By David King | The Associated Press
Believing that the holiday travel boom will continue, Airbnb aims to expand its offerings by convincing more people to convert their homes into short-term rentals.
The company announced Wednesday that it will increase host liability insurance up to $3 million to help owners of nicer homes in expensive locations like California. It will also match newcomers with a “superhost” to guide them through the process of becoming a short-term host, from signing up to welcoming their first guest.
More listings don’t seem to be Airbnb’s biggest challenge.
CEO Brian Chesky says the San Francisco-based company is taking steps to make pricing more transparent when consumers browse Airbnb listings, and he predicts this will cut the sky-high cleaning fees that many hosts stuff far into the booking process – a major consumer complaint.
The company also continues to try to crack down on large tenants, some of whom have turned violent. And it faces efforts to tighten regulation of short-term rentals.
Overall, Airbnb has fared better than most travel companies during the pandemic. This month, it reported record third-quarter earnings of $1.21 billion. However, the stock fell as earnings and bookings fell short of Wall Street expectations and the company issued a cautious outlook for the fourth quarter.
Investors worry that consumers paying more for groceries, gas and housing — and amid forecasts of a recession — will limit discretionary spending like travel and hurt Airbnb.
Some current hosts are concerned this could already be happening. Last month, a post on an Airbnb “superhosts” Facebook page asked, “Has anyone seen a huge drop in bookings over the last 3-4 months? We’ve gone from at least 50% occupancy to literally 0% in the last two months.”
Other social media hosts have proposed theories ranging from a sluggish economy to pent-up travel demand finally running out, and some believe the problem could be that Airbnb already has too many listings.
AirDNA, which tracks short-term rental numbers, said Airbnb listed nearly 1.4 million rentals in the U.S. in September, up 23% year over year and 9% from 2019. Nearly two-thirds added since 2020. The trends are similar for global listings.
Chesky said in an interview that Airbnb now has enough hosts — he didn’t say it has too many — but needs more because vacation travel will continue to increase. And, he said, a recession could encourage more people to convert their homes to Airbnbs. After all, he likes to point out, Airbnb was launched during the great recession of 2008.
“People are cutting back on spending in many areas, but not on travel,” he said. “And with a looming recession, we felt like more people than ever wanted to make extra money.”
Potential hosts are sometimes reluctant, Chesky said, because they’re uncomfortable with having strangers in their home. The company’s response is tripling coverage for hosts – from $1 million to $3 million – against damage, including to vehicles, boats and a wider range of artwork on the property.
Chesky is betting on persuading more owners of beautiful homes to list them on Airbnb.
“Exactly, and property values have gone up since we wrote the $1 million plan,” he said. “We just realized that more than 20% of Airbnb listings, and maybe even more than that, have exceeded $1 million in value.”
The company said it is also rolling out a system to verify guests’ identities and flag potential parties, immediately in the US and Canada and globally by next spring. Chesky said the system was “not a silver bullet,” and he didn’t give many details, but said it will include screening of criminal records and sex offender files in the US.
Meanwhile, the company is working on a plan to display the total price of a stay upfront on its app and website — an amount that would include cleaning fees, which can be steep and only show up later in the booking process.
Chesky said he doesn’t want to restrict or cap cleaning fees — that’s a host decision, he said. But including fees in the upfront price — and in the order in which search results appear — “will correct the market,” he said.