Why are airbnb accommodations constantly on the rise?
Airbnb, known for its offering of affordable accommodations, has transformed itself into a giant in the vacation rental market. However, since the onset of the COVID-19 pandemic, users have noticed a steady increase in accommodation prices, which has raised some concern. Why this upward trend?
Before exploring the reasons behind this change in prices, it is important to note that Airbnb is a platform that has experienced significant growth since its founding in 2008. The San Francisco-based company recorded 79.7 million nights and experiences in the third quarter of 2020, despite the fact that this represented 7% fewer than in the same period last year.
What’s even more intriguing is that despite the decline in the number of bookings, Airbnb customers have paid higher prices for their stays during the pandemic, which has generated substantial profits for the company. For example, in 2021, the average daily rate for an Airbnb stay was $149.15, while in 2020 it was 15% lower and in 2019, 33% lower.
The year 2022 saw a significant increase in revenue generated from home rentals, especially in popular tourist destinations such as the Costa del Sol, Costa Blanca and the Spanish islands, where owners reported a 53% increase in revenue. In places like Palma de Mallorca, for example, monthly income increased from 3,000 to 4,600 euros.
So what has led to this price increase on Airbnb? A few key factors could explain this trend:
1. Increased Demand: As travel restrictions relax in many parts of the world, demand for vacation accommodations has increased. This has allowed owners to raise prices due to competition for a limited number of available accommodations.
2. Changes in Pricing Policy: Airbnb has adjusted its pricing policy in recent years, resulting in higher rates. In addition, cleaning fees and other additional services may also contribute to higher total costs.
3. Limited Supply: Lack of availability of accommodations in some areas can lead to higher prices. In popular tourist destinations, demand far exceeds supply, allowing hosts to charge more for their properties.
4. Property Improvements: Some owners have invested in additional upgrades and amenities at their properties to attract guests. These improvements may justify an increase in prices.
Despite these price increases, Airbnb remains a popular choice for travelers due to its diversity of accommodations and unique experiences. However, it is important that travelers are prepared to pay a little more for the convenience and flexibility offered by this ever-evolving vacation rental platform.
A meteoric rise and the challenges of the real estate market.
Since its inception, Airbnb has experienced staggering growth that has made it a leading global vacation rental platform. With a presence in over 100,000 cities in more than 220 countries and an impressive offering of more than seven million listings, Airbnb has become the place of choice for millions of travelers around the world. However, this success has not been without challenges and significant changes in the real estate market.
Over the last few years, the most touristic cities have experienced a notable increase in the number of tourist homes (VUTs) available on Airbnb. This growth has been so significant that some cities reached an average of 18.1 VUT vacancies per 100 inhabitants, with an increase of 34.5% in the third quarter of 2021.
Before the pandemic, in the main Spanish cities, VUTs offered a capacity similar to that of hotels, with a total of 361,373 vacancies in different types of accommodation. This represented a considerable amount, even surpassing the number of regulated apartments. The rise of VUTs contributed greatly to this growth and accounted for 82% of the increase in tourist accommodation capacity.
However, Airbnb is currently facing a number of problems in the real estate market. The imbalance between high demand and low supply of rentals has led to a general increase in prices, which has made it even more difficult to find affordable rentals. This has also affected tourist rental platforms.
To address this problem, some cities have implemented regulatory and fiscal measures. For example, Portugal has banned the granting of new licenses for short-term tourist rentals to address its real estate crisis. In Spain,
Barcelona and Madrid have established regulations requiring the registration of any housing offered as tourist accommodation. New York has enacted laws requiring hosts to prove that they reside in the properties they rent to tourists or face significant fines.
Airbnb, once known for its affordable rates, is now striving to improve its profitability in a variety of ways, including raising prices. This has raised questions about its future in the market, as prices are no longer as attractive to consumers. The challenge for Airbnb lies in finding a balance between profitability and affordability for travelers as it continues to evolve in the competitive world of vacation rentals.