In the past few years, Airbnb has changed the way we travel. It offers unique places to stay and personal experiences beyond what traditional hotels can offer. But something surprising is happening in 2024: a lot of Airbnb hosts are deciding to leave and sell their businesses.This shift is evident on platforms like Reddit and YouTube, where several hosts have shared their reasons for quitting Airbnb. Additionally, some customers now prefer hotels over Airbnb stays. This sudden shift makes people wonder: Why are so many people quitting their Airbnb business this year?
Is it because there are too many Airbnbs now, or are there new rules making it harder? Or, is it something else entirely, like a change in what hosts and guests want?
Check out some of the stories of people quitting Airbnb above (scroll right for more).
Let's discuss why Airbnb is no longer a smart passive income strategy.
In my opinion, there's a better model which involves building valuable websites & renting them out to business owners. It's called Rank & Rent. More on that later...
What Is the Truth Behind Airbnb Market Saturation and Revenue Challenge?
In the bustling world of Airbnb, there's a plot twist that's turning heads: hosts are stepping back, and the reason is as clear as day. Imagine the Airbnb scene in the USA, packed with a whopping 2.25 million listings in 2021, as AllTheRooms highlights.
France is in the game too, with 1.2 million, and China's not far behind with 1.15 million. It's a crowded stage where every host is vying for the spotlight, but not everyone's getting their moment to shine.
The market becomes saturated with listings, making it harder for individual hosts to stand out and maintain high occupancy rates. Increased competition can lead to a race to the bottom on pricing, further eroding hosts' profits.
And then, Sean Rakidzich revealed the eye-opener from Sonder Holdings Inc. Major investors and companies in the Airbnb market have incurred massive financial losses. Sonder once valued near a grand $2 billion, it nosedived to about $50 million, showing just how rocky this market can be.
Jamie Lane’s tweet about the Airbnb market is quite telling: there's a noticeable decrease in RevPAL (Revenue Per Available Listing) of -3.6%. This figure is seemingly small, but it is significant in the competitive world of Airbnb hosting.
Nicholas Gerli of Reventure Consulting highlights a stark reality in the Airbnb market: a significant revenue drop of nearly 50% in cities like Phoenix and Austin. He warns of a potential wave of forced selling among Airbnb owners in these hard-hit areas, indicating a serious downturn and financial pressure for hosts in these markets.
Nick Gerli points out another concerning trend in the Airbnb market, specifically in Central Texas. According to data from AllTheRooms, there’s a significant year-over-year revenue drop of 40-50% in most of the area, with cities like Austin, San Antonio, and Uvalde being particularly affected. This substantial decline in revenues shows a challenging environment for Airbnb hosts in these regions.
In the Pacific Northwest and Mountain Region, states like Montana, Idaho, and Oregon are witnessing a dramatic Airbnb downturn. With fewer tourists pursuing their Yellowstone-like adventures and a significant increase in listings, the area is experiencing a steep 40% drop in revenue per listing. This shift highlights the stark reality of oversupply and diminishing demand affecting Airbnb hosts in these once-popular destinations.
Bidding Farewell to Airbnb: The Impact of Rising Operational Costs on Hosts
There’s a rising challenge that’s pushing some Airbnb hosts to take their final bow: the increasing costs of running their Airbnb business.
Let's break it down: Keeping an Airbnb property clean and guest-ready isn't cheap. A NerdWallet analysis from June 2022, which peered into 1,000 U.S. Airbnb reservations, revealed that the median cleaning fee for a single night's stay hit $75. And if you've got a bigger place or need extra hands for cleaning, that figure jumps to around $105.
But that's just the opening act. Hosts are also grappling with surprise expenses in maintenance and repairs – those unexpected plot twists that can really throw off your budget. Add to that the rising bills for utilities and general upkeep, and you've got a recipe for shrinking profits. These increasing operational costs are turning hosting from a dream gig into a tough balancing act, especially when bookings aren't rolling in consistently.
So, in this changing landscape of Airbnb hosting, where costs are steadily climbing, we're seeing more hosts decide to close the curtains and move on to different ventures. Rising costs are proving to be a tough act to follow, leading some hosts to exit the Airbnb stage.
John and Bev decided to switch from Airbnb to hotels because of service and cleaning fees, Airbnb charged a 14% service fee and an additional cleaning fee set by the host. John and Bev highlighted these fees as significant for short-term stays. Additionally, they discovered that hotels, particularly those offering breakfast, were more economical compared to Airbnb, especially for stays of a week or less.
