It was 40°C that day in Melbourne. We’d rented an Airbnb five minutes’ walk from South Yarra station. Now it seemed longer. The apartment was in a high-rise with access via a key in a lockbox. Sweat steaming my glasses, I struggled to align the entry code digits. The box clicked open but there was nothing inside. I poked at the empty space in disbelief. Then we noticed a bike rack garlanded with about 20 lockboxes. Kneeling in the dust, we tried one after another.
“You said there would be no problem,” my wife complained. It was time to contact the host, but roaming hadn’t kicked in on our phones. Frustrated, I grabbed my iPad and went in search of a cafe with free Wi-Fi. Two hours later, it was all sorted.
It’s unlikely we’ll use Airbnb again. After the hassle of airports and economy-class travel, we’re no longer up for the adventure of not knowing if we can access our lodgings and what we will find when we do. And we’re not alone.
There’s a growing disenchantment with Airbnb – once positioned as the alternative to impersonal, expensive hotels. In the US, hosts whose dreams of easy cashflow took a battering during Covid turned to social media early this year to vent about shrinking profit margins, partly caused by a glut of rentals. And around the world, local governments are clamping down on Airbnb and other short-term letting markets partly because of their contribution to high rental prices and the housing affordability problem.
Boon for speculators
Founded in 2008, Airbnb not only disrupted the hotel industry, but also created a new class of home buyer – the short-term rental speculator, an August investigation by Bloomberg Businessweek found. Some bought multiple properties, others bigger houses than they needed, renting out rooms to pay off mortgages. But in the US, a surplus of rentals has led to a drop in per-room revenues, with hosts complaining online of “no bookings at all”.
The company originally promoted itself as an online sideline for struggling homeowners to help make ends meet. But a 2019 book by Jeroen A Oskam, The Future of Airbnb and the ‘Sharing Economy’, noted that although in most cities about 90% of hosts offered only one unit, the remaining 10% accounted for up to two-thirds of all rooms offered on the platform, and an even larger share of bookings.
Meanwhile, on the demand side, complaints about affordability, fake listings, dirty houses and algae-infested swimming pools – as well as access problems with absentee owners – have tarnished the company’s image.
For now, Airbnb seems to be riding out the storm: Bloomberg reports that in the second quarter of this year, US bookings rose 11% and the share price was up more than 60% on the same period last year. Worldwide – excluding China – Airbnb had seven million active listings. The NZ$120 billion company offers more rooms globally than the top 10 hotel chains combined, Statista figures show.
Not what I paid for
Among my half-dozen Airbnb experiences, I had a host in London who was holidaying in Australia and an Australian host who lived in Hong Kong. In all instances, it was a case of locate the lockbox and hope. That’s not surprising since management companies handle multiple properties.
Airbnb’s market is primarily economy-class trippers attracted by its perceived affordability. With its perfunctory vetting (background checks are limited and not done at all in some countries) it is also a magnet for party animals and people who want to use someone else’s place for any number of reasons unconnected with travel.
In 2021, two YouTube pranksters, Archie and Josh, famously photographed the interior of a palatial 1700s doll’s house, in the hallway of which they placed a full-size water bottle. Josh’s mother agreed to sign up as an Airbnb host and list the “Luxurious London 18th Century Townhouse”. Within days, they had nearly $5000 worth of bookings which the duo refunded. Neither Airbnb nor the would-be guests spotted the obvious giveaway of the water bottle.
Although it’s unlikely any of the Airbnb listings you come across will be less than full size, it pays to carefully scrutinise the photos, amenities, house rules and cancellation and refund policy. The company is attempting to tighten up this area now, using AI to verify listings and purge fakes, as well as vetting guests. In an interview with Bloomberg in October, co-founder and CEO Brian Chesky admitted Airbnb needed to “get our house in order”.
And it has much housekeeping to do. Guests complain about hosts’ restrictions, inconsistent quality and hefty cleaning fees despite being given long lists of chores. Hosts are equally disenchanted by guests who break things and leave a mess. Meanwhile, the company aggravates both sides with poor customer service.
Impact on affordability
The company’s grandiose mission is “to create a world where anyone can belong anywhere”. Anywhere, that is, except their own backyard. Short-term rentals have exacerbated housing shortages worldwide, driven up rents and forced locals out of neighbourhoods. Governments and local authorities are hoping to ease these affordability issues by cracking down on this market. Under tough new rules in New York, hosts must register with the city government and prove that they live in the dwelling they are renting out and that the home meets safety and other regulatory requirements. They can have no more than two guests at a time. Penalties range from $1000-$5000 for hosts in breach of the new laws. Airbnb data analyser AirDNA says the new regime has reduced the number of short-term rentals on offer in New York by 77%.
Airbnb’s global policy director, Theo Yedinsky, told Associated Press the law changes would harm tourism and “the thousands of New Yorkers and small businesses in the outer boroughs who rely on home sharing and tourism dollars to help make ends meet”.
In Scotland, a new licensing system is forecast to reduce short-term rentals in Edinburgh by as much as 80%. Florence has banned all short-term rentals from its city centre. In Australia, the Victorian state government has just announced a 7.5% levy from 2025 on all short-term rentals.
A study last year by Ka Shing Cheung and Chung Yim Yiu of the University of Auckland Business School, looking mainly at overseas experience, found that although Airbnb rentals drove up rents in high-density areas, in quieter neighbourhoods they had the opposite effect because the constant stream of strangers and their noisy activities made areas less desirable.
