Airbnb has opened the door to two billion guests and a holiday revolution. But as popular destinations crack down on short-term lets, priced-out locals grow angry and returns frustrate shareholders, has the bubble burst? Share your stories below – we’ll be back with live updates on Monday.
Saturday 7 December 2024 07:56, UK
By Megan Harwood-Baynes, cost of living specialist
While struggling to pay their bills in 2007, two San Francisco residents began renting their spare room out to conference-goers when all the hotels in the city were full.
Less than two decades later, what started life as AirBedandBreakfast.com has done nothing short of revolutionise the travel industry.
More than five million hosts, in almost every country across the globe, have followed in the footsteps of Joe Gebbia and Brian Chesky and opened their homes to more than two billion guests through Airbnb.
But as the company grew, so have the accompanying problems: from viral Airbnb horror stories to protests from local communities who argue they have been priced out by landlords buying up properties to turn into holiday lets.
Then there’s competition. Booking.com tells Money it is now two-thirds of the size of Airbnb when it comes to alternative accommodation (so not just hotels) – of the 29 million listings on its site, more than 7.8 millions are in homes, apartments and other unique places to stay.
Airbnb ‘scapegoated’ in Cornwall
Nowhere in the UK springs to mind more quickly than Cornwall in the battle over short-term rentals, with Airbnb often cited as the reason for over-tourism and the housing shortage for beleaguered locals.
A report commissioned by Airbnb, however, found it has little to no significant impact on housing in the vast majority of the UK.
In Cornwall specifically, Airbnb data shows most hosts in the area list one space, for less than four nights a month, and 40% say the extra income helps them to afford their home.
Oliver Monk, councillor for housing, says part of the problem is that Airbnb has become so successful it has become the “generic name” for short-term letting – in the same way we talk about hoovering the house, or putting leftovers in Tupperware.
“People will say to me ‘I’m going to Airbnb my house for six weeks in the summer’ – but they might actually be using another site entirely,” he says.
“I bet Airbnb can’t stand that because their brand name is constantly attached.
“And I think that is partly the reason they have been so proactive in trying to set up a central register to level the playing field.”
Perhaps surprisingly, he adds: “In a way, I have got sympathy with Airbnb.
“I haven’t got Booking.com ringing me up and saying ‘yeah we need a register’ because they are sat behind the shield of the Airbnb brand name.”
And housing problems can’t be blamed solely on short-term lettings, he says: “The current system we have got doesn’t deliver housing quickly enough.”
Which areas are clamping down?
Popular holiday destinations including London, Edinburgh, Paris, Czechia and Rome have all introduced varying restrictions on all short-term lets.
In Barcelona, the city’s mayor has promised to phase out short-term letting licences entirely by 2028 in a bid to return 10,000 apartments to the residential market.
While London’s restrictions have been around for almost eight years, Czechia has become one of the latest countries to clamp down on Airbnb with a draft bill, approved by the government, which will allow municipalities to limit Airbnb-style accommodation. This can vary, but could include capping the number of days a property can be rented out, as well as defining the minimum amount of space required per guest.
It would also place stricter rules and taxes on guesthouses, Airbnbs and other holiday rentals, bringing them into line with traditional hotels.
Dennis Darwiche rents out three Airbnbs in Prague via a “rent to rent” scheme – this means he rents them off the building’s landlord and in turn rents them out to holidaymakers.
“Many locals complain it is too touristy,” he says. “But if the law comes into effect and restricts Airbnb, the hotels won’t have capacity to take all the travellers – so what happens then?
“Well, the prices will increase and we will have fewer tourists.”
He says if they bring in rules restricting the number of days he can rent the apartments, he will have to consider giving up the business.
‘I’ve had to slash my prices to barely break even’
Has all the bad press around Airbnb affected bookings? We asked London hosts for their experiences…
I was a superhost for 3/4 years and came off the platform. When Airbnb raised their fees it left little room for me to raise my prices as I would not get many bookings, so I had to lower it to get bookings back in.
Pat
I’ve been a host since 2011 (Superhost and normally renting single rooms in my shared home). I’ve always been fully booked nearly 100% of the time and my earnings went up every year with the exception of 2020 and 2021. There was a massive jump in what people were willing to pay in 2022 and 2023 and now I’ve gone back down to a 2014 level so, for me, a bubble has definitely burst.
