Its Effect on Hosts & Superhosts – Detailed Insights
Covid19 has disrupted many industries, whether it’s traveling, education, real estate, or retail. Lodging is another huge Billion Dollar industry that has been largely affected by this pandemic. We cannot forget Airbnb or its Superhosts, which have been impacted by the situation significantly.
Several travel restrictions throughout the globe heavily pushed Airbnb into a significant loss. Although Airbnb suffered a lot, the hosts and super hosts who used their platform to temporarily rent out their houses faced real depression.
Airbnb’s Pre-Covid Situation
Before the Covid19 pandemic and travel restrictions, Airbnb was doing aggressively well. The company was expanding into new categories in Lodging and relevant industries. Many plans were laid out before the global pandemic hit the world. An IPO was in the making.
Airbnb Post-Covid Situation
In March and April, Airbnb faced their all-time-high of cancellations in just two months because of the new travel restrictions and lockdowns. The company’s revenue fell by 72% during this period, and they had to cut over 18 thousand jobs.
The stocks were taking a deep dive, and they faced massive annual losses, but the third quarter of the year 2020 proved to be the time of resurrection, and they witnessed a rise in their stock price.
In the first nine months of the year 2020, the company was at a $696.9 million loss due to the pandemic. Before COVID-19 became a reality, their revenue was exponentially increasing to $4.81 billion.
So, who else was affected by the fall of Airbnb? Of course, the hosts and Superhosts were affected the most as they could not manage their expenses, and their whole lodging business models crumbled. Rental arbitrage dreams turned into overnight nightmares.
How Were Hosts Affected?
The hosts on Airbnb suffered a lot due to travel restrictions and the fast spread of Covid19. There was a surge of fear among both the guests and the hosts. Around 47% of hosts felt insecure and uncomfortable renting out their houses, while a tremendous 70% of guests were not willing to stay in these rented houses due to pandemic panic.
From June to August 2020, hosts saw a 44% decline in their total revenues, and they had to drop their rates by a large percentage. Some hosts even dropped their nightly rates by an average of $90.
Around 45% of hosts suffered to manage their operating costs due to prolonged lockdowns and travel restrictions. Over 16% of hosts were unable to pay off their mortgage payments on multiple properties.
The average loss for a host on Airbnb was around $4,036 as the virus spread in the US. The host revenues started to recover in the last few months of the year 2020. Many travel restrictions were removed, and people felt more comfortable with the new vaccines being introduced.
Effect On Superhosts
The super hosts were affected mainly because they were generating the most revenue from the Airbnb platform. Some people were even treating Airbnb as a full-time career. They lent the property to create passive income by entering the lodging industry through Airbnb. Unlucky, the times were not suitable for super hosts, and many were unable to pay their mortgages.
How Hosts Tackled the Situation?
Airbnb did their best to regain their lost revenue, but hosts played a significant role in their comeback. Over 47% of the hosts started offering long stays in order to become more desirable for those concerned about the virus spread, while 29% of hosts reduced their prices to attract more people.
Many property owners also ensured proper sanitization of their property to ensure a safe stay for the guests, and Airbnb also supported this idea.
The Covid19 situation is ever so slowly getting under control, and both Hosts and Guests are now very optimistic. Over 26% of guests felt safe to book apartments during their last summer break, and this percentage will shoot up in the times to come.
Rental Arbitrage Recovery
Last year was an extremely bumpy ride for many companies doing excellently in the travel, food, education, real estate, and lodging business. The sudden decline in revenue was inevitable, but the conditions are now improving as people are now getting back to their everyday routine, slowly accumulating their travel dreams.
The number of bookings increased by 31% in 2019, but a sudden decline was also seen due to tons of cancellations by guests due to the outbreak. Airbnb also focused on domestic travel and “Safecations”.
Airbnb intended to support their hosts in this worst time by providing them a gateway to earn through online activities such as by giving dancing and cooking classes etc. In this way, small hosts managed their expenses without any risk of catching the virus. But it was still a world away from managing top-notch Airbnb listings.
Time will soon tell us what the future holds for all of us, Airbnb included!