The market for holiday rentals is seeing the emergence of surprising levels of competition.
Airbnb, we are sorry to be the ones to break this to you, but the call is coming from within the house.
According to a survey that was published this month by The Bear Cave and reported on by Reuters, Airbnb hosts may develop their business off of the site, but others are already courting repeat clients away from the vacation rental platform entirely.
Professional rental companies, which are frequently referred to as Superhosts (a word used by the company to identify top-performing rental owners), are avoiding the usage of Airbnb by having renters book directly with them or via their listing platform at lower prices. This allows the companies to keep more of the rental revenue.
It may be bad news for Airbnb, but it's fantastic news for your budget as we move into the peak travel season for summer vacations.
Heirloom is one of those companies, and it sells premium vacation rentals on Airbnb in addition to letting guests book directly through its website. According to the report, if you stay at one of Heirloom's Nashville homes for two nights, you'll pay $125 less per night than you would at an equivalent property on Airbnb.
This creates a new issue for Airbnb, which has been plagued by complaints in recent times about rising cleaning fees, service fees, and other expenses that quickly pile up to make the platform suddenly less enticing than hotels. This new challenge comes as a result of the fact that Airbnb has been plagued by complaints in recent times about rising cleaning prices.
The Chief Executive Officer of Airbnb, Brian Chesky, stated that the firm was moving toward a practice of upfront pricing to be more clear about how much a guest would eventually end up spending for a stay at one of their listings.
However, tourists can save money by skipping the middleman and negotiating a deal with their host directly. This method is known as "direct booking." Booking the same property through Airbnb results in a service fee that is twice as high as the one that is included with the Heirloom direct listing in Nashville.
A growing number of creative workarounds
This technique has always been present, albeit to a lesser extent, in the world of Airbnb. Hosts occasionally engage directly with renters as an alternative to having customers book their accommodations through the website and be subject to the various service fees.
It was beneficial for both parties since renters paid less and hosts made more money because they did not have to pay a charge to Airbnb. It seemed as though Airbnb attempted to prevent the practice by implementing a variety of different security precautions, such as concealing hosts' and guests' phone numbers and emails when they communicated with one another over the platform.
Although Airbnb has not directly said that hosts going off book with bookings is a common practice and a financial burden on the firm, the following was noted in the company's most recent annual filing with the U.S. Securities and Exchange Commission:
Because of the decision of some of our Hosts to cross-list their homes, the number of such properties that are available through our platform has been reduced. When properties are cross-listed, the price that guests pay on our platform may be or may appear to be less competitive for several reasons, including differences in fee structure and policies. This may cause guests to book through other services, which could have a materially adverse effect on our company's business, results of operations, and financial condition. Certain property managers may contact our Hosts and guests to entice them to list or book directly with them instead of going through our platform. Additionally, certain Hosts may promote transactions to take place outside of our network, which decreases the number of people who utilize our platform and services.
TPG reached out to Airbnb for comment, but the company did not provide one. The Bear Cave story, on the other hand, demonstrates how effective the workaround has become within the Superhost community as well as the risk that it creates if further professional property manager Superhosts follow in the footsteps of Heirloom.
According to the data provided by the vacation rental marketplace AirDNA, only one percent of all Airbnb and Vrbo hosts are professional property managers. However, they are responsible for managing 23% of the listings that are available and produce 28% of the total revenue. If tourists begin moving away from Airbnb and Vrbo listings in favor of listings on other websites that provide the same property at lower prices, this might cause a significant decline in business for both companies.
Following the publication of the research, Reuters highlighted that the stock price of Airbnb dropped by as much as 6%. The paper detailed the many issues that guests had about staying at Airbnb homes, including hidden cameras in bathrooms, unexpected cleaning requirements, and last-minute host cancellations.
A strategy for making the most of your time spent on Airbnb
The takeaway for travelers is straightforward and should be applied to all significant purchases: Carry out some study.
TPG discovered that the identical four-bedroom house in Provincetown, which is located on Cape Cod in the state of Massachusetts, had a huge variety of nightly rates depending on the platform for the same week in October. While the listing was available on Vacasa for $899 per night, Rent by Owner had it listed for $904 per night. On Airbnb, it went for a price of $1,074 per night, while the Homes & Villas by Marriott Bonvoy platform of Marriott commanded the highest prices at $1,249.23 per night.
Travelers who are prepared to do a little bit of research before reserving a vacation rental can frequently come out on top financially, even if vacation rental marketplaces like Airbnb and Homes & Villas do not appreciate it when a competitor firm undercuts their prices on the same listing.
You ought to do some comparison shopping, as Smokey Robinson and the Miracles advised in an old song.