I’m about 90% booked if I drop my prices enough but I’ve had to absolutely slash my prices. I find that sometimes with wear and tear, bills and cleaner fees, (which have gone up significantly) I’m barely breaking even. There are a lot of new hotels near me, which I think have taken my weekend customers – I used to charge almost double at weekends but now I have to charge the same or less than during the week.
Claire
We rent out an entire flat which means a 90-day limit in London. We have to make our money from the 90 days – we could do more. We are fully booked and could do more than the 90 days but Airbnb shuts down on us. Our council tax has doubled and we now have to consider how we go forward… there appears to be a turning against landlords from powers that be at the moment but hoping to ride it out.
Michael
I’m a guest favourite superhost and I’m fully booked. I’ve been hosting for 1.5 years and have had really good experiences so far. 99% of my guests are lovely and respectful. I also use Airbnb when I travel and I love it. My one gripe is Airbnb should do more to protect the hosts – they are very guest-centric.
Yolanda
I’m a super host and guest favourite and I’ve found that bookings seem to come in much more last minute and there is a higher price sensitivity but I’m still nearly always full just with much less certainty and a slightly lower nightly rate. I’m at the higher end of price and quality of room so that might be impacting things for me.
Tasmin
Airbnb a ‘frustrating share to own’
Airbnb’s core business model is “easy to understand”, says Dan Coatsworth, investment analyst at AJ Bell. And while the key to its success is the continued growth in hosts on the platform and the volume of bookings, there are some big challenges for the company.
With competition from hotels and chains, “sustaining momentum is hard”, he told Money.
Another issue is helping hosts drum up business during non-peak times.
“Many hosts might find they struggle to attract people during certain times of the year and that can put them off using Airbnb permanently, saying it’s not worth the effort,” he said.
But, “longer-term, it’s possible to see Airbnb broaden its services letting car owners rent their vehicles to others”, he adds.
Yet it has been a “frustrating share to own” for anyone who has invested in the company.
“Despite having a well-known brand and growing profits, the stock hasn’t enjoyed the kind of gains seen by other big US names,” Dan says. “Many investors are concerned that sustained earnings growth will be hard to achieve.”
It joined the stock market in December 2020 with an IPO (initial public offering) priced at $68 a share. This immediately jumped to $165 on the first day of trading.
“Unfortunately, most investors were only able to buy once the shares hit the market and the first available market price was $146.
“Today, the shares trade lower than this level at $133. The share price has been like a yo-yo – experiencing big swings upwards since joining the stock market, but soon falling back again.”
Breaking the rules?
HMRC has launched investigations into nearly 2,000 holiday lets in the UK (up from 375 the year before and 95 the year before that), according to a Freedom of Information request submitted by The Daily Telegraph in May this year.
Those under investigation are suspected of failing to declare their income. Under the UK’s rules, there is a £1,000 tax-free threshold on all second income, and a £7,500 threshold if you rent a furnished room in your home.
Under the previous government, the rules around holiday rentals also changed, as Jeremy Hunt abolished certain incentives to discourage out-of-towners from purchasing second homes in popular spots.
The future of travel to #Airbnbust
Airbnb was once the darling of the holiday market, the future of travel – there was a time when I rarely booked a holiday without it.
Now, searching #Airbnbust online, there is no shortage of hosts complaining about a sudden drop in bookings, or former rental homes being put up for sale as cities bring in restrictions. One owner claims he is losing $600,000 (£463,000) a year on his 70 properties.
Yet the popularity of short-term rentals on other sites, like Booking.com, suggests people haven’t given up on the short-term letting market.
And the sun hasn’t quite set on the “beloved brand”, says Daniella Bianchi, chief strategy officer at management consultancy Interbrand.
“Look at their revenues right now – most come from overnight stays, but at least 17% is coming from stays of more than 30 days,” she tells Money.
“This is such a potential avenue for growth for them.”
The brand itself, and its leaders, are still young, she adds: “There is still so much more they can do.”
So while Airbnb’s growth and popularity meant its own name became synonymous with the entire market – and all the problems that came with it – it also meant it “became part of the zeitgeist”.
This, Daniella says, is “what every brand wants”.
Airbnb has been contacted for comment.
By Jimmy Rice, Money blog editor
Across Europe, car companies are cutting jobs and shutting factories – to the extent that some question their very existence.
