Whether it is for hosts, property managers or platforms, liquidity and survival are the overriding issues for the short-term rental industry at this stage of the pandemic, and will remain so for an extended period.
The Covid-19 crisis is far from over. Having chopped workforces, rejiggered business models, halted investments and product initiatives, or shut operations, the short-term rental industry around the world faces varying degrees of resurrected lockdowns and other challenges as the coronavirus outbreak spikes and dips.
For example, Skift Research’s U.S. Travel Tracker October 2020, completed in early November right before the U.S. presidential election, showed that only 37 percent of Americans traveled in October, with visiting friends and families the most popular reason, and small towns and the countryside constituted the most popular destinations.
Still, hotel stays jumped significantly, eight percentage points to 56 percent of all stays in October, according to the survey. That was the biggest jump for hotels since the pandemic’s beginning.
Join Us for the Skift Short-Term Rental and Outdoor Summit – December 9-10
But it is going to be a long hard winter for the travel industry in many parts of the globe as international visitors slowed to a trickle or were totally absent, and there will be additional bankruptcies, layoffs and pain.
Did the short-term rental industry cut deep enough in the spring? Will there be ample funding to survive?
The entire hospitality industry would acknowledge that short-term rentals led the tentative recovery in the Spring and into the Summer in many parts of the world. But a key question for the industry will be how will short-term rentals respond when hotels and cities come back in earnest — and with vaccines a real possibility, they certainly will.
Regulation is A Crisis for Hosts and Platforms
The short-term rental industry hasn’t solved a core issue: Although the gig economy provided a lifeline to property owners and to destinations dependent on tourism revenue in the pre-pandemic era, it also disrupted neighborhoods, and contributed to a shortage of affordable housing.
Have you ever stayed in a short-term rental and had to sneak around the building, pretending you are the host’s cousin? It happens all the time. A condo owner in San Juan pointed last week to a group of Airbnb renters making their way out to the beach.
“Airbnb,” she said, adding she used to keep her condo doors unlocked, but can’t anymore because of all the short-term rental guests ambling around the building’s hallways.
On the other hand, although the building frowns upon it, the condo owner said she’s interested in exploring renting her home as a short-term rental.
Meanwhile, in Colorado, the Denver City Council voted last week to fine platforms such as Airbnb $1,000 per illegal short-term rental transaction in the city. Sure, Airbnb will likely settle with the city in the future, but the price, as in other jurisdictions such as San Diego, California, may be severe limits on the number of permissible short-term rentals.
Maria Rekrut
Regulations are taking a toll on hosts, as well. Maria Rekrut, a real estate investor and founder and President of the Canadian Short Term Rental Host Association, told Skift that many hosts in Toronto can’t cover their mortgages because of the dearth of guests.
“Because of the licensing that is being put into place in 2121, investors are selling their condos at a loss at times of 50 percent, and the rents are being pushed down,” Rekrut said. “In Niagara Falls and in the Niagara Region in Ontario, Canada, many STRs didn’t open up and this included hotels. Many of the bed and breakfasts and short-term rentals will be selling and getting out of the business.”
Corporate Push Means Soul-Searching
The rise of quasi-hotel companies such as Sonder are a mixed bag for the short-term rental industry. Yes, stays in these types of properties mean more standardization and guests aren’t subject to as much of a crapshoot about promised amenities, but it also means meeting local hosts as part of the guest experience gets short-changed.
When you stay in a Sonder in Chicago, and you text with a company representative who’s in Boston about any issues regarding the stay, it just isn’t the same thing as sitting on the back porch with your Airbnb host in Vieques, Puerto Rico, and have him break out his map to make recommendations for things to do. Not to mention the bottle of rum that greeted you in the rental’s refrigerator.
Professional hosts were responsible for some 28 percent of Airbnb’s nights booked at the end of last year, and that will likely rise in the future. Individual hosts, who attract a higher percentage of five-star reviews than do professional hosts, according to Airbnb, often complain these days that their listings are getting crowded out by corporate hosts.
“By far the greatest threat facing the STR industry today is corporatization, with the likes of Airbnb, Sonder etc. working hand in hand with the REITs, vulture funds, global development tycoons, and private equity firms to cut out the middlemen (hosts, property management companies) and take over the whole playing field for themselves,” said one European super-host who declined to be identified. “Those players will also have the clout, the contacts and the money, to make sure they find a way around any zoning or regulatory issues that arise in any market in which they seek to operate. We both know how that game works. Win-win for Airbnb.”
