{"id":160694,"date":"2023-10-13T15:39:34","date_gmt":"2023-10-13T21:39:34","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=160694"},"modified":"2024-02-28T11:01:41","modified_gmt":"2024-02-28T18:01:41","slug":"airbnb-ceo-says-platform-is-fundamentally-flawed","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/airbnb-ceo-says-platform-is-fundamentally-flawed","title":{"rendered":"Airbnb CEO Says Platform is Fundamentally Broken\u2014His Solutions Might Scare Investors"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC5658210461\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Airbnb CEO Brian Chesky has admitted that the short-term rental company is in over its head and needs \u201cto get our house in order.\u201d The company scaled very fast, very quickly, and did not build up its systems to match, he said.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">\u201cTo use a precise metaphor, it\u2019s kind of like we never fully built the foundation. Like, we had a house, and it had four pillars when we needed to have 10,\u201d Chesky&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2023-10-02\/airbnb-is-broken-its-ceo-says-here-are-his-plans-to-fix-it\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">told Bloomberg<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The platform recently rolled out several new features to patch up the cracks in its foundation, but will it be enough to keep the short-term rental site going? Or is it a signal of bigger changes to come for the industry that could trickle down to real estate investors?&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Airbnb\u2019s \u201cCracked Foundation\u201d is Showing&nbsp;<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Airbnb has had growing pains before. From issues with fake listings to controversies in cities complaining about overcrowding to pushback from hotel lobby groups, the&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/the-future-of-short-term-rentals-rests-in-the-guest-experience\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">short-term rental market<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;is not a stranger to dealing with issues.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">In recent months, though, those growing pains have appeared to have gotten worse. In September,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.wired.com\/story\/airbnb-ban-new-york-illegal-listings\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">New York City tightened its rules<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;on short-term rentals, increasing concerns that other major cities in the U.S. could follow. In Europe, Florence, Italy, has&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2023-10-03\/florence-curbs-short-term-rentals-with-locals-priced-out?sref=gPAG2MJ8\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">curbed Airbnb rentals<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;amid complaints that locals are being priced out of the city, while the platform is fighting back against a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.theguardian.com\/australia-news\/2023\/oct\/11\/airbnb-short-term-rental-levy-victoria\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">short-stay levy tax<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;in Victoria, Australia.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em><span data-preserver-spaces=\"true\">Related:&nbsp;<\/span><\/em><\/strong><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/crackdown-on-short-term-rentals-get-tougher\" target=\"_blank\" rel=\"noopener\"><strong><em><span data-preserver-spaces=\"true\">Cities are Cracking Down on Short-Term Rentals\u2014What Does It Mean For Investors?<\/span><\/em><\/strong><\/a><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Despite the backlash across the world, available listings have jumped 13.7% year over year, to 1.53 million as of August, according to data from&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.airdna.co\/blog\/airdna-market-review-us-august-2023\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">AirDNA<\/span><\/a><span data-preserver-spaces=\"true\">. Demand cooled after a robust summer, even as nights booked at Airbnbs have climbed. In August, demand grew 7.6% year over year, compared to 9.3% record growth in July. It was also the biggest August for nights booked, with 21.2 million nights booked. Still, occupancy fell 4.2% from a year ago to 60.4%.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Other cracks are also forming in line with the overall housing market. With increased mortgage rates and an inventory shortage across the country, Nick Gerli, CEO of Reventure Consulting,<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/twitter.com\/nickgerli1\/status\/1673774695693385728?s=20\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">&nbsp;says<\/span><\/a><span data-preserver-spaces=\"true\">, \u201cthe Airbnb collapse is real.\u201d<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Taking data from AllTheRooms, Gerli found that revenue in major cities across the U.S. declined drastically in the past year, with places like Phoenix and Austin, Texas, seeing a nearly 50% decline. It should be noted that this data has been&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/is-the-airbnb-collapse-actually-happening\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">hotly contested<\/span><\/a><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What Airbnb\u2019s Changes Mean for Investors&nbsp;<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Part of CEO Chesky\u2019s solution for fixing Airbnb was to roll out a number of features aimed at guests. One of those features is signaling to hosts that they need to focus on affordability.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">\u201cThe more affordable Airbnbs are, the more bookings we get,\u201d he told Bloomberg. In other words, he wants hosts to shrink their margins. But he said that could be an advantage in regions with a lot of hotels, citing Airbnb data that showed while hotel prices went up 10% in 2022, one-bedroom Airbnb prices declined 1%. The platform wants to give hosts more dynamic pricing insights so they can price their homes competitively.