Brian Chesky is no stranger to big lifts. The 38-year-old former bodybuilder and Airbnb CEO has, in the space of 11 years, hauled his property rental dream from a single air mattress to a multi-billion dollar startup success story. But as hosts rage and debt piles up, the huge weight of the coronavirus pandemic might be too much for Chesky to bear.
The numbers are devastating. According to AirDNA, an online rental analytics firm, new bookings on Airbnb are down 85 per cent; cancellation rates are close to 90 per cent. Revenue generated by Airbnb’s platform in March was down 25 per cent year-on-year, wiping out $1 billion in bookings. With much of the world still on lockdown, those numbers are unlikely to pick up anytime soon. For some, Airbnb’s folly is a potential fortune. In Prague, officials are using the pandemic to try and regain control over the burgeoning short-term rental market that has decimated the supply of housing available to local residents. Other cities may soon follow suit.
Hosts are calling it the Airbnb apocalypse. But it’s more akin to an enema. Airbnb maintains that it’s “powered by local hosts”, but the reality is quite different. Yes, there are many hosts on Airbnb who live in the properties they list on the platform. But, in many markets, including the entire of the United States, the number of “professional” hosts seemingly outnumbers those listing on Airbnb to earn a bit of extra cash from their cosy spare room. According GlobalData, an analytics firm, Airbnb could lose a “significant portion” of its host community as a result of the pandemic. These “professional” hosts, the scourge of local residents and housing officials, could soon be flushed out of Airbnb in their thousands.
This was meant to be Airbnb’s year. The year when the company, which was recently valued at between $50bn and $70bn, went public. It is now worth less than $30bn. Even before coronavirus, Airbnb was struggling to turn scale into profits. The company lost $674 million last year as costs soared to $5.3bn. Behind these numbers are Airbnb’s hosts, who range from retiree holiday home owners to investors with vast but flimsy rental empires. While the former will lament the loss of a reliable secondary income, the latter now face financial ruin as their business model – a sort of ponzi scheme built off the back of Airbnb’s market-busting rental yields – turns to dust in the grip of coronavirus.
