The growth of Airbnb, Sonder, and other short-term rentals offers 3 key benefits for destinations, according to the CEO of a company that tracks 10 million listings around the world
- Short-term rentals like Airbnb have grown exponentially in the past few years, with global sales projected to reach $132.5 billion by 2022.
- This growth has led to clashes between destinations and booking platforms about how best to regulate short-term rentals.
- Last week, travel research company Skift held its first-ever Short-Term Rental Summit, where industry leaders gathered to discuss the impact, future, and regulation of these rentals.
- The CEO of short-term rental analytics platform AirDNA, Scott Shatford, said that despite tensions, there are three major benefits to short-term rentals: They normalize prices during large events, distribute tourism spending, and invest tourism money into local communities.
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Short-term rentals are experiencing explosive growth.
By 2022, global short-term rental sales are projected to reach $132.5 billion, nearly triple what they were in 2012. This increase has been largely fueled by Airbnb, which launched in 2008. Recently, a slew of short-term rental companies such as Sonder, Domio, and Lyric have joined the scene looking to capitalize on growing consumer demand.
The rise of short-term rental bookings has come with its fair share of complaints and incidents, among them overtourism, skyrocketing rents, and out-of-control parties. In response, cities like Los Angeles and Miami, as well as booking platforms like Airbnb, have worked to enact and enforce regulations.
Last week, industry leaders gathered for Skift's first-ever Short Term Rental Summit, which was held in New York City. Attendees included Margaret Richardson, Airbnb's VP of Trust, and KAYAK CEO Steve Hafner.
At the conference, Scott Shatford, CEO of short-term rental analytics platform AirDNA - which, according to its website, tracks over 10 million listings across 80,000 markets - said that in the big picture, short-term rentals are positively impacting destinations in three key ways.
Three positive impacts of short-term rentals
For one, short-term rentals normalize prices of accommodations during big events.
"Most cities can't really accommodate a Super Bowl, or an all-star game," Shatford said. Before Airbnb, blockbuster events allowed hotels to jack up their prices, and visitors weren't left with many other options, he explained. Now, short-term rental hosts can activate their listings, which have historically been lower than hotel prices during major events such as the Super Bowl and New Year's Eve, he said. The end result is increased visitor spending in the marketplace.
Short-term rentals also distribute tourism spending. Shatford pointed out that, while hotels are located in central business districts, Airbnb rentals are scattered throughout the city.
This distribution of rental options has been especially beneficial in places like Puerto Rico, which receives most of its visitors by cruise ship into the old port city of San Juan. "We have cruise ships deliver 20,000 or 25,000 people into old San Juan," Leah Chandler, Chief Marketing Officer for Discover Puerto Rico, said in conversation with Skift hospitality editor Nancy Trejos. "That takes a toll on the destination."
For Puerto Rico, short-term rentals stand to offer economic benefits in the wake of 2017's Hurricane Maria, according to Chandler. Short-term rentals, she said, account for half of the country's rental options, which means tourism dollars have the potential to spread out well beyond city centers.
Lastly, the revenue generated by short-term rentals is reinvested in local communities, Shatford said. Whereas hotel profits may go directly back to headquarters, hosts keep money in the area. In the case of Airbnb, hosts retain approximately 87% of the booking price.
Despite pushback from some cities to regulate the influx of short-term rentals, CEO and Founder of Visit Philadelphia Jeff Guaracino sees short-term rentals as a fixture of the industry with benefits that have yet to be reaped.
Going forward, Guaracino believes short-term rentals are an opportunity for destinations to tap into civic pride and "activate residents who really love where they are."
"They are absolutely a part of hospitality," he said.