The Fall of Airbnb’s Empire — The Death of Short-Term Rental

The Fall of Airbnb’s Empire — The Death of Short-Term Rental

In its early days, Airbnb provided fresh air for travelers seeking affordable accommodation beyond traditional options. The platform’s success was driven by its ability to connect budget-conscious individuals with hosts willing to share spare rooms for extra income.

The Fall of Airbnb’s Empire — The Death of Short-Term Rental
Photo taken from Statista

In 2018, booking was more than a quarter cheaper than booking a hotel around the world. Thanks to its affordability, it was the go-to app to find accomodation oversea.

As a user, I remember how much better it was for me to book an Airbnb in Bali than to stay in hotels. The accomodation we booked had a cozy swimming pool, saving me more than 50% of what I would have paid for a hotel. At some point I really thought the company could be the one to change the entire hospitality industry, making overseas travel affordable.

So What Changed?

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Over the last few years, we have seen the decline of Airbnb partially due to the Covid-19 lockdown. Higher prices and subpar customer service have also eroded the platform’s appeal and customers are turning back to staying in hotel.

The once reverved unicorn startup worth over $100 billion as of November 2023, has a valuation of $83.12 billion‘ down almost 20% from its previous high. So what changed?

Oversupply of Demand

Over the years, landlord realize how they could potential retire off their Airbnb rentals through leasing them. Many have even shared their strategies to making $10,000 a month from the app. These videos raked up views as investors were able to make thousands of dollar with simply almost no work at all.

With more landlord trying to make it a living through the app, the supply of the housing market begin to shrink and the demand for hostel dropped significantly. According to a research by Wharton Marketing, rents rise by 0.018% and property prices rise by 0.026% for every 1% increase in Airbnb listings. These has caused many cities in the EU to combat against the companies expansion.

Apart from that, the business expansion has also caused many stirs recently with claims that user were scammed into booking abandoned Villa in Bali.

Trouble with Expanding Safely

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If you are hearing about Airbnb for the first time, you would be worry about the safety of your well-being.

Well.. you are renting a place to stay from a stranger after all.

The danger that you may be renting from kidnappers or drug dealers were a constant worry for the company and maintain quality was one of the hardest hurdle in the fast growing business. While Airbnb have openly share it has made efforts to check every listing it has, not much can be done as the business rapidly expands.

Regulatory Challenges

Apart from maintaining standards, meeting regulatory challenges worldwide was a constant pain. Many developed countries worldwide, including New York, recognized the need for regulations to manage short-term rentals effectively. The enforcement of new laws in New York hinted at a potential ban on a significant number of short-term listings, marking a pivotal moment for the platform’s future.

Countries like Singapore have banned any short-term leases in the country to protect tourism and to protect the hotel industry. A step that’s needed to maintain one of the safest country in the world.

Growing Challenges as a Unicorn startup

The CEO of Airbnb openly acknowledged the platform’s growing wave of challenges. Complaints about rising costs, gentrification, and frustrations from hosts and guests have raised concerns about the sustainability in the evolving market.

As the company aims to expand globally, unintended consequences emerged, including housing shortages, increased rents, and disruptions in local communities.

Governments worldwide began addressing these issues, reflecting a shift in the perception of short-term rentals and posing potential challenges for the companies continued success.

The Future of Short-Term Rentals

The future of short-term rentals may require a balance between innovation and responsible regulation to ensure a positive experience for hosts, guests, and the communities involved.

Will it last?

As long as people demand affordable hospitality.


Is Airbnb cheaper than hotels?

The cost comparison between Airbnb and hotels can vary depending on factors such as location, time of booking, and the specific accommodations desired. In some cases, Airbnb may offer more budget-friendly options, especially for larger groups or longer stays. However, individual preferences and the availability of discounts can influence the overall cost-effectiveness of each option.

What fee does Airbnb take?

Airbnb typically charges hosts a service fee, which is a percentage of the booking subtotal. This fee helps cover the cost of running the platform, providing customer support, and other services. Guests may also incur additional fees, such as a cleaning fee set by the host. The exact fees can vary, so it’s advisable to check Airbnb’s current fee structure for the most accurate information.

Who pays in Airbnb?

In Airbnb transactions, guests are the ones responsible for paying the cost of the booking, including any applicable fees. Hosts, on the other hand, receive the payment from Airbnb after deducting the service fee. This system is designed to facilitate a secure and efficient payment process for both parties involved in the accommodation arrangement.

Will Airbnb be banned?

The status of Airbnb’s legality varies across different regions and jurisdictions. It’s essential to check local regulations and stay informed about any potential changes in policies regarding short-term rentals. Countries such as Singapore do not allow short term leases.

Will Airbnb collapse?

Airbnb is still a prominent platform, but business landscapes can change. Factors such as market trends, competition, and economic conditions can influence a company’s trajectory.

Why is Airbnb so expensive?

Airbnb prices can be influenced by several factors, including location, property type, demand, and the amenities offered. High demand in popular areas or during peak seasons can lead to increased prices. Additionally, hosts may set their prices based on various considerations.

Why is Airbnb considered bad?

Opinions on Airbnb vary, and some criticisms include concerns about housing shortages in certain areas, effects on local communities, and occasional issues related to property damage or disruptive guests. However, many users also appreciate the platform for its convenience and unique lodging options. Assessing whether Airbnb is “bad” depends on individual perspectives and experiences.

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