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. 

 
 
 
 

How can cities become more bike friendly? The Netherlands offers useful lessons

(Aurore Belot/AFP via Getty Images)

It might seem like cycling is in the DNA of the Netherlands, a country where even the prime minister takes his bicycle to work. But the Dutch haven’t always lived as one with their bikes. In the Amsterdam of the early 1970s, cars were considered the wave of the future. They can be seen filling up squares and streets in historical photographs, and killed an average of over two Amsterdammers per week, including many children.

It is nothing more than an “accident of history” that the Netherlands embraced cycling, says Marco te Brömmelstoet, the director of the Urban Cycling Institute in Amsterdam and a man better known as the city’s cycling professor. Today’s bike rider’s paradise was created after parents and activists took to the streets to protest “child murder” by car. A Saudi oil embargo, rising gas prices, concerns about pollution and anger about the destruction of entire neighbourhoods to build motorways did the rest. 


Amsterdam, 1958. Not a cyclist's paradise. (Keystone/Getty Images)

What’s important about this history is that it can be replicated in other cities, too. Of course, the Netherlands has certain advantages – it’s flat as a pancake, for example. But in the eyes of traffic reformers, the rise of e-bikes (and even cargo bikes) means there’s no excuse for prioritising cars everywhere. 

So how can cities, flat or not, follow Amsterdam’s path to creating places where cycling is a pleasant, safe and common way to get around? The Dutch have some tips. 

Separate bikes from car traffic

Any city could start painting dedicated bike lanes on the streets. But in the Netherlands, those white marks indicating space for cyclists are considered just a minor first step. 

“A line on the road is not enough. Motorists will ignore it,” says Frans Jan van Rossem, a civil servant specialising in cycling policy in Utrecht. If other cities want their residents to choose bikes instead of cars when dodging pandemic-era public transport, protecting them from fast-moving car traffic must be the priority, Van Rossem says. 

The Dutch research institute CROW developed a widely praised design manual for bicycle infrastructure, full of tips for creating these protected lanes: A row of vertical white posts or a curb can serve as a physical separator, for example. Still, cyclists tend to feel safest in a "solitary" path, separated from the road by grass, trees, or an elevated concrete island. 

“The main bottleneck, the main reason why people don’t cycle, is that they don’t feel safe,” Van Rossem notes. “To start, construct separate paths.”

Turn those bike paths into a network

Many cities may have some bike lanes on some streets, but leave cyclists to roll the dice everywhere else. Will conditions still be safe when they turn left or right? Often they have to continue their way without any protected facilities for cyclists. 

“In many cases, cities take fast action, without thinking it through very well,” says Lucas Harms. He leads the Dutch Cycling Embassy, a partnership between the Dutch government and several companies, which promotes Dutch bike knowhow globally. “Don’t build small pieces of bike lane from nothing to nowhere. Think about a network of cycling infrastructure.” 

Utrecht aims to have cyclists within 200 to 300 metres of a connected path anywhere in the city, Van Rossem says. Avoid constructing those paths in sketchy industrial areas, he warns. “A connection through an unattractive area may be fast, but won’t be used a lot.”

Embrace the ‘fietsstraat’, a street where bikes come first


On some streets, drivers have to give up their privileges. (Rick Nederstigt/AFP via Getty Images)

A peculiar Dutch invention called "fietsstraat" (cycling street) holds strong potential for the rest of the world, Kevin Krizek says. He’s a transportation professor from Colorado who spent three years at Radboud University in Nijmegen. 

On cycling streets, cars are “guests”, restricted by a speed limit of 30 kilometres per hour. Drivers are not allowed to pass, so cyclists comfortably dominate the road. In the Netherlands the fietsstraat is usually paved with red asphalt, to resemble a bike path and notify drivers of their secondary status. But creating a cycling street can be easy. “All you need to do is put signs at intersections,” Krizek says. The effect is revolutionary in his view. Drivers have to give up their privileges, and cyclists can take the lead. 