How Guest-Related Challenges are Prompting Hosts to Rethink Airbnb?
Guest-related challenges are becoming a major plot twist for many Airbnb hosts. The hassle of managing guest behavior and property damage is turning hosting from a dream gig into a bit of a nightmare. Hosts are dealing with everything from minor damages to major repairs, and the drama doesn’t stop there.
The real kicker? The time and effort it takes to document these issues, deal with guests, and go through Airbnb's sometimes unsatisfying resolution process.
There’s more. Fear of negative reviews adds another layer of stress. Even if the guest is at fault, a bad review can dim the future prospects of the Airbnb property. Add to this the increasing costs of keeping everything spotless and dealing with unexpected repairs, and hosting feels like a high-maintenance venture.
While Airbnb offers support through its Host Guarantee and Protection Insurance, the process isn't always smooth. This combination of guest-related challenges and the rising costs and efforts involved in maintaining standards is pushing more and more hosts to reconsider their role in the Airbnb saga.
Sean Rakidzich, founder of Million Dollar Renter, stated that one of the untold truths behind why Airbnb hosts are leaving and selling their listings is guest-related challenges. Airbnb hosts grapple with ungrateful or uncompromising guests, a drain on their energy and resources.
Moreover, the rising costs of housekeeping, necessary for maintaining property cleanliness, are becoming increasingly burdensome. Additionally, unexpected repairs further exacerbate the financial strain on hosts. It paints a stark picture of the challenges driving people away from the Airbnb landscape.
The Airbnb Dilemma: Losing Hosts Over Quality Control Issues
Are you an Airbnb host feeling the weight of the platform's quality control issues? You're not alone. In 2024, many hosts grappled with the dilemma of managing properties without full-time staff, and it's causing some to reconsider their hosting journey altogether.
Picture this: a guest encounters a plumbing disaster or an electrical malfunction late at night. Without on-site staff, hosts are left scrambling to coordinate repairs from afar, often in different time zones. It's a logistical nightmare that turns what should be a relaxing hosting experience into a stress-filled emergency.
But it's not just the emergencies that are the problem. Dealing with guest complaints or queries promptly can feel like an uphill battle. From late-night lockouts to sudden appliance malfunctions, hosts are expected to provide immediate assistance, even when they're miles away. And when they can't, it's not just the guest's experience that suffers—it's the host's reputation and future bookings too.
Let's talk about reviews. Negative guest experiences due to quality control issues can tank a host's ratings faster than you can say "superhost." And we all know what that means: fewer bookings, less revenue, and a serious hit to your hosting reputation. For hosts relying on Airbnb as a significant source of income, this can be a devastating blow.
And let's not forget about the financial burden. When hosts are left to deal with damages, complaints, and legal liabilities without adequate support from Airbnb, it's not just their wallets that feel the strain—it's their peace of mind too.
Asher and Lyric - Travel & Family Journalism, in collaboration with ASIS International and John Jay College, have conducted an analysis of Twitter user data to shed light on the nature of complaints lodged by guests who stayed at Airbnb properties between 2015 and 2020. Their research, based on 127,183 Airbnb guest complaints on Twitter, unveils several concerning trends.
Study Results:
Among the complaints analyzed, unsafe conditions emerged as a significant issue, constituting 6.07% (7,719 instances) of the total complaints during the specified timeframe. These unsafe conditions encompass various grievances, including infestations, unsanitary or unhealthy conditions (3.38%), serious safety concerns (1%), instances of obnoxious hosts and/or environments (0.91%), unsafe or malfunctioning amenities (0.46%), the presence of hidden cameras (0.2%), and incidents of theft (0.12%).
Bay Property Management Group also highlights that Airbnb lack of quality control is one of the reason people are quitting Airbnb. The speaker covers issues such as inconsistent quality control across Airbnb properties, which affect guest satisfaction, and the heightened liability for hosts. It deals with property damage or unfair negative reviews by guests. These aspects, combined with the unpredictable and sporadic income from Airbnb rentals, present a complex and risk-laden landscape for hosts.
Airbnb's Maze of Complexity: How Confusing Policies are Driving Hosts to the Exit?
Confusing Airbnb policies are driving hosts straight to the exit! Imagine that you're a host trying to navigate a labyrinth of laws and regulations that vary from city to city. It leaves you feeling like you need a law degree just to rent out your property. From zoning restrictions to registration requirements, it's enough to make your head spin!