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">While he says hosts will make more money if they are able to compete with hotels by providing better deals, hosts have been complaining about shrinking profit margins. According to AirDNA data, RevPAR declined 4% in August, compared to the prior year, to $235.50. Other data from<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.keydatadashboard.com\/blog\/why-picking-the-right-short-term-rental-investment-matters\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">&nbsp;KeyData<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;found that as occupancy rates declined in certain areas in August, the average daily rate also fell, in some cases as high as 37%.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Airbnb is also rethinking its experiences, even as its applications for new experiences&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.airbnb.com\/help\/article\/1581\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">remain closed<\/span><\/a><span data-preserver-spaces=\"true\">. While they do not seem to be a favored feature on the platform, Chesky said experiences could be one way that Airbnb could recoup its income loss from New York City\u2019s recent tightening of the short-term rental market.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">While Chesky hasn\u2019t revealed all his plans for the company, it\u2019s possible he\u2019s trying to go beyond travel to turn Airbnb into an all-purpose app akin to a concierge service. He has long<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/shorttermrentalz.com\/news\/airbnb-expansion-long-term-rental-market\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">&nbsp;hinted<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;about diversifying into other areas besides rooms, such as dining and even car rentals.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">For hosts, that could mean not just providing a comfortable and pleasant stay but providing extra services. Already on the Airbnb website, guests can search for experience-like stays, such as boats, tree houses, tiny homes, castles, and even luxurious properties titled&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.airbnb.com\/stays\/omg\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">OMG!<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Should Real Estate Investors Still Focus on Airbnb?&nbsp;<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">More upgrades, reflecting a focus on core service upgrades, are coming to Airbnb in November. While that might be great for guests, it means changes for hosts. While the price comparison tool is a savvy addition, Airbnb is ultimately encouraging hosts to become more competitive by decreasing their prices in an already saturated market.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">With&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-the-consumer-is-telling-us-about-the-economy\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">inflation seemingly not going anywhere<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;and increasingly&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/mortgage-rates-reach-multidecade-highs-as-housing-demand-slips\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">higher mortgage rates<\/span><\/a><span data-preserver-spaces=\"true\">, people could start cutting back on expenses like travel. If that\u2019s the case, hosts likely won\u2019t have any choice but to cut prices or even sell their short-term rental properties. And with the short-term rental market continuing to grow, that increased supply is likely to also hurt revenue.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">In the long run, investors who have had a lot of returns on Airbnb properties may find themselves needing to adjust and provide not just a place to stay but also cater to a new type of travel where the experience of the place is just as important as how clean the property is. Whether that means the short-term rental market is over or that investors (and travelers) will need to seek out other solutions is yet to be seen.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_e706d086c9185b9471969bc13af2cd2d\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_564c656b3bb229244f5e2b81441dba6f\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size wp-block-paragraph\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color wp-block-paragraph\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<div id=button-custom-event-block_9649aa7b799d96faae85123cf979638e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/airbnb-ceo-says-platform-is-fundamentally-flawed&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color wp-block-paragraph\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/airbnb-ceo-says-platform-is-fundamentally-flawed&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Recently, CEO Brian Chesky admitted Airbnb had its faults but illuminated a path forward that might not be as favorable to investors. Here&#8217;s what you need to know.<\/p>\n","protected":false},"author":613681,"featured_media":160696,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8,7119,7271],"tags":[],"class_list":["post-160694","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends","category-biggerpockets-daily","category-short-term-rentals"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/160694","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613681"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=160694"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/160694\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/160696"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=160694"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=160694"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=160694"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}