Sustainability of Airbnb Businesses

 What do I mean by 'airbnb businesses'? Well this involves anybody who uses any kind of booking site to rent out properties they own. The idea is that you can make a lot more money by renting out properties as if it was a hotel rather than long-term 1-5 year leases. 

The business has taken off and now people buy properties for the sole purpose of engaging in short-term rental activity. You are now even seeing some people do a bit of airbnb arbitrage where they lease properties and then list them on short-term rental sites in order to make a margin on the difference between the long-term lease cost vs. the airbnb revenues (or vrbo / what have you).

As it scales, there could be some issues. Airbnb has taken steps towards sustainability, but its overall sustainability depends on several factors. While the company promotes home-sharing and encourages resource efficiency, there are concerns regarding its impact on local communities and housing markets. Additionally, the carbon footprint associated with increased travel and accommodations remains a challenge. To enhance its sustainability, Airbnb would need to continue addressing these issues, promoting responsible tourism, and implementing environmentally friendly practices throughout its operations.

A lot of neighborhoods who have long-term residents don't what houses close by to be a hotel.

  • Disruption of housing: Airbnb can contribute to a decrease in available housing stock in popular areas as property owners convert long-term rentals into short-term rentals. This can lead to rising housing costs, reduced housing options for locals, and increased gentrification.
  • Noise and disturbance: Frequent turnover of guests in residential areas can lead to increased noise, disruption, and a loss of the sense of community. Neighbors may feel that the transient nature of Airbnb rentals disrupts the stability and peacefulness of their neighborhoods.
  • Safety concerns: Critics argue that Airbnb lacks proper regulation and oversight, leading to potential safety issues. Hosts may not adhere to the same safety standards as traditional accommodations, and guests may face risks such as unverified hosts, inadequate security measures, or unsanitary conditions.
  • Impact on local businesses: Hotels and traditional bed and breakfast establishments may view Airbnb as unfair competition since hosts can operate without adhering to the same regulations, taxes, and fees imposed on the hospitality industry. This can lead to economic disadvantages for local businesses and communities.
  • Change in community dynamics: The presence of Airbnb can alter the social fabric of a community, with strangers constantly coming and going. Some residents may feel a loss of connection and familiarity with their neighbors, leading to a perceived decline in community cohesion.

It's important to note that while these are common concerns, not all communities dislike Airbnb. Some areas have implemented regulations to address these issues and strike a balance between the benefits of short-term rentals and the concerns of the local community.

Positive Impacts of Airbnb Real Estate Businesses

  • Economic benefits: Airbnb can bring economic benefits to both hosts and local communities. Hosts can earn extra income by renting out their properties, which can help them cover their expenses or generate additional revenue. Local businesses such as restaurants, shops, and attractions can also benefit from increased tourism and spending by Airbnb guests.
  • Tourism diversification: Airbnb can contribute to a more diverse and inclusive tourism landscape. It allows travelers to stay in neighborhoods and areas that may not have traditional accommodations, thus promoting tourism outside of centralized tourist areas. This can help distribute the economic benefits of tourism more evenly across a region.
  • Cultural exchange: Airbnb can foster cultural exchange between hosts and guests. Staying in someone's home provides a more personal and immersive experience, allowing guests to interact with locals and gain insights into the local culture, customs, and way of life. This can lead to increased cultural understanding and appreciation.
  • Community support: Some hosts use their Airbnb income to support local community initiatives or contribute to local causes. For example, they may spend their earnings at local businesses, donate to local charities, or invest in community development projects. This can have a positive impact on the overall well-being and development of the community.
  • Increased occupancy rates: Airbnb can help increase occupancy rates, particularly during off-peak seasons or in areas with limited hotel accommodations. This benefits both hosts and local businesses by generating additional tourism-related revenue that would otherwise be missed.

Explore more real estate business models here.