Airbnb’s coronavirus crisis may be good news for renters in expensive cities

People pass by an anti-Airbnb graffiti in the Koukaki district in Athens on May 7, 2020. (Louisa Gouliamaki/AFP via Getty Images)

Like many of us, Airbnb is not having a good year.

Earlier this May, the company laid off nearly 2,000 employees, or approximately 25% of its workforce.

In an attempt to save an additional $800 million this year, Airbnb also gave its top executives a 50% pay cut and suspended its marketing activity.

Plans for an upcoming IPO — which was set to happen later this year — might also be cut short. 

Demand for Airbnb properties has collapsed during the Covid-19 crisis

Kevin B., who asked that his last name be withheld citing privacy concerns, has been renting out his house in San Francisco while living in his girlfriend’s home. The plan was to use the free space to make a bit of extra money for travelling.

But as planes were grounded, restaurants closed and people cancelled travel plans, Airbnb listings started seeing less action. Kevin has put his listing on snooze for the rest of the year and is now thinking about advertising his house for longer-term renting on other platforms such as Zillow or Craigslist.

"Airbnb was great for short-term renters. But now they're pushing for longer-term and if I want someone to rent my home permanently, why would I go to Airbnb and give them a cut?", he asks.

He’s not the only one wondering. Demand for short-term Airbnb rentals has practically vanished over the past few months, with some hosts calling it the “Airbnb apocalypse”.

While Airbnb doesn’t publicly release the number of bookings it records on the platform, third-party sources such as Inside Airbnb give us a glimpse into how the short-term rental giant has been fairing.

The data shows that the number of reviews left on the platform each day in some of the world’s biggest cities has been slowly approaching zero since the start of the outbreak.

Demand has gone down in Airbnb’s most profitable cities

While there is usually a drop in the number of reviews left on Airbnb a few days after New Year’s Eve, this year was different.

The numbers started dropping sharply in places such as London, Paris and New York around the end of February and have continued falling since. Other cities, such as Rio de Janeiro and Sydney, saw similar changes but at a smaller level. While some cities are already coming out of lockdown, Rio is yet to enter one while landlords in Sydney were allowed to advertise “isolation holidays” undisturbed.

Other governments and local authorities have taken much stricter actions designed to restrict the number of people staying in holiday rentals.

In the US, short-term rentals were or are temporarily banned across several states such as Florida, Pennsylvania, Georgia, Delaware, Maine and Vermont as well as several cities. Airbnb bookings in the UK have been restricted to key workers.*

Officials are also using the coronavirus pandemic as an occasion to expand their regulatory control over Airbnb and other similar platforms.

For example, new laws in the Czech Republic ask landlords who want to list their houses or flats on Airbnb to inform the government about how often the property is rented, how much has been paid for it as well as declare what platforms the property is listed on.

Prague - which normally sees more than eight million tourists a year - is among many European capitals where a lack of affordable housing is an increasingly bigger problem.

Authorities are now hoping that regulating websites such as Airbnb may mitigate the effects of over-tourism and create more living spaces for people who actually plan on living in Prague.


Airbnb’s meteoric rise

Airbnb started in 2007 in San Francisco, when co-founders Brian Chesky and Joe Gebbia thought they would put an air mattress in their living room and turn it into a cheap bed and breakfast.

That turned into a startup with a simple philosophy: allow people to occasionally rent out their spare rooms in exchange for a bit of cash and some companionship.

Things couldn’t be more different today. As of April 2020, 56% of the London listings on the website are for entire homes, rather than just spare rooms. While an Airbnb spokesperson says that some of those listings are from resident hosts who only list their properties when they are out of town, there's no way to determine what percentage of the listings might fall into that category. Nearly 50,000 entire houses and flats are currently listed in London.

The sheer scale of the short-term and holiday let market has raised concerns over the impact on urban communities around the world.

Officials and activists argue that the rise of Airbnb and similar sites has caused increases in rent prices and housing shortages, and have called for stronger regulation.

But Airbnb’s pockets run deep. The company spent at least $600,000 on lobbying in the US last year while still maintaining the image of a grassroots operation that is part of the sharing economy.

A lack of regulation and lower overhead costs allowed Airbnb to grow at meteoric rates. Valuations before the coronavirus outbreak placed the company’s worth at over $30 billion.

However, a closer look at the data suggests the number of properties on the website was stagnating even before the pandemic - whether through market saturation, or new regulation, or a combination of both.