Our data and economics editor Ed Conway examined what has gone wrong with Europe and America’s car industry this week.
“While some will reach for their own pet conclusions – Brexit! Electric vehicle deadlines! Government regulations! – in practice there’s something bigger, deeper and less parochial going on here,” Conway wrote.
“As the world shifts from petrol and diesel cars to their electric counterparts, a seismic shift is taking place in the global motor industry.”
In the video below, Conway explains how the rest of the world was caught napping in the electric vehicle race, which means our car prices and auto industry jobs are within China’s grip…
The competition watchdog approved the creation of the UK’s biggest phone network this week with the merger of Three and Vodafone.
The Competition and Markets Authority, the regulator, approved the merger despite previously saying tens of millions could pay more as a result.
Its approval is contingent on the new entity spending billions to improve 5G internet services across the network, it said.
Legally binding targets have been set for the combined Vodafone and Three to agree and meet.
They must cap some mobile tariffs and offer preset contractual terms to mobile virtual network operators, mobile providers that do not own the networks they operate on, for three years.
But not everyone is convinced, as we reported.
“The two companies are currently close competitors so the merger is likely to reduce competitive pressure in the market which could lead to higher prices and lower quality for consumers, at least in the short term,” Rocio Concha, director of policy and advocacy at Which?, said.
“The CMA has taken a gamble with the package of remedies it has settled on.”
Here in Money, our most popular posts of the week, judging by traffic, reflected a big Rightmove survey looking at the “happiest” and “unhappiest” places to live in the UK.
More than 35,000 people across Britain completed the survey, with residents asked questions such as how proud they feel about where they live, their sense of belonging, public transport and whether they earn enough to live comfortably.
Woodbridge in Suffolk came top…
While Slough in Berkshire was ranked bottom…
We also looked at the huge amount a driveway could add to your house price…
…explained why you should consider capitalising on an ISA anomaly while you still can…
…and got a cheap risotto recipe from one of the best chefs in the country…
We’ll be back with live updates on Monday morning – and don’t forget our Saturday long read, this week on the substantial challenges facing Airbnb, which will be published from 8am tomorrow.
The average house price has hit a new high of £298,083, according to Halifax data.
The bank’s house price index also shows prices rose 1.3% in November, the fifth monthly increase in a row.
Here’s how prices changed in the different regions of the UK…
Amanda Bryden, head of mortgages at Halifax, said: “Latest figures continue to show improving levels of demand for mortgages, as an easing in mortgage rates boost buyer confidence.
“However, despite these positive trends, many potential buyers and movers still face significant affordability challenges and buyer confidence may be tested against a changeable economic backdrop.
“As we move towards the end of the year and into 2025, positive employment figures and anticipated decreases in interest rates are expected to continue supporting demand.
“This should underpin further house price growth, albeit at a modest pace as borrowing costs remain above the average of a few years ago.”
Research this week has revealed the “happiest” place to live in the UK…
…and also the unhappiest 10 places on Rightmove’s list of 220 locations…
Some agreed with the findings:
I agree with Woodbridge being a top place to live near to but my nearby large village of Wickham Market is more affordable and has easy access to Woodbridge.
50 yrs Suffolk buoy
Others not so much:
Who on earth makes these decisions?
Not 1 place in Devon and Cornwall!
I’d say the majority of happiness in most of these places is based on how affluent you are not how happy
westo
Here are some more of your thoughts:
I live and work in Harrogate. Moved to this small spa town 7 years ago, after working in the far east for over 6 years. The perfect place to set up my PT business from scratch. It’s a safe space and has a bustling Christmas market and 2 Betty’s Tea Rooms, what’s not to like!
SamB
I reckon Swaffham in Norfolk must rank close to the top of “happy towns”. Even our town’s feral ducks are happy.
Allan G Sneller
Where is Chelmsford on the list?
Steven Jean
Chelmsford came 129th nationally, and 15th in the east of England region – click here to see the full list.
News that buyers are rushing to the market to beat upcoming tax changes will be music to the ears of those selling, according to an industry insider.
Jonathan Hopper, chief executive of Garrington Property Finders, says “hesitation has turned to hurry in some parts of the market”, especially among first-time buyers who are “racing to complete their purchases before the stamp duty thresholds change at the end of March”.
