Unsustainable business model? What will happen to Airbnb?

[Francesco602]

We all know that Airbnb started off as a quick and easy way for rental owners or anyone having the right to access a property to profit from spare rooms or entire apartments. Hosts took advantages of the low entry barriers and fast cashflow (often difficult or impossible for local authorities to track) leading to more and more Airbnbs popping up in various cities, while travelers enjoyed cheaper, more “authentic” stays.

This rapid growth, which spanned over more than a decade and peaked between 2016 and 2020 pre-Covid, came at a cost. Major cities saw housing prices spike, rental stock shrink, and local cultures pushed aside by waves of short-term visitors, all partially tied to overtourism and gentrification.

In response, local governments have tightened rules around short-term rentals. Stricter registration systems, shorter rental periods, and heavier taxes are becoming common. Here are just a few examples:

• New York has cracked down on whole-apartment short-term stays.

• Barcelona plans to eliminate short-term rental apartments by 2028.

• Italy has recently banned self check-in and created a national database, requiring hosts to meet specific conditions to continue hosting.

With tougher regulations and higher barriers to entry, it is no longer as simple or profitable to host, especially now that the platform is saturated with competition - over 1,000 places often appear in even a single Airbnb search for most cities.

Here's what I'd like to discuss with the community:

• Will it become too complicated and less convenient for hosts to continue operating under increasingly restrictive local regulations?
  
  

• As wealth inequality increases worldwide and flight tickets grow more expensive due to CO2 emissions, how will these changes in travel patterns impact short-term rentals?
  
  

• Will Airbnb shift its business model - perhaps by buying properties for full control over the guest experience and obligations, or by leaning more into long-term stays?

What do you think the future holds for Airbnb? Can the platform adapt to survive these challenges, or are we seeing the beginning of its decline? Let’s discuss.

[Karen114]

@Francesco602  I can't comment on wealth inequality and CO2 emmissions. However I do think complicated and inconvenient will help the platform retain cream of the crop hosts and only the best will survive.  I see this as a good thing becuase right now there are so many hosts like you mentioned above and it's giving the platform a bad name.

I have been hosting since 2010 and have experienced economic downturns, pandemic, etc.  People will always make time and money to travel. 

The nice thing about Airbnb is there are spaces for every budget.  I don't see them going anywhere anytime soon 😊 

[Francesco602]

Hello @Karen114 .

Thank you very much for your response, and I apologize for the delayed reply.

I’d like to clarify a few points to better address the observations I made in my original post:

- The phenomena I described are specifically related to "major tourist cities," where the number of Airbnbs has increased by up to 20x in some cases. This has led to an extremely saturated market, where the revenue per listing has effectively decreased compared to previous years due to supply and demand growing at different rates.

- It’s no secret that many local governments are working hard to limit the number of short-term rentals. These are often seen as challenging to regulate, with issues ranging from tax evasion by hosts to illegal Airbnbs operating under the radar. This makes it difficult for authorities to monitor and control the sector effectively.

- While Airbnb hasn’t openly acknowledged this, it’s becoming evident that it’s easier for the platform to work with fewer, larger players rather than a vast number of individual hosts and guests. This could explain why the trend appears to favor property managers who oversee 50+ listings, offering more standardized quality across their properties. Airbnb struggles with quality control and brand identity - two key aspects that are hard to ensure with independent listings.

- I see you’re based in the US, but in Europe, flight prices have nearly tripled in recent years due to several factors: higher airport taxes, CO2 emission-related taxes, inflation, and more. For example, between 2018 and 2022, it was possible to fly from London to Rome for as little as €15 one way, even during peak season. Today, such rates are far less common. While it’s true that people travel based on their free time, affordability often takes precedence, as travelers' budgets ultimately dictate their choices.

- Additionally, Europe is now promoting train travel for sustainability reasons, which I fully support. However, this shift is likely to increase "internal tourism" (within a country or region) rather than encourage cross-border travel.

[Not-Listed0]

My sincere apologies Francesco, I am unaware of how things are done in Europe at the moment in relation to intention for Airbnbs but I believe the geography is a important factor and ultimately would be the determinant in what motivates host behavior. 

For example, some focal points in North America have become hubs for mass immigration and as such the local government bodies have partnered with Airbnb hosts to settle immigrants and refugees, essentially lining their pockets free of cost. Much like an awarded government contract for a private enterprise. As such, resulting in driving up populations, thus demand, thus affecting market prices. Now I have given a very simplistic picture, the reality is causal, with an on-going response and adaption to market variability where individuals purchasing properties and the intended uses of those properties fluctuate, tainting the picture of rental accessibility. 

You want a discussion on if I read the points correctly, on whether;

-there will be a complication for hosts to continue operating under tighter regulations? IMO Karen answered this question lovely.

-IMO (N/A) these are categorized as expenses that the less fortunate financially do not typically have access to anyways. Travel. And Expenses associated with travel.

-I do not partake in the news, so I am unaware of the business model of this corporation, despite having utilized their services through their licensed agents, however, considering  the scope of abuse and lack of regulatory heedings and corners that the hosts typically cut in their pursuit for fast cash, it would most likely be a nightmare of a transition in terms of responsibility and liability for Airbnb. I would imagine the answer would be a hands-off approach as we have it now.

[Francesco602]

Hello @Not-Listed0 .

You're absolutely right. Geography is a crucial factor when trying to accurately reflect on the current market status as well as predicting what might happen in the future.

The refugee/immigration hubs in the US you mentioned are something I wasn’t aware of, but I believe geography and local regulations obviously play an important role here. Such a setup likely wouldn’t be possible everywhere!

Regarding whether "there will be complications for hosts to continue operating under tighter regulations," the answer is yes. Complications are already evident, dictated by stricter regulations, rules, and obligations for hosts. If a local government decides to eliminate a sector, they’ll do it - it may take time, but they’ll get there.

You’re also correct that Airbnb prefers not to own properties, leaving all the regulatory responsibilities to hosts. However, things might change if and when a significant number of listings shut down, making it less profitable or increasingly difficult for Airbnb to sustain its current model. In that scenario, Airbnb might aim to recover those "lost" listings by shifting towards professional management.

[Not-Listed0]

Well, interestingly my mild post was not accepted the first time around. So my apologies for a more terse response as it seems I might be timed and do not have the liberty to wind-down my response. 

Local governments are forced to respond to a lack of planning due to a lack of foresight of the intended consequences of allowing Airbnb as a business to operate in an unregulated environment as it had been doing. As a result of the unfettered immigration, lax housing laws in relation to buying and property ownership, majority of properties on the market are not owned or operated my locals of the geography. This directly impacts the housing market in an adverse way. As we can all clearly see. 

Wealth inequality is a non-factor in this discussion because people without financial stability or fortitude cannot afford the luxury of travelling. And as such cannot deal with the associated expenses of traveling like temporary recreational lodging. 

Airbnb will not ever accept liability in exchange for having greater auspices over the clientele. Ever. It is too great.

Well managed points Karen.