Some Dutch traffic experts worry the cycling street won’t work if a city doesn’t also have a robust cycling culture. In the Netherlands, drivers are aware of the perils of urban cycling because they too use bicycles. Moreover, Dutch cities use sophisticated “circulation plans” to direct cars away from city centres and residential areas, onto a few main routes. 

Without “calming” traffic this way, the cycling street could be a step too far, Harms says. “In a city like New York, where all roads are equally accessible and full, it’s better to separate bicycles and cars,” he says.

Redesign intersections for cyclists' safety

If cyclists have to cross intersections “at the mercy of the Gods”, you’re not there yet, says Harms. When he travels abroad, he often finds clumsily designed crossings. As soon as cars turn, cyclists may fear for their lives. 

Harms recommends placing physical barriers between cars and bikes in places where they must cross. The Dutch build elevated islands to direct traffic into separate sections. The golden rule: cars wait behind bicycles. That way, drivers can see cyclists clearly at all times. Barriers also force Dutch cyclists to turn left in the safest way possible. They cross the street first and wait for their turn again before making their way left.

“You can create that with simple temporary measures,” Harms says. Planters work fine, for example. “They must be forgiving, though. When someone makes a mistake, you don’t want them to get seriously injured by a flower box’s sharp edge.”

Professor Krizek points out how the Dutch integrated cycling routes into roundabouts. Some are small; some are big and glorious, like the Hovenring between Eindhoven and Veldhoven, where cyclists take a futuristic-looking roundabout lifted above the highway. Most of those traffic circles move high volumes of cars and cyclists through intersections efficiently and safely. For a simpler solution, the Dutch manual suggests guiding cyclists to quieter streets – crossing a block up or down may be safer. “Nobody knows how to do intersections better than the Dutch,” says Krizek. 

Ban cars, or at least discourage them


A man rides down from a three-level bicycle parking garage near Amsterdam's main train station. (Timothy Clary/AFP via Getty Images)

The quickest, most affordable way to make a city more bikeable is to ban cars, says Ria Hilhorst, cycling policy advisor for the City of Amsterdam. It will make streets remarkably safe – and will most likely enrage a significant amount of people. 

Amsterdam doesn’t outlaw cars, but it does deliberately make their owners feel unwelcome in the historic city’s cramped streets. Paid parking is hugely effective, for example. Many car owners decide to avoid paying and use bicycles or public transportation for trips into the city. Utrecht, meanwhile, boasts the world’s largest bicycle parking garage, which provides a dizzying 12,500 parking spots.

To further discourage drivers from entering the city’s heart, Amsterdam will soon remove more than 10,000 car-parking spaces. Strategically placed barriers already make it impossible to cross Amsterdam efficiently by car. “In Amsterdam, it is faster to cross the city on a bike than by car,” Harms says. “That is the result of very conscious policy decisions.”

Communicate the benefits clearly

Shopkeepers always fear they will lose clients when their businesses won’t be directly accessible by car, but that’s a myth, says Harms. “A lot of research concludes that better access for pedestrians and cyclists, making a street more attractive, is an economic boost.”

Try replacing one parking space with a small park, he recommends, and residents will see how it improves their community. Home values will eventually rise in calmer, bike-friendlier neighbourhoods without through traffic, Van Rossem says. Fewer cars mean more room for green spaces, for example.

“I often miss the notion that cycling and walking can contribute a lot to the city. One of the greatest threats to public health is lack of exercise. A more walkable and bikeable city can be part of the solution,” says Ria Hilhorst. “But in many countries, cycling is seen as something for losers. I made it, so I have a car and I’m going to use it, is the idea. 

“Changing this requires political courage. Keep your back straight, and present a vision. What do you gain? Tranquility, fewer emissions, health benefits, traffic safety, less space occupied by vehicles.” 

Again, she points to Amsterdam’s history. “It is possible; we were a car city too.”

Karlijn van Houwelingen is a journalist based in New York City.