On the other hand, Tobias Wann, an industry veteran and former CEO of the Zurich-headquartered Oyo Vacation Homes, said the quality of properties is a major challenge for the industry.
Tobias Wann
“In my opinion the biggest issue in STR is to continuously create high-quality supply,” Wann said. “Failing to create supply will be the number one growth-limiting factor in our industry.”
Wann pointed to the fact that Airbnb’s registration statement boasted 7.4 million “available” listings for homes and experiences as of September 30, but only 5.6 million were “active” (displayed on Airbnb and having attracted at least one booking).
“This is concerning and certainly a trend into the wrong direction,” Wann said.
More Direct Bookings?
Talk to individual hosts these days, and you’ll get an earful about their displeasure with the big platforms. Airbnb CEO Brian Chesky mounted an apology tour of sorts this Spring when Airbnb unilaterally refunded Covid-impacted guests, and left hosts virtually empty-handed. Airbnb has taken numerous measures in the interim to right the wrongs, but many hosts feel these steps have been woefully inadequate.
Will individual hosts bolt and attempt to attract a higher percentage of direct bookings? Some undoubtably will attempt to get more direct bookings, but most need Airbnb, Vrbo and Booking.com to divert traveler demand in their directions.
The state of the economy has always forced or eased hosts’ reliance on the big online travel agency platforms, and will continue to do so for the most part in the future.
Like in the airline industry, where carriers could charge bag fees because they have a captive passenger audience, the big online travel agencies know that hosts need them even if they feel disheartened and disenchanted.
Increased Monetization on the Platforms
Writing for VRM Intel about Airbnb’s pending IPO, founder and Editor Amy Hinote said property managers can expect Airbnb to extract higher commissions and to place further limits on host-guest communications.
Amy Hinote
“The difference between HomeAway and Airbnb is that HomeAway’s executives were actively engaged with the VRM (vacation rental manager) community,” Hinote wrote. “In contrast, many of the largest vacation rental property managers have never had the opportunity to have a conversation with Airbnb’s C-suite. Airbnb hasn’t demonstrated any concern for the needs of its professional suppliers, and its filing shows no intention to cater to this supply sector of its business.”
It wouldn’t be surprising if Airbnb competitors Booking.com and Vrbo don’t make similar moves to get higher paydays from hosts in the future, although Booking.com knocked Expedia off its online travel agency pedestal in the early 2000s in part by keeping hotel commissions lower than its rival.
Oh, Then There’s Google
No list of short-term rental challenges would be complete without citing the Google threat as the company pays closer attention to its vacation rental business, and gets more aggressive. Booking.com, Vrbo, and Tripadvisor, to name a few, are more dependent on Google than is Airbnb, but the entire industry will pay an increased Google tax if antitrust watchdogs don’t tame the search engine and make competition more fair.
Airbnb knows that Google, with its grip on consumer eyeballs, is the company’s biggest threat.
Hotel Rebound and Consolidation
In a couple of years, the hotel industry will be back, although it may be reshaped. In certain locales, the short-term rental industry is booming as hotels still struggle. For example, Michelle Katz Hellerstein, who owns a vacation rental in Truckee, California, said rates were “astronomically” high in November as families flocked to the area because of remote school and work.
On the other hand, Katz Hellerstein said although she had a few November rentals, “I guess the greatest challenge is that it appears people don’t want to make plans too far in advance.”
Post-vaccine, though, in-person schools will be back in session, offices will presumably reopen, and a humbled business travel market will show a pulse. When all that happens, short-term rental owners and providers may have to cope with diminished demand in traditional vacation rental markets, as urban areas rebound.
There will be a ton of mergers and business failures as the short-term rental market, the wider travel industry, and global economies sort themselves out. Some of the Sonder-like quasi hotel companies, many of which closed up shop during the pandemic, will be back and newer players will emerge if market conditions are attractive.
A public Airbnb could be emboldened, and get more aggressive with larger acquisitions than has been its habit.
As it is after most crises, the stronger players will get stronger, and weaker companies will have to adapt or succumb.
Register for our Skift Short-Term Rental and Outdoor Summit – December 9-10
"Short" - Google News
November 30, 2020 at 02:30PM
https://ift.tt/2JkRJHF
The Future of Short-Term Rentals After the Pandemic and an Airbnb IPO - Skift
"Short" - Google News
https://ift.tt/2QJPxcA
Bagikan Berita Ini
0 Response to "The Future of Short-Term Rentals After the Pandemic and an Airbnb IPO - Skift"
Post a Comment