Take New York, for instance. Hosting guests for less than 30 days? You better be prepared to stick around for the entire stay and limit it to just two guests at a time. And don't even get us started on San Francisco, where hosts need to jump through hoops just to register with the city and display their short-term rental certificate like a badge of honor.
How about cancellation policies? Airbnb offers a buffet of options, from Flexible to Strict, each with its own set of rules and repercussions. Want to cancel a reservation yourself? Be prepared for penalties, blocked calendar dates, and a potential kiss goodbye to that coveted Superhost status.
In terms of insurance, Airbnb provides coverage, but it's like reading the fine print of a novel-length contract. Host liability insurance might sound like a lifesaver, but it won't save you from intentional damage or theft by guests. And while host damage protection offers peace of mind, it's not a free pass for every mishap under the sun.
It's no wonder hosts are feeling the burnout and throwing in the towel. With cities like Barcelona and Amsterdam tightening the screws on regulations and Airbnb flip-flopping on policies like a politician during election season, it's enough to make even the most seasoned host consider hitting the eject button.
Taxing Times: How Airbnb's Additional Burdens are Pushing Hosts to the Brink?
Airbnb hosts often decide to quit the platform due to the additional tax burdens they face, which arise from complex tax regulations at various governmental levels. One prime example of this complexity arises in Austin, Texas, where Airbnb hosts must navigate a hefty Hotel Occupancy Tax totaling 17%, including both state and local taxes. This not only adds a financial strain, but also involves intricate tax reporting and compliance.
In cities like Los Angeles, the financial impact of such tax obligations is significant. Mayor Garcetti's proposal to impose a 14% occupancy tax on Airbnb rentals in Los Angeles was projected to generate at least $5 million annually. This taxation directly affects the profitability of hosting, as it eats into the hosts' net income. Furthermore, hosts must pay income taxes on their rental earnings, which further diminishes their profits. For those who see Airbnb as a supplemental income rather than a primary business, these tax implications can be burdensome.
In recent announcements of influential personalities such as Shelby Church and Rob Built have publicly withdrawn their support or investments in Airbnb real estate ventures. Shelby Church, in particular, articulated her decision to exit the Airbnb market in one of her videos. Her departure from the platform underscores a broader trend of disillusionment among investors.
One significant factor contributing to this trend is the implementation of SB 584, a legislative measure introducing a 15% tax on Airbnb bookings in California. This additional tax, on top of the existing transient occupancy tax (TOT), significantly escalates the financial burden on guests. For instance, a reservation costing $5.75 per night could jump to approximately $3,745 for a $3,300 booking, surpassing the actual nightly rate.
Why Local Lead Gen Biz Defeats Airbnb Business?
Are you thinking about diving into the world of real estate investment but can't decide between the charm of Airbnb or the savvy digital realm of local lead generation?
Imagine this: You're eyeing the Airbnb route, but ouch, that price tag! The average home in the U.S. costs a hefty $428,700 as of 2023. Add to that the costs of making it guest-ready – fancy furniture, snazzy decor, and those endless maintenance bills. Sure, you might be making around $924 a month as an Airbnb host, but remember, that's not just sitting back and watching the cash roll in. It's answering midnight calls about a broken heater, fretting over a less-than-stellar guest review, and keeping an anxious eye on those ever-changing travel trends.
Now, let’s flip the script to a local lead generation business. You’re not breaking the bank to start. A website? You can start as low as $500. Monthly hosting? Less than a hundred bucks. Your biggest game player? Digital marketing. And even that's just a few hundred dollars to kick off. The best part? Once you've set it all up, it's like a well-oiled machine, quietly churning out income while you sip coffee at your favorite café. We’re talking about a potential of $500 - $3,000 per month – and that's the kind of passive income we daydream about.
Scalability? Lead generation’s got Airbnb beat by a mile. Want to grow your Airbnb empire? Get ready to fork out big bucks for each new property. But in the digital world, scaling up can be as simple as launching a new website or tweaking your marketing strategy – all without the anxiety of a new mortgage.
Airbnb is great if you're all about travel and accommodation, but local lead generation? That's quicker path to achieve financial freedom. So, when you’re weighing your options, think about it. Do you want the high-stakes, high-maintenance world of Airbnb with its unpredictable roller coaster of earnings? Or the idea of a sleek, scalable, and more predictable local lead generation biz?
I've been in coaching local lead gen since 2014 with Dan Klein. Currently, my local lead gen biz program helped over 7400 students to date. Join us and achieve your own digital real estate empire!
