Gauging Impact of Coronavirus on the AirBnB Market
The rapid spread of COVID-19, also known as the Coronavirus has caused many in the AirBnB and vacation rental community to be concerned about how this disease, which may or may not become a pandemic any day, will impact their rental businesses.
Traditional hospitality establishments like Hilton, Marriott, Radisson, etc. have already cut their revenue forecasts for 2020 due to the coronavirus, and it’s safe to assume that the same reduction in hotel demand will also apply to AirBnB and vacation rental demand. Many chains have seen a drop in occupancy of above 75%.
AirBnB has cancelled all bookings in Beijing, and it’s a pretty good bet that as the infection spreads, other cities and regions will be faced with a similar blanket ban on bookings.
However, unlike the massive disruptions which hotels are seeing, the AirBnB and Vacation Rental market should see less of a coronavirus related downturn.
We’ve written this post detailing our analysis of how the coronavirus is going to impact AirBnB’s, vacation rentals, and short term rentals, and what hosts and property managers can do to keep business steady.
First, it’s important to note that a large percentage of cancelled bookings in hotels are business travelers. Most of the hotels which have either been closed or seen a huge reduction in bookings primarily cater to these types of travelers, and as such are particularly vulnerable.
Only 15% of AirBnB and STR bookings are for business travelers, so the market as a whole should be impacted to a much lesser degree. The hotels which are seeing the biggest impact cater primarily to business travelers.
Coronavirus hasn’t yet had a huge impact on the leisure travel market outside of Asia, so rentals in the United States, Canada, and most of Europe (aside from Italy which is seeing a substantial outbreak) aren’t seeing a huge decrease in bookings yet. Rentals in China and surrounding regions will inevitably see a big drop off. Blanket bans like the one in Beijing have the biggest impact.
It’s estimated that the number of foreign visitors who travel to the United States could fall by as much as 50% as a result of this global phenomenon. Rentals and locations which primarily cater to foreign visitors will be particularly hard hit, and booking rates will be depressed for at least three months, with a downturn potentially lasting throughout the summer.
Rentals which cater primarily to US travelers shouldn’t see as much of a hit. Ski and winter sport rentals shouldn’t be noticeably impacted, but rentals catering to spring break families/students and spring vacation travelers may see a downturn. Festivals and public events are being cancelled as well. We’re also hearing from hosts that insurance won’t cover loss of revenue due to virus related cancellations, so if your bookings dry up, it’ll be hard to recoup some of that lost revenue through insurance.
Despite all the hysteria and panic surrounding this virus, it’s important to stay calm and not compromise the integrity of the AirBnB and vacation rental community. While it’s OK to completely shut down your rental during this period, it’s NOT OK to selectively choose guests based on where they’re coming from.
While it’s slim, there is a bit of a silver lining. This downturn is affecting everyone equally. What’s not equal is the work and effort hosts put in during this down period to spruce up their rentals, get more active on social media, especially instagram, and take new pictures, videos, etc. of their unit. Use the opportunity to get your copy, images, and marketing up to date while your guests aren’t there.