think everyone needs to recognise where and what Airbnb really is. It’s a highly successful marketplace. It’s asset light. They had some stunning and smart PR and initial business models that gained massive inventory and in doing so has raised money which it needs to repay many times over and that is the priority. It is after all the whole game behind scaling and bank vaults of investments.

    The old Airbnb is long gone and the company is now a solid part of a multichannel distribution game where there are a few other goliaths feeding. Which company will come out of this best? It’s the one that has avoided too much guests and host angst, but there is no doubt it’s all to play for and we are fascinated to see what will come into play!

  12. Great article Gilbert. Have stayed with my family in large, immaculate homes and small, cozy apartments in cities and countryside around the world and have almost uniformly been thrilled by the space and elegance or charm of each. Luckily, thus far, reviews have accurately reflected the properties. Do hate the cons of what the service has done to locals in many cities and you presented those well. Rarely watch video clips in articles, this one from The Big Short is great. Thanks for the engaging content as always.

  13. Well written and thought out article.

    I am always saddened by people’s hardships. But AirBnB landlords who turned residential areas into commercial centers with continuous turnover will be low on my list for empathy.

    For the posters who say it is here to stay-well, to some extent. But good luck bringing in customers to stay at a place where unknown strangers have just left. Hotel chains have detailed, intense cleaning plans in the works that few hosts will match and Air BnB will have no way to oversee.

Leave a comment

Your email address will not be published.