2023 Airbnb Outlook - Are STR Hosts in Trouble? I Think Not

[Jack Tulloch]

Very interesting BiggerPockets Podcast came out last week titled "The 2023 Bnbust: Are Short-Term Rental Hosts in Trouble?

Tony Robinson and Robert Abasolo sat down with the Vice President of Research at AirDNA, Jaime Lane, to discuss the past, present, and future state of the STR market and the data surrounding it.

Lots to unpack from this episode but wanted to highlight some of the main points that stuck out to me:

1. Occupancy Rates are Down (but only compared to 2021)

2020-2021 showed record numbers for STRs with occupancy rates soaring across the US. In recent months, there have been numerous articles/posts surrounding this idea of "Airbnbust". These posts called out the lower occupancy rates in 2022 compared to 2021 but almost all failed to mention that occupancy rates are still up or at least similar (market dependent) to 2018-2019 numbers. 2021 data should not be used to benchmark future performance expectations. 

2. Urban Area Supply is 20% Below 2019 Levels

Over the last year or two, data shows many STRS in high density/urban areas have been converted to long term rentals. This presents a good opportunity for investors as supply is down compared to occupancy demand.

3.  Only 15% of Hosts are "Super Host" Status

I have seen people on social media saying how super hosts status does not carry the same weight it used to, but the data shows differently. According to Jaime and AirDNA's data, Super Hosts averaged 24% higher occupancy rates compared to non super hosts thus showing the importance of accommodating guests, earning good reviews, etc. 

4. Amenities are Key

With higher supply, differentiating your house/listing is vital. One interesting example Jaime mentions in the podcast is Joshua Tree. As we all know, the Joshua Tree market has been flooded with STR's in recent years. Overall, occupancy rates are down quite a bit in this market, BUT the data shows listings with a pool have seen increased occupancy. Other amenities such as games or a workspace can have a similar effect.

Conclusion:

With so much talk and speculation surrounding STRS in articles and on social media, hearing Jaime breakdown the AirDNA data was super insightful. Speculation can be interesting but at the end of the day, numbers don't lie.

It is important for new hosts to keep in mind that 2021 can not be the expectation moving forward. Hosts who got in just to make a quick buck compared to those who treat hosting as a business will be the ones who may be in trouble. If you research the proper markets, put in the time/effort to perfecting your listing, choose the proper amenities, etc. then the STR business will continue to present as tremendous business opportunity.

 I encourage any current or potential STR investor to listen to this podcast.  

For anyone who already has, I would love to hear your thoughts below!