Airbnb hosts are turning to long-term renters, competitors, over coronavirus

Many Airbnb hosts like Sean Ray are now listing their homes on more websites and making them available for longer terms at discounted rates.

Courtesy of Sean Ray

Sean Ray usually rents out his 3 bedroom home in Dallas by the few days to travelers who find it listed on Airbnb. On Saturday, Ray spent the afternoon touring the property with a mother-of-two, who showed up looking for long-term rental and wore an N-95 mask.

“That’s something I have to do,” Ray said. “I won’t be able to survive much longer if I don’t rent this thing out.”

Ray and many other Airbnb hosts are now listing their homes on competing sites and making them available for longer terms at discounted rates. These hosts are trying to stay afloat on mortgages and arbitrage leases after demand for short-term rentals suddenly dried up due to the coronavirus pandemic.

In an arbitrage, a host rents a property and then rents it out to other people on Airbnb.

“I bring someone into my house and I have my fingers crossed that they pay because I can’t evict them,” Ray said. “But I can’t keep it on Airbnb because that’s a guaranteed loss.”

Airbnb hosts have struggled to find new guests or renters for their listings since March 14, the day the private tech company made a complete policy change Refund to all guests who have canceled their reservation between this day and the 14th

According to numerous hosts who spoke to CNBC, the change overturned the cancellation policies many hosts had in place to protect themselves, and cost many thousands of dollars in lost revenue. Cancellations aside, many hosts are struggling to find short-term bookings. Because of this, many are lowering prices, increasing length of stay and scouting for new bookings everywhere.

Many Airbnb hosts like Liam McLaughlin are now listing their homes on more websites and making them available for longer terms at discounted rates.

Courtesy of Liam McLaughlin

“After they made that announcement, we received an avalanche of cancellations,” Liam McLaughlin, who manages 14 properties in Pittsburgh, Pennsylvania, told Arbitrage. “We’re just trying to survive now by locking people up at weekly or month-long rates just to break even.”

Many of these hosts had previously listed their units exclusively on Airbnb, but are now turning to other sites including Vrbo, HomeAway, ZilovApartments.com and even Facebook Marketplace and Craigslist.

“The business model had to change completely,” said Ambur Storozynsky, a host who is converting two of her five arbitrage properties in Calgary, Canada, into long-term units. “There’s just no demand for people to come on weekends.”

Airbnb CEO Brian Chesky.

John van Hasselt | Corbis | Getty Images

2020 has quickly become a challenging year for Airbnb.

The company has been listening to investment pitches as it considers raising money, Sources familiar with the matter told CNBC. That comes after a Bloomberg report Earlier this month, it said the company’s plans to go public in 2020 could be delayed until 2021 due to the coronavirus pandemic. Meanwhile, the company last week sent a letter to Congress urging lawmakers to pass legislation that could help the company’s host network, either through tax breaks or loans.

“Today we have as many offers for potential guests on the platform as we did before the pandemic,” an Airbnb spokesman said in a statement to CNBC. “We are aware of news reports that larger property managers have faced these challenges, but this is not what constitutes the vast majority of Airbnb hosts.”

accommodation of medical personnel

The migration of Airbnb hosts to other services and the potential loss of delivery for long-term renters could do significant harm to the company, said Henry Harteveldt, travel industry analyst at Atmosphere Research Group.

“If a host moves inventory from a home-sharing service into the condo-rental market, the home-sharing site (whether Airbnb or another company) will suffer,” Harteveldt said. “The lower the amount of home-sharing inventory, the lower the usefulness of a site and therefore its appeal to a consumer.”

Many Airbnb hosts like Travers Xanthos are now listing their homes on more websites and making them available for longer terms at discounted rates.

Chris Graf with Multiverse Media

This shift has already begun for Travers Xanthos. He manages 24 properties in Nashville, Tennessee, most of which are in arbitrage contracts.

After seeing his bookings for March and April canceled, Xanthos quickly devised a backup plan and began listing his properties on Craigslist and Facebook Marketplace. He also bought the domain MedReliefHousing.comwhich is targeting its units at nurses and medical workers traveling to Nashville to treat coronavirus patients who need a place to stay.

Xanthos has already booked three of its units for nurses, he said. Xanthos hopes the government will offer relief to business owners like him, but in the meantime he’s hoping to find more long-term tenants.

“I’m not going to just sit back and rely on a government bailout,” he said. “I must do whatever it takes to save my business, which I’ve worked so hard for.”

Xanthos also plans to print flyers, make yard signs and call hospital human resources departments to promote its units, he said.

“Whatever happens, happens, but I’ll do my best,” Xanthos said. “If I beat it, great. If I don’t, I know I did my best.”

Many Airbnb hosts like Sean Rakidzich are now listing their homes on more websites and making them available for longer terms at discounted rates.

Courtesy of Sean Rakidzich

Sean Rakidzich has taken a similar approach with the 100 properties he manages in Arbitrage, proactively calling out potential guests to fill his vacancies. Rakidzich assembled an impromptu sales team to contact hospitals and housing associations directly. The sales team has grown to nearly two dozen people, many of whom were recently laid off due to the coronavirus outbreak.

“I don’t think anyone in this industry ever thought they needed to pick up the phone and start finding clients,” said Rakidzich, who runs one Youtube channel and a Facebook group designed to educate and connect Airbnb hosts.

In addition to medical professionals, hosts have had good luck booking stranded travelers, students whose campus has been closed and people who need a place to quarantine or isolate.

Although long-term rentals are an option, many hosts would prefer to continue with short-term bookings. Long-term rentals offer a more reliable source of income and involve fewer expenses, such as B. the cost of consumables such as toilet paper and the service fee for Airbnb. However, short-term bookings usually generate significantly higher income for hosts.

Many Airbnb hosts like Ruben Gomez are now listing their homes on more websites and making them available for longer terms at discounted rates.

Ruben Gomez, a host in Omaha, Nebraska, said he will focus on finding long-term tenants for his property. Omaha typically attracts travelers for a number of events such as: B. the College World Series and Berkshire Hathaway‘s annual shareholders’ weekend, but with the coronavirus affecting so many events, he can no longer rely on travelers to bring him revenue. However, Gomez said he hopes to return to the short-term market by next year.

“I definitely want to be back next year,” he said. “But I have to be aware of the short-term demand dips that we’re going through.”

But for hosts who may want to return to short-term bookings at some point, several hosts who spoke to CNBC said they will no longer offer their listings exclusively on Airbnb. The company’s March 14 decision to refund all cancellations left the hosts in an uproar and breaking loyalty, the hosts told CNBC.

“The way they handled communication with the hosts wasn’t a professional way of treating your business associates,” Gomez said. “I’ll still be there because the money is there, but I’m not loyal. It is to my advantage to diversify.”

Comments are closed.