After a long journey, what’s the moment all travellers look forward to the most? Arriving at their Airbnb. The inside might look slightly different to the photos online and you might notice a smell you can’t quite place, but still, it’s home for the next few days. Sometimes, they come with a weird rule or two from the host or are lacking some of the amenities you’d expect for the price point, but hey, it’s usually still cheaper and more spacious than a hotel room, so you can’t complain too much.
When you leave—despite paying a fairly high cleaning fee—you’ll probably have to take out your own rubbish, along with your luggage. Scrolling through the /Airbnb subreddit (or even the /AirbnbHosts), you’ll find experiences like these aren’t uncommon. Hosts and guests have been voicing their complaints with the vacation rental company since the COVID-19 pandemic (and, of course, before then), but could 2024 be the year that Airbnbust becomes a reality?
Let’s go back to the beginning for a moment. Airbnb was founded in 2007 by Brian Chesky, Nathan Blecharczyk, and Joe Gebbia. Chesky has been the CEO since then, seeing the company through several boom and bust cycles as it gradually became one of the largest accommodation marketplaces globally. Like an array of mid-2000s tech startups (think Uber or Netflix, for example), the company wasn’t profitable for years as it focused on building brand awareness through buzzy social media campaigns and low price points.
Thanks to its early convenience and affordability, the company was able to entice hosts and guests alike to stick with the brand. In fact, Airbnb reported that 2022 was its first-ever profitable year. Despite this influx in revenue (its 2022 net income was $1.9 billion, or showing 40 per cent year-over-year growth), general consumer sentiment about Airbnb’s short-term rentals has seemed to decline over the past year, especially online. So, what’s causing this discrepancy?
First of all, pricing has become a big point of contention—so much so that Chesky addressed “tens of thousands” of complaints across social media at Skift Global Forum 2023, a speaking event for the travel industry. While Airbnbs used to be a budget-friendly alternative to hotels, the online booking app for short-term rentals has seen its fair share of price increases over the years.
Which?, a consumer site based in the UK, put out an independent report in September 2023 that compared prices between the average price of a one-bed Airbnb and a hotel room across the world. According to its findings, “hotels were cheaper in 24 of the 30 cities we looked at, including every capital. The average price of a one-bedroom let per night is around £67 more than a hotel—with service fees extra.” While private rentals may still offer more space and savings to larger groups of guests travelling for long periods, when it comes to short-term prices for individual guests, hotels seem like the better option.
Inevitably, the pandemic also had a significant impact on pricing. During and shortly after 2020, Airbnb experienced a boom period. As people began working from home and exiting cities, supply and demand for short-term rental properties rose. However, so many of these vacation rentals were purchased at the time that now the supply largely outsizes the demand, especially as pandemic-fuelled travel continues to level out.
In November 2022, Time explained that “the number of available short-term rental listings in the US skyrocketed to 1.38 million in September. That’s a 23.2% year-over-year increase.” Take Big Bear Lake, a town in Southern California, as an example. Business Insider reported that “from 2020 to 2021, the number of nights available at short-term rentals there increased by 17.3%, but demand grew by only 7.2%,” citing this compliance report summary as evidence. Then, in 2022, the city “had the second-lowest occupancy rate of all US cities [on Airbnb], at 43%,” as per AirDNA, a software company that analyses trends in the short-term rental market.
As a result of this imbalance, many hosts have noted a steep decline in their bookings as more and more listings in their local areas become available. Scroll through the Airbnb community page and you’ll find plenty of hosts speaking to this downturn. One host based in Hawaii wrote: “My bookings are way down this year. I’ve been a superhost for years and my bookings have steadily increased year over year, but not in 2023. I’m down about 30%.”
Another, based in Oregon, responded to her, saying: “I noticed since November  a steep decline in bookings. This is unlike anything I’ve seen since joining in 2012. I’ve run a popular Airbnb listing in a year-round destination location and have had to drop nightly rates these past 2 months to unheard-of rock bottom pricing with many nights remaining open.”
This drop-off in profitability could be down to a few reasons. As inflation affects interest rates, home insurance and property taxes, hosts’ expenses have gone up. This, coupled with the steep increase in available rentals for guests to choose from, has caused a swathe of hosts to be unprofitable as their listings continue to go unbooked.
Due to the impact of short-term rentals on the housing crisis in major cities worldwide, some popular destinations have started cracking down on Airbnbs. For instance, in September 2023, New York City enacted a new law known as Local Law 18, which mandates that all short-term rental hosts register with the city’s government. Moreover, the law also prohibits guests from staying in residencies like these for less than 30 days.
While Airbnb’s oversaturated short-term rental market and more regulations from local governments continue to play out, expect even higher prices as the supply and demand even out. AirDNA predicts that average daily rates will “increase by about 2.1% in 2024.” Ouch.
Searching for Airbnb alternatives for your next holiday in the meantime? Luckily, there are quite a few out there. If you’re still looking for a short-term rental that will allow you to “live like a local” on your vacation, Vrbo is another option. The online marketplace features more than two million homes worldwide and operates similarly to Airbnb, with a few key differences.
For instance, Vrbo concentrates on offering whole-home rentals, tends to have lower fees than its competitor and is said to have better customer service, according to Jennifer Prince, a travel writer for Apartment Theory.
Other alternatives include Booking.com (which features local short-term rentals and hotels), apart hotels (which often are more dependable and consistent than privately owned short-term rentals) or checking out standard hotels.
The bottom line? As Vox senior reporter Whizy Kim puts it, “Airbnb may not be collapsing, as some doomsayers are predicting, but it is facing a reckoning—an existential questioning of what it offers and where it will go from here.” While it probably won’t be going out of business any time soon, it will need to address these key pain points in the near future to retain hosts and guests.
The ball’s in your court, Airbnb.