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What\\u2019s happening with Airbnb? A Palm Springs superhost recently Tweeted about an unusual drop in bookings which opened a floodgate of complaints from guests. Although Airbnb is more successful than ever, there\\u2019s growing discontent in at least some markets and the conversation is bubbling over online with comments like (dramatic voice Kathy!) \\u201cThe Airbnbust is upon us.\\u201d

Hi, I\'m Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

The Tweet about a drop in bookings was quickly picked up by Buzzfeed. It published an article with the title: \\u201cCouple Says An Airbnb Host Expected Them to Strip the Beds, Vacuum, And Do Chores, Plus More Stories from People Who No Longer Use the Service.\\u201d

Viral Tweet: Big Drop in Bookings

The article posted the tweet from the Palm Springs host who said he\\u2019s seen a drop in bookings for three to four months. He said his rental went from about 50% occupancy to literally 0%, and wanted to know if other people were experiencing the same thing. He got more than 2,000 replies from people who are no longer enchanted by the Airbnb experience. (1)

Buzzfeed listed several of the complaints. They included complaints about additional or hidden fees that jack up the price, the sterile look and feel of cookie cutter Airbnbs, hosts that have a litany of house rules and chores, and a lack of concern for the safety and/or privacy of the guests.

One former Airbnb guest said: \\u201cIt was hard to enjoy our Airbnb cabin in the woods when the host was watching us on his outdoor cameras and reporting on things he didn\\u2019t like us doing.\\u201d

Another said: \\u201cI used to love Airbnb because I\\u2019d get a kitchen and I love to cook. But now the cost to stay has gone up so much, and I don\\u2019t feel as safe in them.\\u201d

One person said she refuses to book with Airbnb saying: \\u201cIt\\u2019s disgusting to see empty apartments, condos, and cottages waiting for bookings while people are living in tents.\\u201d

The Washington Post just published an article with the title: \\u201cAirbnb is more successful than ever. Why is everyone so mad at it?\\u201d In addition to high prices, hidden fees, and a lack of service compared to hotels, Airbnb rentals have often saturated the market with too much supply. (2)

Airbnb Is Doing Quite Well Overall

But despite the complaints and a booking slowdown in some areas, Airbnb is doing quite well. The Post reports total revenue of $2.9 billion for the third quarter and a 46% increase in profit to $1.2 billion. Total number of bookings increased to 99.7 million which is the highest ever for the third quarter. Guest arrivals also set a new record for more than 90 million worldwide.

Boston University associate professor of hospitality Makarand Mody says: \\u201cIt\\u2019s ironic the Airbnbust hashtag is going around, given they had their best quarter ever in the company\\u2019s history. It\\u2019s a little hard to reconcile the two.\\u201d

Airbnb is also paying attention to that hashtag. CEO Brian Chesky announced changes that would increase pricing transparency. He said that Airbnb would let users see the price totals up front, including nightly rates and all the fees. He\\u2019s also asking hosts to avoid \\u201cunreasonable\\u201d requests as part of the rental agreement \\u2013 things like stripping beds and doing the laundry.

Mody says the changes are a step in the right direction, but he says: \\u201cThey don\\u2019t solve the underlying problem, which is exorbitant fees in the first place.\\u201d Cleaning fees are one of the things that add a lot to the price tag, and Airbnb has encouraged hosts to keep them low or not charge a cleaning fee at all. The company says that 45% of listings around the world do not charge cleaning fees.

But a spokeswoman for hosts told the Post that cleaning fees have gone up since Covid because of more stringent cleaning protocols. Many hosts are also hiring professional cleaners because of this. Those cleaning fees will now be more visible at the time a guest books the accommodation but it doesn\\u2019t necessarily mean they will go down.

Are There Too Many Airbnbs?

Another problem is the sheer number of Airbnbs in some areas. The year-over-year increase in U.S. Airbnbs is 29% from about 850,000 to more than 1.2 million. AirDNA\\u2019s Jamie Lane says: \\u201cThere are more listings and more demand, but less demand per listing.\\u201d

And now, Airbnb is also rolling out an easy way for new hosts to list their homes with help from a Superhost. The new hosts will be coached by the more experienced ones, along with extra support from the company. So this will likely result in even more supply, especially if the economy continues to slow down, and people look for a side hustle.

The Post says that Chesky responded to a question about booking slowdown complaints by saying the overall situation remains positive. He says the stories about a booking slowdown are anecdotal, and could be due to a variety of factors including changes in the way people travel.

He also says that the Airbnb algorithm that produces search results will prioritize them by all-in pricing and the best value. Airbnb plans to help hosts with tools to determine more competitive pricing. If there are issues, Chesky says they need to be looked at on a case-by-case basis.\\xa0

Airbnbs vs. Hotels

In some cases, travelers are discovering that it\\u2019s currently easier and less expensive to rent a hotel room. If you turn back the clocks to 2008 when Airbnb first launched, the opposite was true. While some people feel that Airbnb has turned into too much of a good thing, it\\u2019s not all negative. There are plenty of great Airbnb\\u2019s out there waiting to provide a great Airbnb experience. It just might take a little more work to find them, like anything else in life that is worth the effort.

It\\u2019s also a good idea to do a deep dive into specific markets if you are thinking about setting up an Airbnb. You\\u2019ll find lots of data at our website. You can join for free at newsforinvestors.com. And please remember to subscribe to our podcast and leave a review!

Thank you! And thanks for listening. I\'m Kathy Fettke.

Links:

1 -https://www.buzzfeed.com/alexalisitza/airbnb-bookings-down-twitter-reacts-buzzfeed

2 -https://www.washingtonpost.com/travel/2022/11/14/airbnb-airbnbust-hosts-fees-chores/