Airbnb might not get much of a bounce from the rebound in short-term rentals

In this Monday, March 13, 2017, photo, Airbnb co-founder and CEO Brian Chesky is interviewed during a luncheon meeting of the Economic Club of New York.

Airbnb may not get a big benefit from the recent rebound in short-term rental bookings.
Much of the pick-up in activity is coming from vacation spots such as beaches and parks within driving distance of major cities.
Airbnb rival VRBO tends to dominate the market for accommodations in those areas, Scott Shatford, the CEO of industry research firm AirDNA, told Business Insider.
Longer term, Airbnb could still do well, though, in part because it enacted a much more guest-friendly stance during the coronavirus crisis than VRBO, Shatford said.
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After being crushed by the coronavirus crisis, the short-term rental market is bouncing back. But that's not necessarily good news for market leader Airbnb.

Much of the pick-up in activity is coming from vacation destinations within driving distances of major cities, Scott Shatford, CEO of AirDNA, an industry research firm, told Business Insider. Those kinds of areas have long been a stronghold of VRBO, Airbnb's chief rival, he said. By contrast, Airbnb's stronghold is in cities, which are not seeing nearly as much of an uptick in reservations, he said.

"It's just in the nature of who's booking travel," said Shatford. "I think VRBO, through this summer," he continued, "will perform better than Airbnb."

With states and countries lifting their coronavirus-related restrictions, people around the world are beginning to travel more and plan for future vacations.

AirDNA reported last week that consumers worldwide made 2.1 million short-term rental bookings the week of May 18, which was up 127% from the nadir when the coronavirus crisis was raging at its worst. Some countries, including the United States, have even started to see booking reach levels that exceed what they were prior to the onset of the pandemic.

But the rebound is uneven. Bookings are skyrocketing in places such as Big Bear Lake, outside of Los Angeles; South Padre Island, Texas; and North Carolina's Carolina Beach. In each of those destinations, reservations were up more than 1,000% from the low point in April.

Big cities are seeing only a limited rebound

By contrast, big cities are seeing much more modest increases in bookings. New York was up only 40% from the April bottom. And San Francisco was up by less than 50%. And that was before widespread protests erupted im cities across the country, often resulting in government-imposed curfews.

The week of April 5, New York City saw 2,812 short-term rental bookings, according to AirDNA. That was more than three times the numbers seen in Gulf Shores, Alabama, that week, and more than five times that in Myrtle Beach, South Carolina. But the week of May 18, both of those picturesque places saw at least 800 more bookings than the Big Apple did.

People who are going to those vacation destinations are typically older and looking for bigger places to rent, such as four-bedroom houses, Shatford said. Those kinds of spaces are right in VRBO's wheelhouse, but not in Airbnb's, he said.

"VRBO's always been this traditional leisure market," Shatford said. He continued: "That's where they started and that's where they still have ... dominance, in terms of that supply. And obviously, that supply has done better. That's what people are choosing."

Airbnb has already taken a big hit to its business. Company CEO Brian Chesky said last month he expects revenue to be down more than 50% from last year due to the pandemic. In response to its troubles, the company cut 25% of its workforce, laid off most of its contractors, and has slashed other expenses. It has also raised $2 billion in debt since the crisis began.

Airbnb's prospects are likely brighter in the longer term, Shatford said.

Airbnb will likely benefit from being guest-friendly

During and in the wake of the coronavirus crisis, people have been leaving big cities for health or safety reasons. There are indications that housing demand is falling in places like New York and San Francisco.

While people may again resume traveling to such cities, they're likely to want to stay on the fringes of those places, outside of their dense urban cores, Shatford said. It's in such places where hotels can be hard to come by that short-term rental accommodations of flourished, he said.

Meanwhile, the differing ways Airbnb and VRBO handled cancellations during the coronavirus crisis is likely to benefit the former, Shatford said. Both companies allow the property managers who use their services to set their own cancellation terms. But during the pandemic, Airbnb has allowed many travelers to cancel their bookings and get a full refund, regardless of what the host's policies would have provided. VRBO, by contrast, has stuck by its hosts, many of whom have refused to offer full refunds.

Some hosts have threatened to abandon Airbnb because it overrode their cancellation policies. But that same move likely earned the company the loyalty of travelers, Shatford said.

"I'm still am of this belief ... that guest loyalty will win this in the long run," he said.

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