How You Can Avoid the Airbnb Collapse

Airbnb revolutionized the way people traveled by providing a mainstream alternative to hotels. Now that the market is taking a dip, so is the company. With looming conversations around the ‘Airbnbust’, people are wondering about the future of short term rentals. With saturation in the market; many are feeling that they missed out on the golden era of Airbnb.

In fact, AirDNA wrote an article over Q3 2022 that Airbnb was going to find itself in a slow winter. While the platform identified that demand has increased 17% and Average Daily rate has increased 5.7% YOY, Occupancy has seen a 5.0% decrease YOY and the supply of available listings has increased 24.6% YOY. This indicates that supply is outpacing demand causing more hosts to see vacancy in their listings. With more supply than demand, this means that there is more hosts coming onto the platform than guests looking for places to stay.

Even Vacasa, a major short term rental management company through Airbnb, mentioned in their financials for Q3 2022 that the company is experiencing softness and variability in guest bookings which could have a material unfavorable impact to their business.

These statements are in direct opposition to the statement that came out from Airbnb’s Q3 2022 Shareholder Letter, where they noted having their biggest and most profitable quarter ever. On top of guest demand staying ‘strong’, while also noting a strong growth in new hosts, aka the supply. So the question you should be asking yourself is “why are third parties saying there is softening in guest demand and Airbnb is saying demand is still strong?”.

The truth is that demand is continuing to grow, however in relation to supply the demand position is weaker. So Airbnb can make claims to both statements being true without uncovering the dark secret that hosts are taking the brunt of the problems. The weakened relationship of demand to supply means that the amount of money hosts would make in the past is more diluted now due to the saturation. So in total, Airbnb will continue to make more money year over year, however it won’t be the same from a ratio perspective. This just means that with rising costs, the platforms margins will continue to be thinner and thinner.

While there are growing problems that Airbnb is facing, that doesn’t have to be true for your short term rental business. That is, only if you believe quality is better than quantity. The one saving grace of the platform is that there are many ways to optimize your listing to maximize the rents you can receive.

There is a big difference between professional and rookie hosts. Saturation does not automatically equate to less bookings for your rentals. So I want to share a few ways that you can work towards to becoming a professional host.

But before I do that, I want to ask if you’ve found value in this video. If you have, it would be so great if you could hit the subscribe button. Now let’s get into the list.

#1 – You suck at cleaning your own Airbnb. Hire a professional cleaning crew to clean and turnover your unit. You can use Turnoverbnb to automate this process, find a cleaner and schedule them.

#2 – Your own knowledge of a market does not trump the data when it comes to pricing your rental. So use a dynamic pricing tool like Pricelabs to accurately price your unit. You can also use the minimum stays feature to incentivize longer stays, leading to greater occupancy and revenue.

#3 – Get to super host as fast as possible so that your listing is pushed to the top of the search in your area. AirDNA says only 14.3% of 2.1 million hosts are actually super host which means there’s a pronounced difference in being a high quality host vs everyone else. Superhost status is determined on a quarterly basis and requires the following criteria;

Completed at least 10 trips or 3 reservations that total at least 100 nights

Maintained a 90% response rate or higher

Maintained a less than 1% cancellation rate, with exceptions made for those that fall under our Extenuating Circumstances policy

Maintained a 4.8 overall rating (A review counts towards Superhost status when either both the guest and the Host have submitted a review, or the 14-day window for reviews is over, whichever comes first).

#4 – It’s all about the amenities. Ask the question of how you stand out from the rest? Does your listing have a pool or hot tub? A few of the major overlooked amenities is having a full kitchen – with all of the cookware, a garage for guests to stow their vehicles and an in-unit washer and dryer. A place that is fully self-sufficient and clean will always rent on the market.

#5 – Get a professional photographer to take pictures of your unit. You aren’t as creative as you think right out of the gate. So rely on someone who spends every waking hour dreaming of capturing the best shot of your property. Often times you can find this person through your agent and it’s not a ton of money to make happen. Often, these pictures cost around $200 to have done and will pay for themselves with the bookings you will get. You’ll have to trust me that your listing will sit there without professional photos.

#6 – Direct Bookings. Don’t just rely on Airbnb. Build your own website, list and market your own property there or build relationships with medical agencies or insurance agencies. You can do this by contacting HR in hospitals or asking for relocation specialists at the insurance agency. This can be very profitable as an option.

Hopefully this video has given you some better perspective over the ‘Airbnbust’ controversy and what you can do to protect your investment. As I’ve noted, there’s many factors you can control about getting your listing booked, so don’t use the hype as a reason to fail. Too often we look for reasons why something won’t work instead of asking the question “How can it work”. So make sure you are always looking for solutions in the difficult situations.

Anyway, that’s it for today, please leave a comment down below and share your thoughts on the ‘Airbnbust’. What do you make of the data? What are you seeing in your market? I want to know your thoughts!


Published by Andrew Street

Real-Estate Investor and Creator of BNB Monthly

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