Some hosts are abandoning the platform

The graphs above suggest that, pre-Covid-19, Airbnb had seen healthy — and consistent — quarter-on-quarter growth in demand in major cities until the start of this year. That’s true; but the picture looks slightly different when we count the number of properties being listed.

Here the graphs look much flatter, with several cities seeing drops that pre-date the pandemic.

Airbnb may have saturated the market

The number of properties available for short-term rent in Los Angeles has fallen back to what it was in 2017, according to Inside Airbnb's data, with the sharpest decline starting around September last year, well before the first Covid-19 cases. Also according to Inside Airbnb, Rio and Rome both started 2020 with fewer Airbnb rentals than when they started 2019. Rio’s numbers have actually been gradually falling since at least April 2008, when Inside Airbnb started collecting data for the city.

A spokesperson for Airbnb disputes some of these findings and says that overall rental listings on the platform has not actually declined. "There are more listings on Airbnb today than on 1 January 2020, with more than 90% of hosts saying they plan to host at least as often after the pandemic," says company spokesperson Metin Parlak. "The majority of hosts on Airbnb share their own home and half say the additional income helps them afford their home. Our platform helps spread tourism benefits beyond tourist hotspots to local families and communities, generating and estimated direct economic impact of $117 billion in economic activity in our top 30 countries in 2019."

Airbnb is not the only site seeing listings vanish. StreetEasy, a real estate classifieds website in New York, reported 46% fewer listings in April this year compared to last year, although the decline started even before the outbreak.

At the same time, the share of short-term and furnished flats available to rent on StreetEasy has increased since the start of the Covid-19 outbreak. This can partially be explained by the local rental market adjusting to increased demand from medical personnel coming to New York to fight the virus and college students who had to leave their dorms and needed alternative, flexible accommodation.

Another part of the reason could also be that properties are moving from Airbnb to StreetEasy.

Los Angeles, on the other hand, saw an increase in the number of houses on the rental market. Real estate classifieds platform Zillow saw a slight uptick of 7% even as authorities ordered a state-wide stay-at-home order.

As some Twitter users observed, at least some of these newly listed properties were previously active on Airbnb. Like Kevin in San Francisco, some landlords are taking their properties off Airbnb and transforming them into longer-term rentals or selling them. That might be bad news for holiday letters, but good news for residents seeking more affordable longer-term rents.

Airbnb is betting on long-term stays as well. About half of the site’s listings now offer discounts for longer-term stays and the company is launching new tools to help hosts transition to the new model.

But whether it can convince landlords that the service it provides is worth the service fee it asks for will remain to be seen.

What’s next?

While the rental markets are frozen right now, activity is likely to pick back up once lockdowns are eased and people feel comfortable moving again.

However, social distancing rules might stay with us for a long time. This might make tourists and businesspeople wary of spending the night in an unknown stranger’s room.

On the other hand, Airbnb has a unique advantage compared to hotels and other traditional accommodation services. The company is not responsible for maintaining rooms or paying staff, which may allow it to bounce back more easily.

To survive in a post-coronavirus world, Airbnb will have to rethink the way it operates and put local communities back at the centre of its business.

*Update May 29: We've updated this story to reflect the fact that some jurisdictions that temporarily halted short-term rentals have since lifted those restrictions. We've also added responses from an Airbnb spokesperson. 

Nicu Calcea is a data reporter at New Statesman Media Group. 

 
 
 
 

To beat rising temperatures, Vienna launches a network of 'Cool Streets'

A Vienna resident cools off at one of the city's new Cool Streets installations. (Courtesy Christian Fürthner/Mobilitätsagentur Wien)

Over the past several months, Austria has recorded its highest unemployment rate since World War II, thanks to the economic aftermath of the Covid-19 pandemic. With no job or a suddenly smaller income – not to mention the continued threat of the virus – many Viennese will opt for a staycation this summer.  

At the same time, last year, Austria’s capital experienced 39 days with temperatures of over 30°C (86°F), one of its hottest summers in history according to the Central Institute for Meteorology and Geodynamics.

Climate experts expect a similarly sizzling 2020 season, and city officials are now doubling down on efforts to combat the heat by launching a “Cool Streets” initiative as well as a new, state-of-the-art cooling park.

“As the city councilwoman in charge of climate, it is my job to ensure local cooling,” Vienna’s deputy mayor Birgit Hebein proclaimed at the opening of one of 22 new “Cool Streets” on 22 June.

