Last week we shared an article about the effect that Airbnb is potentially having on rents. This week we’ve found an item about potential new players in the short-term rental market, and their interest in working with property management firms. From the Wall Street Journal:
The short-term residential rental business, which got its start with people putting spare rooms on the lodging market, is knocking on the door of some of the country’s largest landlords.
A venture-capital group that includes hotelier Barry Sternlicht has invested in a startup that plans to add a new upscale and branded dimension to the short-term rental business pioneered by companies like Airbnb Inc. and HomeAway Inc…
“Consumers want short-term rentals and they want them at a scale that no one ever anticipated,” said Fifth Wall co-founder Brendan Wallace.
Numerous other startups are pushing into similar businesses, including Arlington, Va.-based WhyHotel and YouRent.com of Miami. Meanwhile, Airbnb in 2016 launched its own “Friendly Buildings Program” under which landlords put rental units on the website.
An Airbnb spokesman last week said there were 13,000 units in the program, up from 10,000 in July.
Many landlords are still skeptical about working with these companies, but that could change as property management firms become more familiar with the new short-term companies. And of course, if vacancies begin to rise then working with these firms could become a much more enticing option.
A report commissioned by the Hotel Trades Council and several neighborhood organizations says that Airbnb is driving up home rental prices in New York City. According to this article about the report, Airbnb listings have removed between 7,000 and 13,500 housing units from circulation in the past three years and have increased the city’s median rent by $380 a year.
The article also points out that it is against the law for landlords to rent out an entire apartment in a multi-unit building for less than 30 days. If landlords do, they face hefty fines meant to deter them from renting to tourists and taking business from hotels and to keep the apartments available for permanent housing.
Last year Airbnb, which disputes the studies results, released its own economic impact study that shows Airbnb rentals in New York last year served 2 million guests and generated $3.5 billion in economic activity.
While this research is focused on New York, it does bring up an interesting consideration for all municipalities. Housing affordability is an issue across the country, including here in the Triad, and while Airbnb is not likely having the same level of impact in our local cities, it is likely to be a cause for concern among local governments, who are already grappling with housing affordability, if they perceive any units being removed from the housing stock to be used as “vacation rentals.” They will be very interested in trying to keep as many units as possible available for permanent housing.
For its part, Airbnb says it supports new state (NY) legislation that would prevent hosts from listing more than one property on Airbnb’s site.
Airbnb is making a push to work directly with apartment management companies. From the Wall Street Journal:
Home-rental giant Airbnb Inc. is trying to charm apartment landlords with a program that gives them some extra revenue if they allow tenants to rent their units out on the site.
Airbnb last month announced an offering that allows apartment owners to take a cut of the revenue from Airbnb guests in their buildings. The program has the potential to add millions of apartment units to Airbnb’s inventory of short-term rental properties.
So far, though, the program has few takers, as landlords remain wary of lawsuits, regulatory hassles and ticked-off neighbors…
Under Airbnb’s new plan, called the Friendly Buildings Program, if landlords allow tenants to lease units on Airbnb, they have an opportunity to take a cut of the nightly revenue at a suggested rate of 5% to 15%.
But for a one-night, $200 stay that means the landlord would make $30 or less, an amount that many landlords say doesn’t justify the hassle.
The article mentions many of the largest companies in the industry – Camden, AvalonBay, Essex, Equity – and at most they expressed curiosity, but in general there seemed to be a healthy dose of skepticism towards the idea. Of course that could change as regulatory hurdles are removed and the pool of business grows, but for now this seems like an idea whose time has yet to come.
You’ve likely heard a lot about how apartment managers feel about Airbnb, but how do residents actually feel? One company asked its residents and the results were interesting. From NAA’s Industry Insider:
An ongoing topic among apartment industry professionals ever since, Cortland Partners decided to ask its residents about how they feel about allowing short term rentals at their communities. In January, Vice President, Resident Experience, Brian Ericson, sent a six-question online survey to more than 14,000 Cortland Partners residents and received 1,153 responses…
The company, which operates nearly 35,000 units in 95 communities, primarily in the Southeast, Texas, and Ohio, learned that 43 percent of residents surveyed are “strongly” opposed to allowing Airbnb rentals, compared to only 12 percent who “strongly” support Airbnb rentals.
In total, 52 percent are opposed to Airbnb rentals, compared to only 18 percent who are in favor; 30 percent of respondents were measured as neutral. The survey also showed that by allowing its residents to become Airbnb “hosts” it could negatively affect retention rates.
The full article is definitely worth a read.
There are more than just lease restrictions that might make residents think twice before signing up as an Airbnb host:
Back in September, Nigel Warren rented out his bedroom in the apartment where he lives for $100 a night on Airbnb, the fast-growing Web site for short-term home and apartment stays. His roommate was cool with it, and his guests behaved themselves during their stay in the East Village building where he is a renter.
But when he returned from a three-night trip to Colorado, he heard from his landlord. Special enforcement officers from the city showed up while he was gone, and the landlord received five violations for running afoul of rules related to illegal transient hotels. Added together, the potential fines looked as if they could reach over $40,000.
Mr. Warren, like many if not most Airbnb users, had not read the terms and conditions on Airbnb’s Web site telling him not to break any laws (while also wiping the company’s hands clean of responsibility for hosts’ compliance with those laws).