While the novel Coronavirus is affecting the real estate business in the US as a whole, the biggest impact can be seen in the Airbnb industry. Amid growing public anxiety over the economy and public health and as the number of confirmed Coronavirus cases continued to increase, President Donald Trump announced new travel restrictions on March 12th. Along with this travel ban, event cancellations and falling demand have also put pressure on airlines and other players in the travel and tourism sector and beyond. New Airbnb data from AirDNA and Mashvisor shows that this has had a direct impact on Airbnb hosts in the US and around the world.
The Impact of Coronavirus on Airbnb
When a crisis like COVID-19 hits, it doesn’t just impact Airbnb as a company, but also Airbnb hosts who rely on their Airbnb income and guests whose travel plans have been disrupted. The Coronavirus has struck Airbnb at a, particularly sensitive time. The company was planning to launch its initial public offering this year, beginning the process in March or April. Earlier this month, though, Bloomberg reported that the IPO might now be delayed.
When it comes to hosts, Airbnb data and analytics show that the number of Airbnb rental listings on the site has remained relatively steady. Demand, however, has taken a hit and this can be seen clearly when looking at Airbnb bookings and Airbnb occupancy rate data. Airbnb bookings are tanking and cancellations are at an all-time high for vacation home rentals in virus hot spots across the US housing market, according to a recent report from AirDNA.
Mashvisor’s Airbnb analytics shows how this is affecting Airbnb occupancy rates as well. Our Airbnb data comes straight from Airbnb and mirrors the performance of actual Airbnb rental listings over the past 12 months. It is also verified by real Airbnb hosts. New data shows that the national Airbnb occupancy rate in the US fell from 54.2% in September – November 2019 to 48.9% in December 2019 – February 2020. Obviously, a drop in the Airbnb occupancy rate will result in a drop in revenue for hosts as well. Mashvisor’s Airbnb analytics shows that the monthly Airbnb rental income fell from $2,614 to $2,571 during the above-mentioned time period. In certain US cities, the drop was more severe, as you’ll see later on in this blog.
Airbnb’s Response and Cancellation Policy
Since the World Health Organization declared a global health emergency for the Coronavirus outbreak, Airbnb announced its “More Flexible Reservations”. This is a set of tools and programs that’ll help Airbnb hosts and guests navigate uncertainty and meet their needs to cancel or postpone their hosting and travel plans. This program allowed Airbnb guests who made reservations before March 14th (with check-in dates from March 14th through June 1st, 2020) and decided to cancel their bookings to receive full refunds as a travel coupon which can be used on a future trip. According to Airbnb, this new policy aims to promote a fair balance and additional transparency for both hosts and guests.
However, thousands of Airbnb hosts across the globe are feeling the impact of the coronavirus pandemic after this change in the company’s cancellation policy. On Airhosts Forum, a popular platform for Airbnb hosts, users are sharing their concerns about the financial impact of refunding money. As cancellations continue and new bookings dry up, many hosts in the US have empty calendars for the coming weeks. These hosts who rely on their Airbnb rental income are now facing uncertain futures as due dates for their mortgages, utility bills, homeowners association fees, and property taxes draw near.
Host GPO, a short-term vacation rental group purchasing organization, posted an open letter to Airbnb asking the company to reconsider the new coronavirus cancellation refund policy. They wrote that they would understand if the new policy covers guests who have been diagnosed with the Coronavirus, are under quarantine, or who have had their flights canceled due to travel bans. However, giving full refunds to practically everyone “will be absolutely devastating to hosts.” Based on Airbnb data and analytics, hosts in numerous cities in the US have already started to feel this impact.
Cities Where Airbnb Hosts Were Affected Most
Cities and markets that are considered hot vacation spots or where huge events are often held are those which were hit the hardest due to the coronavirus pandemic in 2020. Mashvisor’s Airbnb data (which is estimated using the Airbnb Occupancy Rate Calculator) shows that these markets are the Los Angeles real estate market, Boston real estate market, Miami real estate market, Dallas real estate market, Austin real estate market, Atlanta real estate market, and the Chicago real estate market. The graph below shows Mashvisor’s Airbnb occupancy rate data for these cities in March of 2019 and how they were affected by the coronavirus in the US in March of 2020.
As you can see, Airbnb occupancy rates have fallen over 35% in every major city in the US housing market. The biggest drop is in Airbnb Atlanta (a whopping 33.12%) followed by Airbnb Dallas (29.62%), Airbnb Boston (29.27%) and Airbnb Miami (28.51%). As for the other markets, data shows that occupancy rates dropped 25.82% for Airbnb Austin, 23.45% for Airbnb Los Angeles, and 25.3% for Airbnb Chicago. Of course, Airbnb occupancy rates are not the only thing affected by the COVID-19 pandemic. Take a look at the following tables that compare Airbnb data for the above-mentioned cities in 2019 vs 2020.
Table #1: March 2019 Airbnb Data for Major US Cities
|City||Daily Rate||Occupancy||Rental Income|
|Los Angeles, CA||$156||82.16%||$3,763|
Table #2: March 2020 Airbnb Data for Major US Cities
|City||Daily Rate||Occupancy||Rental Income|
|Los Angeles, CA||$174||58.71%||$3,171|
Note: All Airbnb data in the above tables have been generated by Mashvisor’s Airbnb Profit Calculator and based on nationwide real estate data as well as historical and predictive analytics. To learn more about Mashvisor and our investment tools that help real estate investors and Airbnb hosts make faster and smarter investment decisions, click here.
How Can Airbnb Hosts Avoid the Impact of Coronavirus in the US?
Some Airbnb hosts in the US are cutting their nightly rental rates trying to attract guests with a good deal. But, seeing as travel restrictions have been put in place by governments or health authorities and everyone is in quarantine right now, this might not be a good solution after all. So what else can you do as a host to protect your short-term rental business from the effects of the coronavirus pandemic?
What we, and most housing experts, suggest is to turn your Airbnb investment property into a traditional, long-term rental for the time being. Investing in long-term rentals has always been known as the safest and the best type of real estate investment especially in times of pandemics. No matter where you invest in rental property, people are always going to look for places to live and renting is the more affordable option for most people today. Meaning, you’ll start generating rental income and cash flow until things go back to how they were before the COVID-19 outbreak. Airbnb assures hosts saying “We know that COVID-19 will have an impact on this in the near-term, but we also know that travel is resilient and will rebound”.
If you’re considering our suggestion to turn your Airbnb rental into a traditional one, make sure to check Mashvisor’s traditional and Airbnb data to ensure it’ll be a profitable solution for you. For more details on how to switch from the Airbnb investment strategy to the traditional investment strategy, read our guide: How to Convert Your Airbnb into a Long Term Rental.
To use our tools and access traditional as well as Airbnb data for your city/neighborhood of choice in the US, sign up now to Mashvisor.