Yahoo Finance Airbnb hosts turn to longer term rental income during coronavirus outbreak
As the novel coronavirus pandemic rips through the hospitality and tourism industry, Airbnb hosts around the world are losing nightly bookings. But hosts aren’t just watching their business disappear. Instead they are making way for month-to-month leasing.
In the U.S., some Airbnb hosts have started marketing their properties for rent each month, listing their properties on longer term rental platforms like San Francisco-based month-to-month rental listing service Kopa and Austin-based full-home medium-term rental platform Homads.
“For a lot of hosts, we think this is an eye opening-moment of the tremendous value of medium-term housing. You spend 90% less time managing your space and yet you earn ultimately more over the whole year,” said Jack Forbes, CEO and co-founder of Kopa, explaining that many hosts using short-term rental sites like Airbnb have an average annual occupancy rate of under 50%, whereas sites like Kopa aim for an occupancy rate of 95%.
Homads site visits increased 500% in mid-March from February, said co-founder and chief executive officer Vi Nguyen, while Kopa had a tenfold increase in hosts and listings on its platform.
“Look at the times. Everyone is unsure of what’s going to happen, even after the pandemic, what’s going to happen. The stability of longer leases is appealing to them,” said Nguyen.
Meanwhile, some Airbnb hosts are pulling their properties from the short-term rental platform altogether. In the U.S., 43,000 properties have disappeared from Airbnb from January. There were 1,045,000 active Airbnb properties in January to 1,002,000 in March in the U.S., according to AirDNA.
New target guests
More than 750 hosts have turned to Facebook to crowdsource ideas on how to earn income during the challenging time. Some suggest renting to nurses and health care workers who don’t want to expose their families to the virus at home. Others said to look for students scrambling for somewhere to live, now that most dormitories have been closed down.
“We are seeing high conversion rates [from website visits to product use] among nurses who do not want to bring the virus home or anyone who is around someone elderly or immunocompromised,” said Nguyen. “A lot of people want to stay somewhere separate and quarantine.”
“People are very skittish right now. They don't want to make plans because they don't know how long things will be shut down,” said Jason Centeno, who owns and manages over 20 properties in Philadelphia.
Alex Rep, a Kansas City short-term rental host with seven properties, was able to book five longer-term tenants, including one from a nearby lodge for cancer patients that is shutting down.
“We have a flood of people that have never used a short-term rental but who need a place to stay and don’t know where to look except for — vuela! — us,” said Rep. “At first, I was in a panic, to be completely honest… It is definitely less money than what we would have normally gotten, but I can’t complain because the alternative is what hotels are doing, shutting down.”
Airbnb creates a rift
Usually, when a guest cancels on Airbnb, hosts receive some compensation. But Airbnb has mandated a policy whereby hosts are forced to give refunds to guests canceling due to the coronavirus pandemic — leaving many hosts feeling betrayed by Airbnb.
“Homeowners are angry, and a lot of them will return to Airbnb after the pandemic, but a lot of them won’t because it was such a break of their trust. They’re frustrated,” say Nguyen.
In New York City, the total Airbnb revenue dropped by almost half from February 22 to March 23, from $14 million to $9 million, and occupancy dropped from 37.3% to 24.2%. And from February to March in Seattle, the revenue dropped from $3 million to $2 million, and occupancy 52.4% to 28.2%, according to AirDNA.
Austin faced a particularly bad blow. The revenue dropped from $8 million to $5 million from February to March, and occupancy went from 56.9% to 34.1%. But year-over-year, the contrast is even worse. Because the South by Southwest music and arts festival was canceled, hosts missed the biggest travel season of the year for the city — last year, they brought in $16.1 million in the stretch of the 10-day festival, but this year they brought in about $9.8 million.
The problem is not only in the U.S. Reports have shown that Airbnb hosts are turning to long-term rental solutions in Australia and New Zealand. Toronto has also been hard-hit, said Nguyen.
Airbnb said in a statement. that it is “working day and night on a plan of action that will help [hosts] get through this extremely difficult time.” The company added that its “success is dependent on the success of...our hosts.”
COVID-19 relief efforts
Despite the frustration, most hosts understand that Airbnb and other real estate rental platforms are making tough decisions to stay in business. As the pandemic continues, several of the platforms have announced humanitarian efforts.
Airbnb is partnering with hosts to provide housing for 100,000 COVID-19 responders globally, including health care providers, relief workers, and first responders from organizations including Red Cross, the International Rescue Committee and the International Medical Corps. Airbnb has a “pool of money” for free stays and is subsidizing the rest by about 15%. A pilot program in Italy and France saw 6,000 volunteers who are hosts on Airbnbs, tweeted Airbnb CEO Brian Chesky on March 26.
Meanwhile, Kopa has launched a program called “Kopa for Good,” which aims to provide 10,000 furnished apartments to those displaced by COVID-19. These apartments are required to have a flexible cancellation policy, professional cleaning, be at least 20% discounted, and provide soap and toilet paper. Guests include international students who cannot live in their dorms and return home, health care providers and individuals with high-risk family members in their homes.
“A lot of hosts are now dedicating their efforts toward supporting people disrupted by COVID-19. A lot of them genuinely want to help,” said Forbes.
Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter
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