“In Austria, there are already more heat deaths than traffic fatalities,” she added.

Hebein was referring to the 766 people the Austrian Agency for Health and Food Security included in its 2018 heat-associated mortality statistics. The number was up by 31% compared to 2017, and in contrast to the 409 people who died in traffic collisions the same year.

The project includes 18 temporary Cool Streets located across the city, plus four roads that will be redesigned permanently and designated as “Cool Streets Plus”.

“The Plus version includes the planting of trees. Brighter surfaces, which reflect less heat, replace asphalt in addition to the installation of shadow or water elements,” said Kathrin Ivancsits, spokeswoman for the city-owned bureau Mobilitätsagentur, which is coordinating the project.


Vienna's seasonal Cool Streets provide shady places to rest and are closed to cars. (Petra Loho for CityMetric)

In addition to mobile shade dispensers and seating possibilities amid more greenery provided by potted plants, each street features a steel column offering drinking water and spray cooling. The temporary Cool Streets will also remain car-free until 20 September.

A sensor in the granite base releases drinking water and pushes it through 34 nozzles whenever the outside temperature reaches 25°C (77°F) . As soon as the ambient temperature drops to 23°C (73°F), the sensor, which operates from 10 a.m. to 8 p.m., turns off the water supply.

The sensors were included in part to allay concerns about legionella, a pathogenic bacteria that can reproduce in water.  

“When the spray stops, the system drains, and therefore no microbial contamination can develop,” said Dr. Hans-Peter Hutter, deputy head of the Department of Environmental Health at the Center for Public Health at Medical University Vienna, in a televised interview.

Hutter also assured the public that there is no increased risk of a Covid-19 infection from the spray as long as people adhere to the one-meter social distance requirement.


But Samer Bagaeen of the University of Kent's School of Architecture and Planning notes that air cooling systems, like the ones used in Germany at abattoirs, have been found recently to be a risk factor for Covid-19 outbreaks.

“The same could be said for spay devices,” he warned.

Vienna’s district councils selected the 22 Cool Street locations with the help of the city’s Urban Heat Vulnerability Index. The map shows where most people suffer from heat by evaluating temperature data, green and water-related infrastructure, and demographic data.

“Urban heat islands can occur when cities replace the natural land cover with dense concentrations of pavement, buildings, and other surfaces that absorb and retain heat,” as the US Environmental Protection Agency states.


A rendering of Vienna's planned park featuring a Coolspot, which is scheduled to open in August. Click to expand.
(Courtesy Carla Lo Landscape Architecture)

Vienna’s sixth district, Mariahilf, is such an area. The construction of the capital’s first “Cooling Park”, a €1 million project covering the 10,600 square-metre Esterházypark, is designed to provide relief. 

Green4Cities, a centre of excellence for green infrastructure in urban areas, designed the park’s main attraction, the “Coolspot”. The nearly 3.40-metre high steel trellis holds three rings equipped with spray nozzles. Textile shading slats, tensioned with steel cables, cover them.

The effects of evaporation and evapotranspiration create a cooler microclimate around the 30 square-metre seating area, alongside other spray spots selectively scattered across the park.

The high-pressure spray also deposits tiny droplets on plant and tree leaves, which stimulates them to sweat even more. All together, these collective measures help to cool their surroundings by up to six degrees.

The landscape architect Carla Lo and her team planned what she calls the “low-tech” park components. “Plants are an essential design element of the Cooling Park,” Lo says. “By unsealing the [soil], we can add new grass, herbaceous beds, and more climate-resistant trees to the existing cultivation”.

Light-coloured, natural stone punctuated by grass seams replaces the old concrete surfaces, and wooden benches meander throughout the park.

Living near the park and yearning for an urban escape close by, Lo says she’s motivated to ensure the park is completed by mid-August.

“If we don't do anything, Vienna will be another eight degrees Celsius hotter in 2050 than it already is,” Hebein said.

Vienna recently came in first in the World's 10 Greenest Cities Index by the consulting agency Resonance.

“There is no one size fits all on how cities respond to urban heat,” says the University of Kent’s Bagaeen, who points out that Vienna was one of the first European cities to set up an Urban Heat Islands Strategic Plan in 2015.

In the short term, prognoses on the city’s future development may be more difficult: Vienna votes this autumn.

Petra Loho is a journalist and photographer based in Austria.