Drastic drop in requests and reservations

[Paolo-and-Cristina0]

Good evening to all,

I would like to know if it is only happening to us, but since early November, the number of requests and reservations has dropped dramatically. I have not changed anything in the announcements (5 advs) , no negative reviews and lower prices for the few free dates in the following weeks. Supehost from several years. We have always had reservations constantly, throughout the year. It 's this happening to any of you?

[Danielle476]

I love that adding a line through a price is a 'perk'.  OOoOoooOh!! Colour me impressed!  What a crock.  My prices reflect those of the units in my building - I give zero regard to AirBNB's 'suggestions' or their terribly applied 'Smart Pricing'.

[Sarah977]

@Danielle476  It's "strikethrough styling". How could you not be impressed with a feature with such a fancy name?  🙂

[Sean433]

It is drier than a desert out there. Christmas was not bad, I thought we would do better but it was just ok. January is just horrible for half of my listings. I even dropped the price of a 3 bedroom home to $49 for the Sunday that just passed as well as today and even that did not work.

The rest we have some long term bookings which saved us and a repeat business traveller who stays monday - thursday every week.

My strategy next year, and this is something some hosts may want to consider depending on their market, is rent long term (4-5 months) starting October (right after thanks giving) and go back to Short term around Late April/early May. Based on the numbers I have seen, it is not worthwhile doing short term from November-April. We earned as much as we would with long term tenants plus all the extra work that goes into managing short term.

Also, the new laws in Toronto and other parts of the world may finally lower the amount of listings out there. If 20-30% of listings are gone next year, that would be very helpful to the high supply/low demand equation.

[Susan17]

@Sean433 

"Also, the new laws in Toronto and other parts of the world may finally lower the amount of listings out there. If 20-30% of listings are gone next year, that would be very helpful to the high supply/low demand equation"

Paradoxically, in most cities where draconian regulations have been imposed - severely restricting and/or wiping out small local hosts - listing numbers have actually skyrocketed in the  aftermath. For example, when the 90 Day Limit was brought in in London in 2016, there were 35,000 listings. Today there are just under 80,000. And the overwhelming majority of the post-regulation listings are from huge commercial operators with hundreds/thousands of listings each.

Another example - since new regulations were introduced here in Dublin in July of 2019, almost every small local long-term host I know, has either shut down already, or is in the process of shutting down (myself included, after a decade of grafting my arse off to build my little business). Meanwhile, a plethora of corporate mega-hosts such as Sonder, with its $400 million in VC funding and $1 billion valuation, set up shop here in August, is going a bomb, and is currently advertising for an Associate Director of Real Estate, whose "primary role is to sell Sonder to build-to-let developers to sign as many units as possible in Dublin"  (never mind the fact that our homeless figures recently surpassed 10,000 for the first time ever). Quite frankly, it's a f**king travesty.

[Sean433]

@Susan17 

Some questions...

- are you shutting down and switching to long term tenants?

- if these corporations are buying up non commercial real estate, how are they able to bypass your laws? Or are they only buying commercial hotel like buildings. 

I do believe the market does balance itself out over time. There’s may be a lag but it has to happen. As soon as there is over saturation and the returns don’t make sense anymore, people and businesses do pull out

[Sean433]

@Susan17 

Also, as for Sonder, they seem  to rent out 1 bedroom apartments in large buildings. If you rent a 3 bedroom home, they would not be in direct competition with you in the sense that travelers coming as a bigger group would only book with listings like you. They would be in competition with you only if they rented large 3 bedroom apartments which matched your homes capacity.

Also, I am not sure if Sonder is legally allowed to lease residential homes in your city however in mine, as of this summer, a commercial company would not be allowed to short term rent a home. Only those who are the principle residents of the home can rent it for short term. Meaning you have to be living there on paper.

[Susan17]

@Sean433 

Not sure where you're getting the impression that Sonder only rent out one bedroom homes. Not the case. Besides, I'm only using Sonder as an example, because they're one of the most recognisable names. There are thousands upon thousands of mega-host operators with vast inventories out there - some doing things by the book, but the majority, doing whatever the hell they feel like doing, regardless of the laws. Just like Airbnb has done, from day one.

[Susan17]

@Sean433 

It can take years for markets to balance out - it doesn't happen overnight - and in the meantime, the lavishly-funded commercial mega-hosts can afford to operate at lower price points and slimmer margins, until they completely dominate their respective markets, and eliminate the small players altogether (at which point, their prices shoot up again, of course). No small (or even medium-sized) host can sustain a battering like that for very long. Whole batallions of faux-Airbnbs, mini-Airbnbs, Airbnb-lites and Airbnb-wannabes gobbling up everything in their path.. just like their idols.

Most of the corporations aren't buying up property, almost all of them are operating under the rental arbitrage model. Long term leases, (typically 3, 5 or even 10 years), preferential rates, taking over entire buildings, several floors of the one building, and/or swathes of individual units. The WeWork model, basically, but for homes.

As for how they're bypassing laws.. in more ways than you could count. Sean. In more ways than you could count. (I will recount them all, in detail, with evidence, one day soon - but not here on this forum) This is the Land of Brown Envelopes and Greasy Palms, after all. The  reality is, most of them don't give a flying fig about regulations. Even if caught, the punitive fines that would cripple a small host, are just a drop in the ocean to the big boys. Cost of doing business. And even if they do get rumbled, and one or two of their listings get shut down, that won't even put a dent in their operations, when they have dozens/scores/hundreds of other lucrative properties bringing home the bacon. For them, the rewards far, far outweigh the risks, while for small hosts, the very opposite is true.

