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After many months of lockdowns, life has been brought back into the accommodation industry, and Airbnb’s bookings have begun bouncing back, with a twist. But with sweeping changes to the property landscape likely to have more of a lasting impact, is it time for Airbnb to pivot?
Suburbanite Principal, market commentator and valuer, Anna Porter shares her thoughts from a professional’s perspective.
Airbnb will have to pivot to stay relevant
While Airbnb may currently be seeing an increase in bookings, they are not all the same as they once were. The big disruptor now needs to become more traditional and provide well priced midterm accommodation for displaced workers that can’t travel across borders or people who have been stranded by border closures and isolation.
Those that haven’t done so are going to struggle.
As tenants encounter financial hardship amid rising unemployment, many are moving back in with their parents or turning to Airbnbs as a stopgap measure. We are currently seeing people transitioning to stopgap measures, like Airbnb properties, if they had to let go of a more expensive tenancy or are looking for a temporary housing solution.
Gone are the days where workers could easily cross borders, so businesses are now putting their staff into Airbnbs for weeks at a time, instead of sending them back to their home state where they would be required to enter quarantine.
There will also be highly likely chance that a glut of Airbnb will be coming onto the long-term rental market, and in areas where they are regional or costal, which will push up vacancies.
Many Airbnb hosts will need to decide if they should try to rent out the property fully furnished or take the loss on removing furnishings/storing it. This is because furnished properties don’t tend to rent as well in the long-term accommodation market so this is a big call they need to make.
The Fall in the Accomodation Business
The fall in tourism numbers coupled with the economic condition gives Airbnb hosts the opportunity to pivot to survive on the other end of this. The data is showing that they are starting to pick back up again with more than 55,000 new bookings in Australia as at May 24 compared to the low point of 16,000 for the week of 20-26th April, 2020.
The Airdna data also indicates that average daily rates for accommodation have slightly increased from the same period last year but occupancy rates have dropped off. For next week alone, its predicted occupancy will be at 40.9% compared to last years 48.6%, according to the data.*
Some properties and hosts may not bounce back after they take the revenue loss, juggling mortgage repayments and then the loss of furniture as one of the assets they would have invested in, possibly to the tune of tens of thousands. This could also result in many properties being placed up for sale also which in turn will soften the holiday market for buyers and create
some good buying power outside of the big capitals over the next 12 months.
Whilst these times are challenging and many property owners may be seeking a ‘quick sale’, there are some things that should not be done.
DO NOT panic and sell your property.
There are many lifelines available and we will get through this time. Once out the other side, there will be increased demand and a stronger economy and increases in value.
If you have no choice but to sell, you can contact a professional so they can put you in touch with the higher performing agents in your area.
Professionals with a wide range of clientele and experience will be able to put you in contact with the correct agent tailored to your needs and requirements.
Another reason is that there is also an evident buying opportunity that some Australians may be able to take advantage of.
Below are some of the criteria to help you safeguard in general and self-assess whether you should invest.
Criteria for individuals who should consider investing:
- People with income security, and/or
- People with savings
- If you are comfortable to take a risk with potential upswing at the other end
- Are comfortable with the market fluctuating in the short term and can take a long term view
- Are able to hold the property for at least 12-24 months and wait for the economy to recover
If you would like to speak with a professional on your investment options, please do not hesitate to contact one of our team members and we can put you through to the right person.
*The Airdna data mentioned can be viewed here: https://www.airdna.co/covid-19-data-center
For more articles, see our Summer Bulletin
