One of Australia’s highest-profile property investment experts says that Airbnb hosts might hold the answer to the loss of houses in the recent bushfires … by returning holiday homes to the residential housing pool.
“The locations that have been the most devastated are areas that often have a high level of Airbnb and other short term rental options,” says Anna Porter of property investment advice website Suburbanite. “The south coast of NSW for example and many of the country areas surrounding it are peppered with good quality Airbnb accommodation.
“Many of the Airbnb hosts have already felt the pinch of losing their holiday income over this period, with some agents in the area saying they have seen a decline by as much as 25% in holiday rental enquiry and bookings over the past few months in the surrounding areas that have not even been directly impacted by the fires.”
So she suggests “repurposing” some of the Airbnb accommodation to longer term rentals for the next 12 to18 months to free up rental options for families who are rebuilding, and allowing them to stay within their local community.
“The challenge will be that the Air BnB hosts need to make the decision to flip the property from short term stays to a permanent rental, which attracts a different style of revenue,” says Porter.
“But also do this for a price that is in line with market rents and not an inflated short term rental cost.” She suggests a joint approach by both Airbnb and the government, including:
- Airbnb could reduce their fees to the hosts to allow them to drop rates in bush fire affected areas.
- Government grants to any Air BnB owners that house bush fire affected families to help them bridge the gap between their holiday rental income and a discounted rental for locals.
- Tax breaks for AirBnB hosts that offer their properties to fire affected families at this time at a discounted rate.
Which sounds great except that Airbnb rentals in these affected areas tend to run about double the cost of residential lets, and the Airbnb commission tops out at 20 per cent.
Then there’s the whole drive to boost regional tourism and the fact that a lot of Airbnb host don’t pay tax on their holiday rental properties to begin with.
But, hey, any initiative that gets Airbnb rentals back into the residential pool should be applauded.
Airbnb takes half-billion-dollar profit hit.
Meanwhile, don’t get too excited but Airbnb suffered a half-billion-dollar turnaround in profits last year.
The international online holiday letting behemoth posted a net loss of US$322 million for the first nine months of 2019, down from a $200 million profit a year earlier, according to a story in the Wall Street Journal (reported in Forbes Magazine).
While it may be, on the face of it, a troubling sign for the holiday letting website as it prepares its long-anticipated stock market launch, the story behind the figures may be even more worrying for apartment owners trying to resist the spread of short-term lets into residential blocks.
Rising costs have been blamed for the net loss and that’s partly due to the company spending more than $100 million per year to upgrade its technology. Then there’s legal, accounting and human resources expenses more than doubling during the third quarter of 2019 compared to the previous year.
One factor would have to be Airbnb facing legal challenges on several fronts internationally – and mounting its own political campaigns in efforts to counter potentially damaging legislation that would restrict its operations.
But it’s not all “lost” money. Tech news website The Information also reported last year that Airbnb significantly boosted spending on marketing during the first quarter of 2019.
And Airbnb isn’t exactly on its uppers; the company still has a reported $3 billion in cash reserves.
The worrying sign for apartment residents is the combination of increased marketing and improved technology.
Airbnb might have lost some momentum last year but chances are it will be back soon, slicker and stronger than ever.