photo: A lone tourist in Barcelona, one of several global cities that have seen a massive crash in Airbnb bookings.
A lone tourist in Barcelona, one of several global cities that have seen a massive crash in Airbnb bookings. Angel Garcia/Bloomberg

The short-term rental market is reeling from the coronavirus-driven tourism collapse. Can the industry’s dominant player stage a comeback after lockdowns lift?

What will happen to home-sharing in the wake of coronavirus? It’s one of many questions about the fate of pre-pandemic sharing-economy juggernauts like Airbnb. That company and its competitors have transformed the market for travel accommodation in recent years, reshaping neighborhoods and whole cities in the process as short-term rentals swept through heavily touristed parts of the world. But with tourism on hold, national economies staggered, and public attitudes about shared space very much in question, the prospects for that industry are now murky.

In the immediate future, things look dire indeed. Across the world, Airbnb bookings have tanked. Data analysts at AirDNA say that bookings across Europe collapsed in March, dropping 80% compared to the previous week in the week beginning March 9, and another 10% on top of that in the week of March 16. In the U.S., where virus response lagged, the figures for falls in booking are uneven, but scarcely less dramatic. By the middle of March, bookings in New York City, San Francisco and Seattle had already dropped more than 50% compared to the week beginning January 5, with drops of over 35% in Washington, D.C., and Chicago.

To weather the crisis, Airbnb has reportedly canceled all marketing activities, put its founders’ salaries on hold and slashed those of top executives by half. It has halted all but essential hiring, may postpone going public and has not ruled out layoffs. “Airbnb is resilient and built to withstand tough times and we’re doing all we can to strengthen our community and our company,” the company said in a recent statement to Reuters.

In a fast-evolving situation, Airbnb has offered blanket cancelation of any pre-lockdown bookings made for stays up until May 31 — which antagonized hosts who thought the cancelation policies they had agreed with guests would hold. Acknowledging their anger, company founder Brian Chesky outlined the company’s dilemma in a statement: “If we allowed guests to cancel and receive a refund, we knew it could have significant consequences on your livelihood. But, we couldn’t have guests and hosts feel pressured to put themselves into unsafe situations and create an additional public health hazard.”

To repair the relationship, Airbnb to set up a $250 million fund, in order to compensate hosts for up to 25% of their lost income, with an additional $10 million bailout fund for super-hosts. U.S. hosts will also be eligible to apply for relief from Covid-19 stimulus payments, a bailout that Airbnb is also asking the national government to extend to hosts in Canada.

These measures could help the company regain goodwill from hosts, which will be important once tourism revives. But when that revival could come, the form it might take, and what it could look like in the cities where Airbnb has been most prominent remain mysteries.

Mobilizing for the crisis

For now, many of those now unrented units are being put to good use. Short-stay hosts worldwide have offered stays in over 100,000 units to people in need, whether that’s accommodation for medical staff in Italy who want to stay near their hospitals and self-isolate during the crisis, or homeless residents of cities such as Barcelona, where the city has struck a deal to rent 200 short-stay apartments to allow people who would otherwise be on the streets to self-isolate.

Beyond that, there are many ways the situation might evolve when the immediate crisis recedes.

A rural revival could come first

If, as the crisis stabilizes, lockdowns are lifted and some travel resumes, home-share listing in cities might not be the first to revive.

“I think that in more isolated rural areas, Airbnb is likely to be pretty resilient,” says Marie Hickey, head of commercial research at U.K. real estate consultants Savills. “It could be the case that we don’t see a truly sustained recovery in overseas visitors until well into 2021, and the market that will bounce back quickest may be the domestic leisure market.”

While people might be more wary of traveling to other countries, urbanites who have been cooped up in city homes under lockdown may well take the opportunity to travel somewhere nearby for some open space and fresh air once it is safe to do so.

Hotels fight back

When travel to cities returns, it may not be Airbnb that reaps the benefits. Some experts think there may be a medium-term swing back toward traditional hotels once the travel industry starts to revive, due to fears about how consistently hygiene standards can be enforced in the home-share market. “People might be less inclined to book Airbnb after the recovery due to perceived cleanliness issues” says Michael O’Regan, senior lecturer in marketing at the U.K.’s Bournemouth University. “They simply can’t guarantee a deep clean on a host-to-host basis after every guest.”

Following a period where social mixing has been discouraged, travelers might nonetheless remain wary of sharing hotel spaces that have a large turnover of guests mixing in public. Hickey thus predicts a possible swing toward a previously niche sector: apartment buildings that are run by hotels. “We might see serviced apartments, or so-called aparthotels, being the main beneficiaries of the situation,” she says. “They’re similar to Airbnb listings but you have that confidence as a user that they’re being operated just like a hotel, with regular cleaning and health and safety precautions.”

This sector has already grown in recent years, thanks partly to the concept of staying in apartments while traveling being so widely publicized by the Airbnb boom. It might now stand to be the quickest sector to recover. That wouldn’t be a bad thing for cities in need of cash — hotel-type accommodations generally contribute more in tax, and are on a scale to support full-time employees.

Ex-Airbnbs return to the long-term rental market

The downturn is going to force a lot of Airbnb landlords to find alternative ways to pay off their loans — possibly by finding longer-term tenants.

Indeed, there’s already been much online discussion — some of it gleeful — of Airbnb units filtering back onto the long-term rental market. In Dublin, for example, the number of one- and two-bedroom apartments available for rent in Central Dublin hit a five-year high in March, with several of the listing photos betraying the apartments’ past as tourist accommodation.

Many might welcome the disappearance of at least a proportion of home-shares as a long overdue correction. It’s certainly possible that quality of life for residents might improve in some heavily touristed areas — such as Barcelona’s Old City — if more apartments had full-time tenants, thus reducing noise nuisance and supporting a broader ecosystem of locally focused stores and amenities.

The long road back to business as usual

But there’s another possible outcome — that this massive global shock to the lives of millions of people ends up, over the longer term, changing little. “There was a lot of discussion during the SARS and MERS epidemics about how it might change people’s behavior” says O’Regan, “but things ended up going back to business as usual pretty fast. I don’t think Covid-19 is a fatal blow. I think a lot of people will go back to hosting.”

Neither of those global outbreaks were nearly as far-reaching as the Covid-19 pandemic, of course — and the present crisis has yet to crest — but when cases start trending down, there might be intense pressure from cities and people hungry for income to return to business as it was as quickly as possible. In Amsterdam, for example, the pandemic is costing the city €1.6 billion a month. With much of that lost from hotels, restaurants and catering, many people will not be worrying about overtourism for a good while.

The crisis may also shed light on one major criticism of Airbnb — the accusation that it exacerbates urban housing shortages by removing apartments from the longer-term market. In cities that have been the most vocal about the effects of short-term rentals on housing prices and quality of life, such as Paris and Barcelona, it’s possible that the tourism hiatus could expand the rental market and ease affordability for locals.

But the coronavirus crash could also reveal something else entirely: that the impact of the platform may have been overstated, and that changes detectable in particular neighbourhoods affected by Airbnb may still not be enough to affect rent levels across an entire metropolis. In cities with housing demand as high as London, which has roughly 900,000 rental households, you might need many thousands of former Airbnbs to seek permanent tenants for there to be any perceptible effect on citywide rent levels.

For some time, Airbnbs critics have highlighted the significance of its role in skewing rental markets and pushed for stricter regulation, while the company insisted it was channeling income that boosts local communities. Now we may get an opportunity to see who was right.

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