Airbnb's struggles go beyond people spending less. It's losing some travelers to hotels.
13.08.2024 - 18:16
/ insider.com
/ Brian Chesky
Duane Brown jets off to international destinations seven or eight times a year.
After staying in his first Airbnb in London in 2011, the 42-year-old digital marketer was so enamored with the concept that he became a host himself. He welcomed guests to his two-bedroom apartment in downtown Toronto for a year and a half.
But Brown told Business Insider that more-recent disappointing experiences with short-term rentals had led to a change of heart.
On one trip to Budapest, Hungary, in 2019, Brown said he booked an Airbnb whose listing photos were shot at strategic angles that hid a dilapidated bathroom and damaged walls. He now stays in hotels, which he believes have a more consistent "standard of care," he said.
"If there are no independent hotels or Marriotts, well, then maybe I'd go to Airbnb, but there's always been at least one of those in a city I go to," he said.
Brown is just one traveler, but in an earnings call last week, Airbnb told investors to temper expectations for the third quarter because of waning customer demand. Even after announcing growth in bookings, the short-term-rental giant lowered its projected third-quarter earnings to between $3.67 billion and $3.73 billion, below the $3.8 billion analysts expected.
Wall Street flinched and Airbnb stock took a tumble last week, dropping 14% in one day. The company also warned of a global dwindling of lead times, or the number of days in advance travelers book their stays, a sign of less enthusiastic demand.
It's a far cry from the record-setting demand Airbnb saw immediately following COVID-19 lockdowns, when travelers craved private homes and acres of outdoor space. New data shows traveler demand for short-term rentals is stalling or waning in some parts of the US and for certain types of accommodation. With some consumers' gripes over burdensome cleaning fees, lists of checkout chores, increasing prices, and a lack of quality control, the short-term-rental giant has some convincing to do to retain its loyal customers.
Part of the issue is that travelers' perceptions of what makes a good travel deal have changed. Airbnb used to have a stronger upper hand for budget-conscious tourists. In 2019, hotels commanded an average of 49% more a night in large cities, according to March data from AirDNA, which analyzes the short-term-rental industry. That gap shrunk to just 26% in 2022, AirDNA found.
On the earnings call with investors last week, CEO Brian Chesky mentioned competing with hotels was central to the company's strategy. He teased the prospect of an expansion of hotel rooms available to book on Airbnb, tied to the company's ownership of the last-minute-accommodation platform HotelTonight. Last month, an Airbnb executive hinted that Airbnb