Life has been brought back into the accommodation industry, and Airbnb’s bookings have begun bouncing back, with a twist.
But with sweeping changes to the property landscape likely to have more of a lasting impact, is it time for Airbnb to pivot?
According to Suburbanite Principal, market commentator and valuer, Anna Porter, Airbnb will have to pivot to stay relevant.
“Airbnb may be seeing increased bookings through its platform but they are not all the same as they once were,” says Porter.
“The big disruptor now needs to become more traditional and provide well priced midterm accommodation for displaced workers that can’t travel borders or people who have been stranded by border closures and iso.”
Those that haven’t done that are going to struggle, Porter believes.
“As tenants encounter financial hardship amid rising unemployment, many are moving back in with their parents or turning to Airbnbs as a stopgap measure,” the valuer says.
“We’re seeing people transitioning to stopgap measures, like Airbnb properties, if they had to let go of a more expensive tenancy or are looking for a temporary housing solution,”
“Gone are the days where workers could easily cross borders, so businesses are now putting their staff into Airbnbs for weeks at a time, instead of sending them back to their home state where they would be required to enter quarantine.”
Porter predicts there will be a glut of Airbnb coming onto the long-term rental market, and in areas where they are regional or costal, they will push up vacancies
“Many Airbnb hosts will need to decide if they try to rent out the property fully furnished or take the loss on removing furnishings/storing it,” suggests Porter.
“This is because furnished properties don’t tend to rent as well in the long-term accommodation market so this is a big call they need to make.”
The falling tourism numbers coupled with the economic condition gives Airbnb hosts the opportunity to pivot to survive on the other end of this.
The data is showing that they are starting to pick back up again with more than 55,000 new bookings in Australia as at May 24 compared to the low point of 16,000 for the week of 20-26thApril, 2020.
The Airdna data also indicates that average daily rates for accommodation have slightly increased from the same period last year but occupancy rates have dropped off.
For next week alone, its predicted occupancy will be at 40.9% compared to last years 48.6%, according to the data.
The data can be viewed here: https://www.airdna.co/covid-19-data-center
According to Porter, some properties and hosts may not bounce back after they take the revenue loss, juggling mortgage repayments and then the loss of furniture as one of the assets they would have invested in, possibly to the tune of tens of thousands.
“This could also result in many properties being placed up for sale also which in turn will soften the holiday market for buyers and create some good buying power outside of the big capitals over the next 12 months,” says Porter.
Whilst these times are challenging and many property owners may be seeking a ‘quick sale’, but Porter has some advice for what not to do.
“Please DO NOT panic and sell your property,” says the Suburbanite Principal, valuer and media commentator.
“There are many lifelines available and we will get through this time,”
“Once out the other side, there will be increased demand and a stronger economy and increases in value.”
Anna believes now is the most important time to use an agent with experience and a proven track record.
There is also an evident buying opportunity that some Australians may be able to take advantage of.
“We know for some people they will be able to pull the leaver and buy shares or property while the prices are suppressed,” says Porter.
But she warns this is not the strategy for everyone.
Below are some of the criteria Porter has put in place to safeguard her client’s and investors in general for a self-assessment of whether you should invest.
Here’s Anna’s criteria for individuals who should consider investing:
– People with income security, and/or
– People with savings
– If you are comfortable to take a risk with potential upswing at the other end
– Are comfortable with the market fluctuating in the short term and can take a long term view
– Are able to hold the property for at least 12-24 months and wait for the economy to recover
Anna Porter welcomes discussion on the opportunity’s and the risks of investing in this climate.