The Roles Have Been Reversed – Why Airbnb Is Now Losing Customers to Hotels

On its earnings call last week, Airbnb asked investors to temper their expectations for the third quarter due to declining demand. Even after reporting the surge in bookings, the short-term rental giant cut its third-quarter earnings forecast to $3.73 billion from $3.67 billion, below analysts’ expectations of $3.8 billion. Wall Street was aghast, and Airbnb’s stock plunged last week, falling 14% in a single day.

That’s a far cry from the record demand Airbnb saw in the immediate aftermath of the pandemic. New data shows that traveler demand for short-term rentals is declining in some parts of the United States and for some types of accommodations. And with some consumers complaining about high cleaning fees, rising prices, and lack of quality control, the short-term rental giant needs to convince its loyal customers to keep them around, Business Insider notes.

Part of the problem is that travelers’ perceptions of what constitutes a good travel deal have changed. Airbnb used to have a stronger advantage for travelers who wanted to spend less. In 2019, hotels were charging 49% more per night in major cities, according to March data from AirDNA, which analyzes the short-term rental industry. That gap has narrowed to just 26% in 2022.

On an earnings call with investors last week, CEO Brian Chesky said competing with hotels was central to the company’s strategy. He also announced the possibility of increasing the number of hotel rooms available to book on Airbnb. Last month, an Airbnb executive hinted that Airbnb guests could soon add hotel amenities like spa treatments and personal chefs to their stay.

Airbnb is down, hotels are down.

AirDNA found that demand for Airbnbs is lagging or declining in some categories where hotels compete.

In U.S. cities and suburbs, traveler demand for Airbnbs is no longer growing as rapidly as it did in the immediate aftermath of 2020. Instead, the share of demand for short-term rentals in suburban markets has remained flat over the past year, at about 9% year-over-year. In urban markets, the share of demand for short-term rentals is still hovering around 7%.

AirDNA analyzed a group of five popular vacation spots in Florida and found that demand for short-term rentals was weakest in categories most likely to compete with individual hotel rooms.

Demand for short-term, one-bedroom rentals in Florida’s five markets grew just 1% from 2023 to 2024, and demand for private rooms in shared housing fell 8.7% compared to last year. The fees associated with short-term rentals can be a bigger burden for some travelers who book shorter stays or with smaller groups, said Jamie Lin, chief economist at AirDNA.

source: after that