Airbnb Hosts Want Guests To Come To Them Directly

(Bloomberg Businessweek) -- This April, more than 600 landlords, real estate agents and small-property managers traveled to a swanky resort in San Diego to get advice from Jesse Vasquez. A former salesperson at a hospice-care company, Vasquez now manages more than a dozen properties, in addition to his side hustle coaching his peers. The key, as he laid out in a stream-of-consciousness presentation on success in real estate, is reducing dependence on short-term rental platforms by increasing your ability to find renters on your own. “We don’t have to be relying on Airbnb,” Vasquez told his audience. “Don’t allow these big companies to supply your clients. Build your own house on your own freakin’ land.”.Over the past 15 years or so, Airbnb Inc. has established a new market in short-term real estate rentals. The site, along with competitors such as Vrbo, made it easier for property owners to take on renters by helping travelers find alternatives to hotels and handling some of the transaction details. This was a boon for many property owners, who suddenly had a new source of income to help pay off their mortgages or fund renovations. Airbnb, the world’s biggest short-term rental platform, added more than a million active listings last year, while posting record profit. It has more than doubled its market value to $97 billion since its 2020 initial public offering..But it’s getting harder to be an Airbnb host, in the US at least. Through May of this year, year-over-year earnings for US hosts had declined in 22 of the past 28 months, according to analytics firm AirDNA. The declines have been moderating in recent months, and US host earnings have risen in three of the first five months of this year. Many markets have been saturated with short-term rentals, and demand for large vacation homes is weakening because travelers are again considering competitively priced hotels and overseas trips. Several key cities, including Los Angeles, New York, Phoenix and San Diego have restricted short-term rentals, locking hosts out of the market. Some hosts also complain that Airbnb has made it harder to make money with its refund policies and the algorithms it uses to decide which properties show up at the top of its search results. High interest rates, meanwhile, have made the notion of simply selling properties and moving on less of an option for many property owners..The headwinds are inspiring hosts such as Vasquez and the people who attended his conference to try to cut out Airbnb altogether. In part, this is what always happens when people rely on internet platforms to make a living. It’s akin to Uber drivers asking passengers to call them directly the next time they need a ride, or YouTube influencers and TikTok celebrities cutting side deals with brands to secure advertising income they won’t have to split with the platforms. Who likes a middleman?.On Airbnb, there’s a specific opportunity in the shift to mid-term rentals—stays of longer than 30 days but shorter than the yearlong leases people sign for their primary apartments. Attracting a steady stream of people to rent an apartment once or twice a week essentially requires a service like Airbnb. If you’re only looking for a few renters a year, it becomes more reasonable to find them yourself..In practice, though, this strategy is often a way to supplement Airbnb income rather than replace it entirely. Vivian Yip, an Austin-based host who came to Vasquez’s conference, began this shift more than three years ago. The initial inspiration came at the beginning of the Covid-19 pandemic in 2020, when Airbnb canceled hosts’ bookings on their behalf without full compensation. “I realized how exposed my business was,” Yip says. “So that became an aha moment for me that I need to do a better job of diversifying my business and revenue.”.Yip secured her first mid-term booking—a family that needed a place to stay while they renovated their primary home—after listing her home on a rental site called Furnished Finder. The next reservation was a construction team from Dallas assigned to a project in Austin..By 2021 she was able to quit her job working on supply chain operations for Apple Inc. and focus on real estate full time. Her property management company has since grown to include more than 20 homes, and she says she earns in the six figures. Still, she relies on Airbnb for half of her bookings. “I’m not strong enough to replace Airbnb,” she says..Airbnb Chief Executive Officer Brian Chesky has downplayed the importance of individual hosts circumventing his company’s services, saying in 2021 that “regular people don’t think of us as intermediary” and “can’t conceive of” doing business without Airbnb because they’re not trying to run a big business. In response to a request for comment for this article, a spokesperson said in an email that its platform offers benefits for hosts focused on short- and longer-term stays, including background checks, payment processing and insurance. “When bookings and communication move off our platform, we are no longer able to ensure hosts and guests are covered by our extensive built-in protections and support,” the spokesperson wrote..Guests are also increasingly using Airbnb itself to book mid-term rentals. The category has taken a bigger portion of Airbnb’s business since the pandemic, Chief Financial Officer Ellie Mertz told investors in May. Stays longer than 28 days peaked at 24% of bookings in the first quarter of 2021, compared with 13% in the same period in 2019. Over the past year, the number has settled at around 18%. Mid-term rentals have continued to grow as Airbnb takes action to encourage the category, as it did last summer when it reduced service fees for stays of more than three months..For now, the segment is dominated by large property management companies such as Anyplace, Blueground and June Homes, which have amassed thousands of furnished apartments and boutique hotel rooms to list on both Airbnb and their own websites. But smaller players are also buying property management software and setting up their own booking websites, which can draw renters in by offering lower prices for properties that people initially find on Airbnb or Vrbo..For some hosts, the trick is not to find renters one by one but to form relationships with institutions that will bring in regular business. These can be companies helping their employees relocate, or insurers and government agencies in search of temporary housing for displaced families or contract workers..Christine Xie converted a three-year-old Airbnb business in Las Vegas into a mid-term rental company last year. Xie and her two business partners struck a deal with the World Series of Poker to be its corporate housing provider for its dealers and event staff during weekslong tournaments. Separately, the company won a contract to provide housing for casino workers who had relocated after pitching the idea to an executive in the casino’s office lobby..The interest in direct bookings creates an opportunity for businesses such as Furnished Finder LLC. The site, which charges $150 annually per listing rather than taking a commission, had become a familiar name among hosts offering monthslong stays to travel nurses. Interest spiked last fall when New York City effectively banned short-term apartment rentals, and in October the platform added more homes than in any month of its 10-year history, according to CEO Jeff Hurst..Today, Furnished Finder has 300,000 listings in the US, still a far cry from Airbnb’s 7.7 million globally. But it is profitable and plans to hire more engineers and product managers, says Hurst, who was hired in late 2023, one of a wave of former Vrbo employees who’ve migrated to the company..The hunger to develop alternate strategies to find tenants is a big reason people were willing to fork over the $897 Vasquez charged for his conference, whose attendance doubled from the year before. He talks up the benefits of rental hosts referring potential clients to one another. “The mid-term space is all about connections,” he says..Vasquez rented out his first mid-term property to a travel nurse in 2015, then built up his portfolio by making a housing deal with his local hospital in Modesto, California, and managing other people’s rentals. He now brings in more than $80,000 a month in profit, with nine rentals he owns and eight that he manages for others..His social media following exploded after he appeared on a real estate investing podcast last year to explain his operations. The increasing prominence provided a significant boost for what has become an even bigger source of income for Vasquez than rental housing: giving other people advice about rental housing..After the podcast episode aired, Vasquez got more than 300 new students for his yearlong mentorship program, which costs $6,500. He says his online mentorship program turned a $1.3 million profit last year. The conference attracted 60 more sign-ups, adding to the 450 people who have taken the course. Profit is once again projected to top $1 million..“It’s so crazy to feel like this movement is happening,” he says, “and I get to be a catalyst.”.(Updates paragraph three with additional data on Airbnb host earnings. A previous version corrected information about Furnished Finder’s pricing.).More stories like this are available on bloomberg.com.©2024 Bloomberg L.P.

Airbnb Hosts Want Guests To Come To Them Directly

A dip in profits and a shift to longer rentals have property managers looking for ways around the ubiquitous rental marketplace.

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