660,000 airbnb listings are available in the US. 5.6 million Airbnb listings globally. 327 million bookings were made in 2019. Airbnb had 120,000 listings in 2012 and 189 million in revenue.
A decade later, it has 46x more rentals and revenue is expected to break 7 billion this year. With that growth, there becomes the question of if Airbnb could be a bubble for the renters?
There’s constant stories of people investing tons of time and money into properties for the purpose of Airbnb. So much so, that property management on them is an industry in itself. Looked at earnings and found an independent survey from 2019 for US hosts, saying Airbnb hosts only averaged $924 a month.
There’s also some pretty high operating expenses, with one company that advises people on Airbnb’s says operating costs range anywhere from 25-75% of the revenue they’ll expect. These are also costs that exist before things such as a mortgage, property taxes and other fixed costs. This shows a case that Airbnb hosts don’t really have the luxury most people think, where there is a decent workload to it and revenue/margins aren’t that high.
To really figure out though if this enters the bubble territory though, it’s important to look at the hotel industry. 91,000 hotels/motels exist in the US 9 million is the total amount of guest rooms in the US. 194 billion is the annual revenue of the hotel industry. Airbnb guests are a bit different over standard hotel guests, where the average Airbnb guest spends $740, compared to hotel guests at $530.
The stay time is much longer though, averaging about 2.5x longer over a hotel. The type of travelers are also different, with 60% of leisure travelers preferring Airbnb, while 68% of people traveling for work prefer hotels. The best way to look at this though is just the size of the hotel market overall. Today, there is still more overall revenue to the hotel industry versus airbnb rentals, even though it’s getting closer, with airbnb winning in certain markets.
One possible one being NYC, where despite a technical ban, it’s one of the biggest airbnb markets in the world, with rentals rivaling the hotel industry with certain demographics. All said and done, there’s clearly some sort of bubble here, where everyone seems to think there’s an easy money formula in doing this, but like pretty much everything in real estate, margins won’t be that high and work will be more over expected.
