Home-Sharing Takes Big Hit From Coronavirus
- Mar 23, 2020
The hospitality industry is facing one of its largest crises to date. According to the World Travel and Tourism Council, the coronavirus pandemic could result in up to 50 million travel and tourism jobs being lost worldwide, on top of other strong economic ripples. Before the virus hit, the sector accounted for 10 percent of global GDP. What will this mean for home-sharing companies and how are they coping?
What’s clear now is that states’ and cities’ attempts to bring tougher restrictions on Airbnb fade in comparison to the effects of the novel coronavirus outbreak. However, Airbnb’s handling of the crisis so far—by agreeing to give full refunds for coronavirus-related cancellations—may prove effective on the long haul. By siding with renters, the firm is likely to keep a good reputation among clients despite being in a free fall.
The San Francisco-based company is piling up hundreds of millions of dollars in losses, according to The Wall Street Journal citing people familiar with the matter. What’s more, the firm’s plans to go public this year have also been heavily impacted, with an IPO possible only after the coronavirus crisis ends and the firm manages to stabilize its finances.
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Vrbo is taking the opposite path, siding with hosts over renters and refunding only half of the money people paid to book, unless hosts agree to a larger amount. The firm stuck to its guns even after Airbnb and TripAdvisor announced full refunds. Some renters are unable to get the 50 percent refund if hosts refuse to cancel reservations. This did not sit well with many customers, as reflected by reactions on the firm’s Facebook page.
The tip of the iceberg
With the number of COVID-19 cases expected to increase across both Europe and the U.S. in the following weeks, it is likely that the home-sharing industry’s troubled waters could be deeper than they seem. In many places around the world, hosts are withdrawing listings from Airbnb and other platforms, putting them directly on the market instead. Central Dublin has seen a 64 percent spike in its volume of rental stock, according to property website Daft.ie.
Last Friday, AirDNA noted that, while global Airbnb supply remained steady, demand has seen significant setbacks. Additionally, the data provider pointed out that revenue is either declining or sharply dropping in many U.S. cities, with markets including San Francisco, New York City and Seattle tumbling more than 50 percent.