This sense of urgency is prompting some buyers to “view in haste and offer high” to secure a house now and complete their purchase before the tax changes take effect, Hopper says.
“This will be music to the ears of sellers, many of whom have been forced to hold down their asking prices and accept lower offers for much of this year as the supply of homes for sale outstripped demand,” he adds.
However, this buoyancy, which Hopper says is “pumping up average prices” and could “easily turn into another ‘stamp duty stampede'” – is far from universal.
“It’s a different story at the higher end of the market, where wealthy buyers who have rerun the numbers in the wake of a largely unfavourable budget remain highly price sensitive,” he said.
“The supply of good quality prime homes for sale is strong, and buyers at this end of the market often find themselves spoilt for choice and able to negotiate hard on the price they pay – and this is keeping prime price rises much more modest.”
What is stamp duty?
Stamp duty is a tax paid on the cost of a property, with more paid for second homes and by non-UK residents. The threshold for first-time buyers will fall to £300,000 from £425,000 in April. And the threshold for most other properties will fall from £250,000 to £125,000.
New figures show that 10 nightclubs are closing every month in the UK and fewer people are going on nights out.
Michael Hill, the director of Night Time Industries Association, which collated the figures, tells Sky News there were several reasons for the worrying data.
Clubs had a very challenging pandemic, he says, as they were “first to close and last to open” after lockdowns, while they also received “disproportionate support”.
“Then when we came out of that, we walked into the cost of operating crisis or the cost of daily living crisis where energy fees went up,” he says.
“But the one thing that I would say to you is I don’t believe the big night is lost – I just think people can’t afford to go out because of the current inflationary pressures and economics that everyone is facing at the moment.”
There’s hope, however, with some clubs seeing success with earlier nights. Pre-midnight events and shows are proving “extremely successful”, he says.
Watch his full interview with Sky News here…
A trade union has warned that an upcoming strike of around 40 lorry drivers could lead to shortages of turkeys, with Christmas just around the corner.
The drivers, who work for Culina, are planning strike action on 19 and 20 December. The Unite union said this could affect company’s contract with Avara Foods in Hereford – which delivers poultry to the warehouses of M&S and Tesco in the West Midlands.
The union has been in pay negotiations since April.
“Our members do a skilled and vital job ensuring food gets from A to B on time,” said Unite regional officer Jason Richards.
“But they are not being valued by their employer, who has refused to offer any pay increase whatsoever. This Scrooge-like behaviour is unacceptable and will see our members head to the picket line later this month.”
Culina has been approached for comment by Sky News, while an Avara Foods spokesperson told The Grocer: “We understand that discussions between Culina and Unite are ongoing and we hope they will reach a mutually agreeable solution. We expect to meet our Christmas commitments for turkey in full.”
By Sarah Taaffe-Maguire, business and economics reporter
A day on from Bitcoin hitting the $100,000 milestone and it’s eased back, with one Bitcoin now buying $98,405, highlighting how cryptocurrencies can be volatile.
It’s been a good week for sterling, with the pound higher against the euro and the dollar than at the start of the week.
One pound now buys $1.2752 or €1.2055, which ought to be welcome news for importers of European and US goods and anyone with a holiday coming up in America or on the continent.
Similarly, the benchmark UK index is higher than at the start of the week and at a level not seen since mid-October before the budget and US election depressed markets.
The FTSE 100 index of most valuable companies is up 0.79% since markets opened on Monday morning. The FTSE 250 list grew 1.38% in value during the same period.
Oil prices have gone even lower over the week, with a barrel of the benchmark Brent crude oil costing $71.34, a low last seen three weeks ago.
Over the past two weeks, live news reporter Ollie Cooper dug into whether common fitness supplements taken by many gym-goers are worth the money – are they getting you ripped, or are they ripping you off?
He started the series after getting hooked on 14 supplements a day – with many of them redundant and a waste of money.
He enlisted the help of doctors, sleep experts, nutritionists and personal trainers on his quest for answers, looking at:
Below are links to all the relevant pieces – click to find out if you’re getting ripped or ripped off…
Every Monday we tackle your consumer disputes or money problems with the help of industry experts.
It could relate to an active dispute you’re in, a personal or social dilemma relating to money, an issue with your mortgage or a question about your rights.
You can submit yours via WhatsApp here – or in the box above…but please remember to leave contact details!
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