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Will Airbnb survive the coronavirus? [spoiler: yes]

The short-term rental market is storming as a result of the collapse of the tourism industry caused by the coronavirus. Will the main player in the industry regain its position after everything is over?


What will happen to the home-sharing service after the coronavirus? One of the burning questions about the fate of pre-pandemic giants, like Airbnb. This company and its competitors redrawn the market for travel services, while changing areas and entire cities, when a wave of transition to short-term rental swept through the tourist areas of the world. Now, with frozen tourism, national economies falling into a coma and people’s unwillingness to now share a common space with strangers - the future of such companies is under a very big question, The industry's prospects are most gloomy.

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The near future does not cause the slightest optimism. Airbnb orders worldwide have plummeted. AirDNA data analysts say the number of orders across Europe has fallen significantly. First, a fivefold collapse occurred, when in the third week of March there was a drop of 80% compared to the second week. After that, there was not much left to fall, but in the last week of March the indicators fell another 10% compared with the third week. In the United States, where the response to the rampant virus was lagging behind the European one, the numbers of falls in booking are uneven, but hardly less dramatic. By mid-March, orders in New York, San Francisco and Seattle had already collapsed by more than half compared with early January, in Washington and Chicago, indicators slipped by a third.

To survive the crisis, Airbnb is rumored to have canceled all marketing activities, suspended payments to its founders, and halved the salaries of top managers. Everything except the necessary hiring was terminated, all public events were canceled. There were no mass layoffs yet, but they seemed to be on the agenda. “Airbnb is resilient and withstands difficult times, we are doing our best to strengthen our community and our company,” a Reuters statement said in a recent statement.

In a rapidly evolving situation, the company proposed the complete cancellation of any pre-bookings - which went against the wishes of the owners, who believe that the cancellation rules, which they have already agreed with the guests, will remain. Realizing their dissatisfaction, the founder of the company, Brian Chesky, outlined the company's dilemma: “If the cancellation of the reservation involved the payment of a refund, this could have serious consequences for you. It is absolutely unacceptable to jeopardize the life and health of guests and hosts who may be in unsafe situations. ”

To restore strained relations with the owners, Airbnb created a fund of $ 250 million to compensate hosts for at least a quarter of lost revenue. An additional fund of $ 10 million for super hosts is also provided. US hosts are eligible to apply for exemption from payments due to Covid-19. Airbnb also requested the Canadian government to extend these benefits to hosts in the country.

These measures will help to return the friendly attitude of the owners, which will be very important after the restoration of tourism. But no one knows when the revival will take place, in what form, and how it will look in cities where Airbnb had the most stable positions.
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At the moment, many of those whose housing is not currently rented, find him another worthy use. Owners earning short-term rents all over the world have offered shelter to more than 100,000 people in need. This is housing for medical personnel in Italy, who need to live close to their hospitals. And a roof over your head for those who decided to isolate themselves during the crisis. And even a temporary shelter for the homeless. In Barcelona, ​​the city authorities rented 200 apartments for a short term, to allow those who would otherwise be on the street to self-insulate.

When the most difficult crisis period is over, other ways of developing the current situation are possible.

Revival will begin with the village


If, as the crisis stabilizes, the restrictions are lifted, and some routes resume their work, urban options may not be the first to be in demand.

“I think that in more isolated rural areas, Airbnb’s position is likely to be fairly stable,” said Marie Hickey, head of commercial real estate research at a UK consulting company. “It is entirely possible that we will not see a truly sustainable recovery in the flow of foreign visitors until 2021. The market that is recovering fastest may be the domestic leisure market. ”

While people may be more careful when traveling to other countries, urban residents locked up in their city apartments may well take the opportunity to go somewhere in the neighborhood to breathe fresh air as soon as it becomes safe.

Hotels will recapture positions


When travelers return to the cities, it is not a fact that Airbnb will be the first to benefit from it. Some experts believe that when the tourism industry begins to revive, a mid-term return to traditional hotels may occur due to concerns about how hygienic standards for home options will be respected. “People may be less likely to book Airbnb after quarantine has been lifted due to cleanliness issues,” said Michael O'Reegan, senior professor of marketing at the University of Great Britain at Bournemouth. “Hosts simply cannot guarantee a thorough disinfection after each guest.”

However, while the recent prohibitions on communication will be fresh in memory, travelers may be afraid to share a common space in hotels with a large number of visitors. Hickey predicts a possible turn in the direction of the previously niche sector: apartment buildings controlled by hotels. “We could see serviced apartments or so-called apart hotels as the main beneficiaries of the situation,” she says. “They are similar to what Airbnb offers. And there, users are confident that the sanitary standards will be like in a hotel, with regular cleaning, as well as observing safety rules. ”

This sector has already grown in recent years, thanks in part to the concept of staying in apartments while traveling, which is so widely covered by the Airbnb boom. Now it may be the fastest recovery sector. This would not be bad for cities in need of cash - hotel-type housing, as a rule, brings large taxes and implies jobs for staff.

Airbnb properties return to long-term rental market


The recession will force many Airbnb owners to find alternative ways to repay their loans - perhaps by looking for long-term tenants.

There is a lot of discussion on the Internet (and the tone of these discussions is encouraging) that former Airbnb apartments are returning to the long-term rental market. For example, in Dublin, the number of one and two bedroom apartments that can be rented in the center of Dublin reached a five-year maximum in March, and often in the photographs these apartments have signs that they were previously used to accommodate tourists.



I’ll see that with hosting on Airbnb it’s now complete f ** a. All these apartments, completely unrelated to each other, suddenly appeared simultaneously in rent. And everything is like a selection with small towels folded on the beds! What a sudden hospitality in the current rental market in Dublin.

A similar trend is observed in London and Madrid. In Amsterdam, many tenants are optimistic, they are looking for long-term tenants - but only until the summer.



Amsterdam property owners expect mass tourism to return in 3–6 months. If you look at the former Airbnb apartments, which are now temporarily rented out per month at Pararius, you will notice that everyone negotiates a specific rental end date.

Many are only glad that at least some of the proposals have moved to rent, the need for such a correction has long been ripe. The quality of life of local people can improve in some areas where there was previously an intense tourist flow. In particular, in the Old Town (Barcelona), if most of the apartments will now be occupied by long-term tenants who are absent full time, there will be less noise in the area, and a wider ecosystem of local shops and services will arise.

Long return to normal


But another outcome is possible - the current global shock in the lives of millions of people will ultimately change little. “During the SARS and MERS epidemics, there was a lot of talk about how that would change people,” says O'Reegan, “but in the end things went as usual, and pretty quickly. I do not think that Covid-19 is a fatal blow. Many people will pretty soon return to hosting their home. ”

None of these previous global outbreaks has had as far-reaching consequences as the Covid-19 pandemic, of course, the current crisis has not yet really erupted, but when the number of new infections goes down, there will be strong pressure from cities and people eager to return to normal life and business as soon as possible. In particular, in Amsterdam, a pandemic costs the city 1.6 billion euros per month. Given that a significant share of this amount is the loss of hotels, restaurants and other cafes, many will not worry about excessive tourism for a long time.

The crisis also exposed another Airbnb flaw that has been sharply criticized - the accusation that the service exacerbates the lack of urban housing by removing apartments from the long-term rental market. In cities where short-term rents have had a major impact on prices and quality of life, such as Paris and Barcelona, ​​it is possible that a break in tourism could expand the rental market and make it easier for locals to access.



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