Thoughts on hosting to an Airbnb arbitrage company?

[Michael6116]

I got a Airbnb alert on my listing page yesterday saying "Start hosting longer stays. We've seen a recent increase in guests looking for weekly and monthly stays close to home". So I clicked Review. Airbnb recommended a 63% discount for a month long stay, so I set up a very significant monthly discount.

This morning I received a booking request for a month, so all seemed good.

However, without going into details that might breach forum guidelines, there was something fishy about the request, so I did a bit of due diligence. I quickly found out about something called "airbnb arbitrage". If you search the internet for that phrase, or something like "make money from airbnb without owning property", you will find a lot of sites about it, so it seems to be quite popular. The gist is that you take a longer let at reduced price, and then sublet at hopefully significantly higher prices, e.g. if you let for a month at Airbnb's suggested 63% monthly discount and then fully sublet it you could triple your investment without having to actually own any property.

Personally I know my mortgage terms specifically prohibit me from allowing my tenants/guests to sublet, but even if it didn't I wouldn't be comfortable hosting a potentially large number of people I couldn't vet, and would also feel it would be dishonest if a guest subsequently relisted my property for the period of their stay.

What are other people's views on "airbnb arbitrage"? How can you protect yourself from this if it would have serious consequences for you, e.g. breaching your mortgage terms? Are a lot of these big Airbnb hosting company "superhosts" you see actually performing arbitrage themselves? And is that why Airbnb has "seen a recent increase in guests looking for weekly and monthly stays close to home"?

[Mary996]

Hi @Michael6116

Thanks for bringing this up.   I read such a strategy in an Airbnb related book suggesting that would-be Listers don't need their own properties but can take on those of others.

Aimed at tbe those who don't own but who are willing to do the graft work or to Co-host.

I think the entrepreneur takes on large establishments or failing hotels so its not really a threat to every day Airbnbs. But I can see that there's a conflict of interest if we are encouraged to ask low prices to feed such a business model. 

[Mary996]

And Bravo @Michael6116 for pointing this out for changing your own parameters and inviting us  to think about the subletting risk. For some however such an arrangement might be agreeable  if owners are not able to fully engage with their properties.