With over 120,000 reported cases worldwide in around 120 countries, the coronavirus was declared a pandemic by the WHO this week. Businesses around the world are feeling the effects of the virus. But with growing bans on travel with the intent of reducing the spread of the outbreak, the coronavirus is quickly taking a toll on the short-term rental market. Airbnb hosts in the US housing market and around the world are dealing with mass cancellations and some are reporting a 0% Airbnb occupancy rate as we move into March.
Airbnb Hosts vs. the Coronavirus
Because the coronavirus has quickly spread across countries and continents, the general public has been warned against traveling during this time, with some governments and organizations banning trips altogether. This week, President Trump placed a 30-day ban on all travel from Europe to the United States, with the exception extending to the UK only.
Naturally, the tourism and hospitality industry is feeling the growing effects. The issue, however, is more serious for small, local Airbnb hosts and real estate investors. While larger hotels and companies may have the resources to cover costs during this time, those who operate a smaller Airbnb business and rely on the rental income to cover mortgage costs are afraid that if the situation continues, they will have to look for alternative sources of income to keep their heads above water.
Airbnb’s Response to the Coronavirus
Although Airbnb representatives have declined to give comments on the financial effect of the coronavirus, a new program was instated this week to help with the process of refunds for cancellations. The More Flexible Reservations program will help Airbnb hosts to offer refunds to guests more easily. However, not all cancellations will be eligible and there are reports of requests for refunds being denied.
There is also speculation around Airbnb’s plan to go public this year. However, the latest comments from Airbnb’s chief executive, Brian Chesky, on the situation do not cover the future of this plan. Rather, he offered hope to Airbnb employees and possibly to Airbnb hosts as well with this statement:
Airbnb was born during a global crisis (the 2008 financial crisis). It didn’t stop us then, and it won’t stop us now.
What Can Airbnb Hosts Do to Limit the Impact of the Coronavirus?
Some Airbnb hosts are responding by cutting the nightly rental rate of their short-term rental properties. This is in the hopes of attracting Airbnb guests with a good deal. While it’s working to keep up the Airbnb occupancy rate for some, it may only be a temporary solution as more and more travel bans are being put in place.
So what can Airbnb hosts do to protect their businesses from the impact of the coronavirus? One suggested solution by experts in the business like Jasper Ribbers of Get Paid for Your Pad is to temporarily turn your Airbnb investment property into a long-term rental. This is if you’re facing cancellations and the lack of cash flow will put you in the negative.
The first step is to analyze your neighborhood and rental property using long-term rental data to ensure it’s a profitable solution. You can use Mashvisor’s real estate analytics platform to do this. Sign up now using our promo code and get 15% off any Mashvisor Plan. For more on the next steps to converting your Airbnb successfully to ensure continuing cash flow, read our guide: How to Convert Your Airbnb into a Long Term Rental.
Sign up now to Mashvisor to stay updated on real estate news around the US.