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.
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.