In 2019, the Herald on Sunday reported some Auckland apartment owner/occupiers “faced a constant stream of cleaners, loud parties and strangers in the corridors”. But the ability of body corporates to prevent apartments being rented out short term is restricted by the Unit Titles Act.
Holes in the net
The situation is worse in tourist centres. In Queenstown, the post-Covid return of tourists has seen long-term tenants evicted as landlords turn their properties back into short-term rentals. According to AirDNA, Queenstown has 6395 listings, of which 80% are entire homes. Figures from AirDNA suggest that landlords can earn more on Airbnb in two nights than by renting to a local for a week, without the hassle of having to comply with tenancy legislation.
In 2017, the Queenstown Lakes District Council tried to introduce a 28-day-a-year cap on short-term rentals but Airbnb successfully blocked the move through the Environment Court. Now, owners of standalone or duplex units can rent their properties on short-term letting platforms for up to 90 days a year, provided they register with the council. However, the council does not have the resources to police that rule.
“We are challenged by the community as to why we aren’t proactively searching online to try to find these places that are in breach, but it is actually quite difficult to do so,” says mayor Glyn Lewers. “And it is quite time-consuming and resource-draining for council.”
Even if the council were able to identify the rule breakers, “the fine will probably be less than the cost of taking them to court, and the cost would be borne by the ratepayers”, says Lewers.
Airbnb could, of course, provide data to the council to ensure hosts comply with the law or automatically suspend listings that exceed 90 days, but it chooses to do neither. Instead, says Susan Wheeldon, Airbnb country manager for New Zealand and Australia, “what we’d like to see are nationwide regulations for short-term accommodation including a registration scheme and a code of conduct”.
National registration and data-sharing would mean the government could make evidence-based policy decisions, she says, while a code of conduct could ensure “both hosts and guests behave appropriately and are just good neighbours”.
Danielle McKenzie, manager of tourism systems at the Ministry of Business, Innovation and Employment, says it is monitoring the short-term rental area, but any change to accommodation regulations would ultimately be a decision for Parliament. That leaves local councils with little control over the growth of short-term rentals.
Since late July, Christchurch homeowners have needed a resource consent to rent their properties to visitors for more than 60 days a year. In September, the Press reported that just 24 of an estimated 990 eligible homes had applied for consent.
Beating the algorithm
In London, where Airbnb agreed in 2016 to suspend accounts when properties reached a 90-day short-term rental cap, hosts were able to switch to one of the many other platforms, such as Vrbo, and ignore the law. A BBC undercover investigation in 2019 found property management companies were helping landlords break the law by relisting their properties with new photos and a slightly altered address to fool Airbnb’s capping algorithm.
Airbnb has itself been criticised for mobilising hosts to oppose regulation. A 2021 University of Manchester study highlighted its use of “community organisers” to set up “host clubs” – seemingly independent associations of homeowners in Europe and North America – to lobby as if they were grassroots groups. Airbnb maintains the clubs “serve as a forum to connect and gather passionate hosts”.
Travellers, though, can at least ensure they personally are not contributing to the so-called “Airbnb Effect”– driving up rents and house prices – by searching out alternatives (see “Better room service”, opposite page) or following the principles of New York’s new regulations by renting only from those who live on the property and are present during their stay.
It could mean they never have to struggle with a lockbox again.
Airbnb can be a win-win for hosts and travellers in rural areas and small towns where hotels and motels are not commercially viable, but elsewhere there are socially responsible alternatives that are often no more expensive and may even be cheaper.
Better Room Service
Hotels: These are hassle-fee and safe, offer consistent quality and provide employment for locals. They are often now no more expensive than Airbnb. A new study by British consumer magazine Which? compared the cost of thousands of hotels with 300,000 one-bedroom listings on Airbnb and Vrbo around the world and found private rentals were 19% more expensive on average. On a recent Melbourne trip, I scored a studio suite in a five-star hotel with free airport transfer for the same price as an Airbnb apartment. Sometimes, you can get a better deal by contacting the hotel directly because sites like Booking.com charge hotels a commission.
Serviced apartments: Serviced apartments cater mainly for business travellers so are centrally located. They tend to be more expensive than Airbnb but have better amenities, consistent quality, safety and security and have more space for groups or families. They can be cheaper for longer stays than hotels.
Homestay.com: Homestay, travellers say, is like Airbnb used to be. The experience is less transactional and impersonal than staying in many Airbnbs. Homestay gets better reviews than other online platforms. It claims to “promote sustainable local tourism by ensuring you’re [sic] spending stays within local communities, minimising your environmental impact”.
Fairbnb.coop: Bills itself as a “co-operative platform that puts people over profit by investing in communities”. Like Airbnb, Fairbnb adds a commission – 15% – but the difference is half goes to selected local charities and projects. Hosts are allowed to have only one property. Fairbnb began in 2016 and operates in Italy, Spain, France, Portugal and Belgium. It has just launched in the UK.
Bed and breakfasts: Before Airbnb, B&Bs were the popular alternative to hotels and motels. Mostly family operated, they tend to be a bit more expensive than Airbnbs, but are regulated, have on-site help and offer more opportunity for meeting locals.
NomadHer: There are countless other online accommodation platforms but, like everything in the sharing economy, there is a small element of personal risk when interacting with strangers and no uniformity of quality. NomadHer is a female-only travel app where you can access a verified database of female-friendly businesses and accommodations around the world, as well as resources such as travel guides, trip-planning tools and safety tips.