As for me - yes, I'm in the process of shutting down. I have no other choice. (And no, long term rental is not an option for me) It's not like I was getting enough bookings to keep going anyway - truth be told, regulations or no regulations, the game was over for small local hosts in over-saturated markets like Dublin, long before the regs ever came in (For one of my two listings, I've had a grand total of 9 Airbnb bookings in the past 16 months) So yeah, It's a very scary, very worrying, very stressful time - a living nightmare, actually - and for now,  I'm just doing whatever I need to do, to keep mine and my family's heads above water..

I do have a couple of Airbnb-related projects that I've been working on for quite some time now, but realistically, it could be another several months before they finally come to fruition, and pay off properly for me. Regardless of what the future holds though, there are no words to express how sickened, how disgusted and how goddam incensed I am that it's come to this, after so many years of putting my heart, soul, blood, sweat and tears (literally) into my little Airbnb business. And lest there be any doubt whatsoever in anyone's mind, let me be absolutely clear on this - there is one reason, and one reason only,  why I - and hundreds of thousands of other small, independent hosts just like me across the globe - now find ourselves in this heart-breaking, soul-destroying position - Airbnb's insatiable quest for money, power and world dominance. Nothing more, noting less.

[Juan63]

Thanks for all the in depth information you posted. It just seems there is more to it than competition. I mean, to only have a few requests in 16 months? Not trying to offend you by any means just trying to get to a rational answer. Why couldn't you compete? Was there something lacking with your place? I just feel the last paragraph may explain more about your feelings than the truth. Coming from a big city in the USA, yes there are corporate Airbnb's but with the new regulations, there is enough room for everyone. You must adapt or die.

[Susan17]

Sorry for the repost guys, but in addition to the points above outlining the many factors preventing regular hosts from getting bookings, it's also important to take into account how Airbnb is - and has been -performing as a company, how that shapes the overall picture, and how it may (will) affect the future prospects of small, independent hosts.

Despite all the hype, the truth is, Airbnb has long since reached it's peak in major markets (US, Europe etc), with growth plateauing as far back as 2017, and Morgan Stanley downgrading projections for subsequent years. MS revised its forecast for user adoption down from 31 percent to 28 percent for 2018, from 37 percent to 30 percent for 2019 and from 43 percent to 31 percent for 2020. Since then, slower than expected growth in emerging markets appears to have failed to make up the shortfall

The percentage of travelers who used Airbnb during the 12 months leading up to October 2018  increased by only 2%, compared with 3% the year before and 8% in 2016. 

Not only that, but by 2017, user frequency has already started to fall by 10 percent, or three times per year, after being flat for the previous three years.

The 2018 Morgan Stanley report  attributed the tempered growth, in part,  to a plateau in awareness of Airbnb. It found that the slowing growth applied to both leisure and business travelers. The firm had expected business travel adoption to increase from 18 percent in 2016 to 23 percent in 2017. Instead it grew to only 20 

At the same time, serious concerns about Airbnb guests' safety and security were already on the rise; the number of people concerned about such issues rose from 10 percent in 2016 to 25 percent in 2017. Additionally, the percent of non-Airbnb users who cited concerns about privacy grew to 36 percent, up 700 basis points, and non-users worried about security grew to 13 percent, up 400 basis points. "This is surprising and potentially troubling for Airbnb's growth," the report stated. "Typically, consumers become more comfortable with emerging technologies as awareness/testing/adoption grow. This doesn't appear to be happening for Airbnb."

Additionally, the rise in booking alternative accommodation through online travel agencies also contributed to the findings as Morgan Stanley Research predicted this method of booking would grow 1.3 times faster than Airbnb bookings, with 59 percent of respondents reporting the use of such agencies. 

Causes for the lull in activity included privacy and safety fears. By early 2019, over 50 percent of those surveyed for a subsequent report,  cited concerns about safety as a reason not to book with Airbnb, with fears residing in possible scams or untrustworthy hosts (and bear in mind, this was long before the seriously damaging publicity surrounding the Orinda tragedies, and the Vice scamming article had gone viral. The 2019 MS report hasn't yet been released, but is widely expected to make interesting - if depressing - reading, when it does surface. 

However, it doesn't take a bunch of business geniuses to work out that skyrocketing inventory (fuelled by Airbnb's current hyper-aggressive IPO-focused global recruitment drive, with its eye-wateringly costly referral bonuses to reel in armies of brand new hosts), coupled with a sharp decline in user adoption and plummeting consumer confidence/satisfaction ratings, is not a sustainable survival strategy for any business. 

And the latest news... 

Airbnb's New Years Eve 2019 Guest Volume Shows Its Falling Growth Rate.

 https://techcrunch.com/2020/01/01/airbnbs-new-years-eve-guest-volume-shows-its-falling-growth-rate/

[Sean433]

@Susan17 

what is your strategy to deal with this ?

[Mel5207]

Hi Paolo and Cristina, I have also had a significant drop in bookings since November even though I have dropped my prices.  I suspect something has been changed in the Airbnb algorithm and I'm sure the £4/night service charge they have imposed is not helping.  I thought initially that more people are posting rooms in my area causing over-supply but having reviewed local competition, I'm not sure that is the case.  I have messaged Airbnb with a complaint and am waiting for a response. It will be interesting to see what they say.  It's useful to know that other hosts are experiencing the same issue. Many thanks for starting this thread. Mel C

[Jennifer1421]

@Mel5207I'd be very interested to hear what response (if any) you get. Please keep us updated on that.

[Mel5207]

Thanks Jennifer, I will update the thread, if/when I get a reply.

[Juan63]

November and December have been historically slower for me, and my room rental seems to be the most affected even into January. Luckily my new home rental has really picked up and we are getting reservations all the way into March. I was able to hit my target in both months though, but mostly thanks to my home rental and last minute room rentals. Try lowering your rental price just for the current month.