Why the AirBnB Market is rapidly shifting towards multi-unit hosts and what this means for hospitality startups

POSTED BY petar@yada.ai ON Fri, Apr 19th 2019, 04:14 PM

The AirBnB, Short Term Rental, and Vacation Rental is changing, consolidating, and relying more and more on professional tools and solutions.

As someone who’s been hosting on AirBnB for quite some time, I feel like I’m in a reasonably good position to write about some of the trends I’ve noticed when it comes to AirBnB hosting, especially when it comes to the consolidation of rentals, and the rapid rise of multi-unit hosts.

When vacation rentals started becoming a thing, the vast majority of hosts were people who had an extra room or apartment or something along those lines which they thought they might list on AirBnB and see if anyone was interested in staying there. That’s certainly how it started for me — an un-leased room in the apartment I was living in at the time.

However, as the vacation rental market matured, a really profound and noticeable shift began to occur — more and more rentals were becoming part of a portfolio, and status quo of one-host, one-rental began to change.

There’s no getting around the fact that being an AirBnB host is a tedious, time consuming, and frustrating endeavor, and one in which Murphys Law definitely rules supreme. It’s no surprise than that a huge portion of newly listed units are ones which are managed or run by someone who hosts on AirBnB professionally, or at least semi professionally. There’s a lot of evidence to support this, but I want to primarily focus on the numbers which illustrate the rise of multi-unit hosts, and what this means for the AirBnB market as a whole.

I’d also like to point out that this increase in multi-unit hosts doesn’t really change anything for guests — if anything, it adds an additional layer of standardization and quality control could in fact serve to bring standards up even higher.

In a nutshell, multi-unit hosts were the fastest growing segment within the AirBnB platform. This includes fastest growing in number hosts, guests, and revenue. In the 10–15 largest markets, revenue growth from multi-unit hosts rose on average 75% over the past few years, with drastically higher gains in markets such as New Orleans and Hawaii.

It’s also important to note that hosts with 10+ properties generated over a quarter of all revenue generated by hosts with multiple properties. And while multi unit hosts only represent around 10–15% of all hosts, the units they manage and rent represent around 35%-40% of all units listed on AirBnB in the United States.

The reason for these shifts are pretty obvious — hosting is hard, but it scales really well. The more units you rent out, the easier it becomes to manage and rent every subsequent unit. The marginal cost in labor and expertise from the first to the second is low, and from the second to third is even lower. I personally can back this up with my own experiences in managing multiple units. It makes a lot more sense for a small number of people to overcome that hurdle of getting the first rental up and running, and scaling that to 3, 4, or more, than for most units to be managed on a 1 to 1 basis.

While the majority of AirBnB’s are still being rented out by people who just work with that one unit, the numbers show that this is changing, and within a few years, we’ll probably see a scenario where over 50% of properties listed on AirBnB are ones which are managed by multi-property hosts.

This is big because this type of shift in hosting behaviors means that the surrounding ecosystems related to AirBnB management and automation are becoming mature enough to support a large and varied group of innovative startups which are making use of really cool and impressive technology to making hosting much easier, and traveling/staying in vacation rentals a truly seamless and immersive experience.

Yada is one of the newer entrants to the scene, but we’ve seen an amazing amount of feedback and positive reactions from hosts who’ve decided to give us a shot. I’ve also been impressed by the number of software startups which are tackling other aspects of the hosting process, such as various property management systems, booking systems, and ranking placement platforms.

I think it’s still really early to make any sort of big determination as to whether this market can sustain this level of innovation, but hospitality is an industry which is just beginning to undertake its technological revolution, and I think we’re just at the starting line of an exciting boom in hospitality tech.

You can reach me at petar@yada.ai, on twitter at @petarojdrovic, and on Instagram at @ojpetar.

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