Is Airbnb working in the UK?

According to AirDNA figures, bookings are down 85%, cancellations are down 90% and revenues in March are down 25% year-on-year. The coronavirus environment suggests that figures are unlikely to improve any time soon.

Some official facts 

However, that is not the case at all. Last year, due to rising costs to $5.3bn, the company lost $674m. Such figures are generated from Airbnb hosts: from retirees with personal summer homes, to property investors with flimsy rental models.

To understand the crisis, you have to understand that Airbnb is not a rental property company, but the largest hotel chain in the world, with an inventory checking of more than seven million different listings. That said, the listings are not individual rooms. And many hosts on Airbnb have more than one listing. Many of these listings are owned by companies that manage Airbnb or individuals who take out loans to secure a number of properties because they know they can get higher rates by subletting them through, Airbnb and other online platforms. This business model has created a boom. But the problem is that when there are no guests, there is no one to pay the rent.

“There is a possibility that this business model – renting out properties, furnishing them and re-hosting them on Airbnb – will not appeal to people who understand how unstable this environment can be,” says Scott Shatford, CEO of AirDNA.

“The company can still be successful if only it accepts the idea that it may have to become smaller in the short to medium term,” says Ralph Hollister, associate analyst at GlobalData.

Not a small part of the discontent is directed at Airbnb by hosts, which relates to the company’s decision to allow cancellations for guests from March 14 to May 31 without penalty. Airbnb collects most of its bookings before guests check in, unlike regular hotels. And this has created a financial pain for hosts, especially those who don’t own their listings.

The Airbnb company has raised $1bn in funding, which also has have a financial cushion in the form of Superhost members (who have a $17m fund available).

Amidst all the confusion, there are signs of a change of course. The site’s home page, prominently displayed, now advertises monthly stays rather than weekend trips. It is likely that Airbnb in London UK also will also focus more on real homes and vacant rooms than on high-yield investment opportunities.