Airbnb Sees Bookings Recover But Reports Massive Losses

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TROGIR, CROATIA - SEPTEMBER 13th, 2018: Woman is installing Airbnb application on Nokia smartphone. Airbnb is an online marketplace and hospitality service, enabling people to lease or rent short-term lodging

Nothing went according to the plan in 2020 for anyone. Airbnb might be the brightest example of how unpredictable this year appeared for the real estate market in general and its rental sector particularly. The company might have started the year with a highly anticipated IPO, but eventually had to face some pretty devastating tendencies having to raise the emergency debt funding and even lay off at least 25% of employees. As for IPO, it is still hanging on a rusty nail.

The market was standing still for several weeks due to the Lockdown with no clear vision of what the future holds. Property owners were reporting tens of thousands of dollar losses in bookings. And then suddenly the situation started to change rapidly as the domestic quarantine restrictions were rising, while international traveling was still out of the question. Rural Airbnb started to demonstrate quite significant recovery rates as people were looking for vacation getaways inside the country. But does it mean a general recovery of the company, or there is still a long way to go?

A miracle or an omen?

This summer was peculiar in every way. People might have been planning their vacations for months, and then they were suddenly locked in their homes for an uncertain period. That is why it is quite understandable that as soon as the restrictions have been lifted, suffering vacationers have flooded the rental market. On the one hand, it has marked the beginning of the recovery period. Optimists even predicted the V-shape course of events for Airbnb, which means that recovery will be instant and compatible with the recession, so the company will manage to get out of the crisis pretty fast. But the reality appeared to be a bit different.

 

Looking for recreational getaways, people have turned to rural and upstate vacation areas. Those segments have shown stable recovery and even growth comparing to the same period in 2019. According to the available data hosts in those locations have earned over $200 million only in June 2020, which is 25% than last year. But the same sources demonstrate that $9 of every $10 were earned outside big American cities with traditional touristic attractions. What does it mean for the company in general? On the background of such optimistic reports, Airbnb`s revenue in June 2020 is at least 67% less than in the same period last year. The secret lies in an extremely uneven spread of demand for home-sharing sector nowadays.

 

The Grand Relocation of 2020

 

Seeking for a breath of fresh wind, American vacationers are massively abandoning dusty cities infested with COVID-19. The upstate rental market is boosting up, as the demand exceeds the supply leading to bidding wars between vacationers and extra profits for hosts, who are raising the prices willingly hoping to balance the booking flow. But a huge segment of the rental properties remain abandoned causing continuous losses. Those are properties located in big cities around the main touristic attractions. Airbnb has been logically relying on those locations as the most profitable ones. And what we see nowadays is that generally the free fall has ended and we might even notice some signs of recovery. But at the same time, the growth is very uneven and its impact on the future is still unclear. While a huge segment of property situated at Metropolis lies idle, the rural and recreational areas find themselves under massive stress of overbooking. Such situations inevitably lead to quality loss, which might have a tangible effect in the future.

 

Hope for the future of Airbnb-like business.

 

Airbnb is a part of the so-called “shared economy” a phenomenon that has been developing for the past several years all over the world. Those are various companies from bicycle and car-shares to co-working spaces that managed to grow from startups to massive businesses within quite a short period of time. The idea was fresh, relevant, and met the current demand fully. But COVID-19 has shuffled the cards. The whole idea of shared property and space now contradicts new norms and habits that have been formed by quarantine restrictions. And the fact that some of those changes might be here to stay gives a cause for concern for the whole idea of a shared economy. For example, since people got used to working from home, the concept of co-working spaces is jeopardized.

 

Does that mean that there is no hope for Airbnb and companies alike? Actually, no. In fact, although Airbnb itself is going through a really rough period and its future is still unclear, there is hope in the home-sharing sector. You can always arrange yourself a home office, buy o rent a vehicle. But people will always travel, and there will always be a demand for comfortable accommodation at a reasonable price. And since it might take hotels and the whole hospitality industry a lot of f time and effort to adjust for the new standards, home-sharing startups like Airbnb might face their golden hour right now, in the post-Coronavirus period.

 

It might seem that investors have totally abandoned the traveling industry in the past several months. But now the restrictions are gradually raising and domestic tourism re-evaluates itself, which means that companies that may offer new hospitality solutions have a strong chance to storm into the market and finally create a fresh and real atmosphere of competition.

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