Has Airbnb Actually Been A Net Negative On Our Lives?
Airbnb hit the travel scene a little over a decade ago and pretty much exploded right off the bat. It wasn’t the first vacation rental type of site out there but it quickly became the most popular. Airbnb disrupted the travel world much like what Uber did for the cab industry. But as time has gone on the shine has kind of worn off both companies, especially during the pandemic. All of a sudden cabs are often cheaper, and easier to get, than Uber. Airbnb has been tacking fees on top of fees for their rentals to the point that they no longer are the deal they once were as well. I recently shared how fees have gotten out of control with Airbnb in Around the Web but it opened up Pandora’s box on something else. Something that has me wondering, has Airbnb actually been a net negative on our lives?
RELATED: PSA, Airbnb Gift Cards Are NOT Customer Friendly
What Am I Talking About?
The article I shared about Airbnb had people complaining about the insane fees on some properties. One of the ones highlighted had a room going for $99 a night but there were over $100 in taxes and fees tacked on top of that, more than doubling the cost. The fees were so high that Vegas resort fees looked like a deal! It was news to me that hosts get to pick their own cleaning fee rates. Apparently some hosts have been taking advantage of this fact. Throw that on top of Airbnb’s fee and the city taxes and Airbnb isn’t the great deal it once was.
But while reading that article I noticed some other points made about Airbnb and it got me to wondering, are they ultimately hurting us or helping us.
The Beginnings
Airbnb was started in 2008 and was originally called AirBed & Breakfast. This was because the founders were renting out blow up mattress in their apartment in San Francisco. They also offered breakfast with the stay, hence the name. They were trying to offer an affordable alternative to the expensive and saturated hotel market in San Francisco.
That was the idea, connect travelers with people with extra space so they could visit areas at a much cheaper rate than a hotel. As they moved on from air beds they shortened the name to Airbnb and the company continued to explode in popularity.
The Issue
What started as a way for people to travel on the cheap and for hosts to make extra money on space they had turned into a business. Enter in the institutional investor. A person who finds a popular travel destination, buys up the affordable housing and rents it out exclusively on Airbnb. This was not the intention of the site, it was supposed to be a way for people to make extra money on residences they owned an used. But the app made it easier to connect people and there was money to be made.
What happens as institutional investors buy up real estate in certain areas? The amount of real estate available shrinks which drives rent and purchase prices up. More competition for less spaces. There has been a direct correlation to popular Airbnb destinations and rising rents. One person on Twitter found a host in Atlanta with 17 properties listed.
https://twitter.com/cookie_davis/status/1394745540202672141
On top of higher rents, tenets in the same building have to deal with constant parties and a stream of random people in and out of their building. Something that I am sure many are not fond of.
Throw in the fact that many local governments missed out on tax revenue for years and you have another problem. While it seemed like a nice “hack” when you were booking Airbnb years ago you know the government is going to get that money back one way or another (raising taxes elsewhere). That problem has since been fixed with Airbnb now collecting the taxes for the local government.
Final Thoughts
I have never been a lover of Airbnb, I prefer the consistency and on hand staff of a hotel, but I see where it is useful. Giving you access to larger spaces, in unique areas, has a purpose for sure. And allowing people to make money on a spare bedroom or their place when they are out of town is awesome too.
Along the way it has morphed from what it was intended to be though. Institutional investors have overtaken the platform driving up rent and pushing people out of areas where they once lived along the way. Some governments have taken note and are trying to curb it. I thought it was worth having a dialogue on and something to be aware of.
Lower Spend - Chase Ink Business Preferred® 100K!
Chase Ink Business Preferred® is a powerful card that earns 3X Ultimate Rewards points in a broad range of business categories on the first $150K in spend per year. Right now earn 100K Chase Ultimate Rewards points after Learn more about this card and its features!
Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
It’s horrible how small companies created by well-intentioned IT folks in Silicon Valley eventually get fleeced by local governments everywhere else. Anyone taken a Lyft lately in Chicago? Taxes, fees, and special surcharges are astronomical, all because the cab industry whined about it and paid off members of the City Council. Same with Airbnb. Chicago’s hotel industry got their lobbyists to force the City Council to categorize Airbnb as “public lodging” which translated to Airbnb charging people the 18% amusement tax in addition to the 10.25% sales tax. Chicago also forced Airbnb to allow corporate hotel chains to add their rooms when users search for available rooms. That quaint room you want near Wrigley Field will most likely also feature rooms in Hilton or Marriott hotels miles away. This has all trickled down to smaller cities I used to visit. Indianapolis, Houston, and Milwaukee are three places where Airbnb is a cash cow for local governments to find some extra bucks. Airbnb only makes financial sense if you have multiple people to share the cost.
Regardless of Airbnb faults (which are many), people who seriously believe that hotel rooms are a better deal than a COMPARABLE Airbnb simply haven’t done their homework. In most cases, it represents a much better monetary value than any COMPARABLE hotel room or — especially — a suite. Does it take more work to find a good Airbnb stay than to book a hotel? Usually yes, but that’s another story.
I agree that you will usually get more bang (space) for your buck with Airbnb the price being the same.
Cleaning fees should be a percentage of a single night. The variability makes searching difficult and turns people off.
As others have said, the idea that “institutional” hosts are bad levels at hosts a criticism that applies equally to hotels. It’s hotels that got Airbnb banned in many places. It’s silly to take the side of Marriott over Airbnb hosts. But the ultimate villain is exclusionary zoning that prevents more housing from being built. If Airbnb reduces the stock of housing for buyers, you should be at least as critical of homeowners who lobby their zoning boards to limit the units that can be built.
Limiting units that can be built is an issue too for keeping housing affordable.
I’m no Airbnb shill and I’ve never made any money off them as I’ve only ever stayed as a guest rather than as a host, but I’m going to have to stick up for them here as I’m not really understanding the arguments here.
Taxes and fees in many cases have certainly gone up, but in many cases that’s also been unavoidable. Like you highlighted, Airbnb charges whatever local taxes are required, so they can’t be held at fault for that.
As for cleaning fees, it stands to reason that these will vary. Someone renting out their mother-in-law suite will only need to change the sheets, clean the toilet, sweep the floor, wipe down some surfaces, etc. and so the cleaning required will be minimal and shouldn’t take too long.
Cleaning a 4 bedroom house is a completely different kettle of fish. My wife cleaned a couple of large Airbnb properties for a friend a few years ago and, depending on the state that guests left them in, it could take anything from 2-5 hours to clean it thoroughly to get it to the standard you’d expect it to be in. If you have to hire a cleaner- or even if you do it yourself and value your time – a $25 cleaning fee isn’t going to cut it. Especially since COVID, guests expect a high level of cleanliness and you’re not going to be able to get that quality as a host if you don’t charge an appropriate cleaning fee.
Sure, that can mean stays of 1-2 nights have a prohibitively expensive cleaning fee and sometimes hosts will inflate the fee needed, but if that’s case then don’t rent the property and book a different Airbnb or hotel instead. If you’re staying for a month though, a $100 cleaning fee only adds $3.33 per day. It’s not like Airbnb is sneaky and hides cleaning fees – they’re clearly listed when looking at properties, so you know exactly what you’re being charged for.
I also don’t see how Airbnb can be faulted for focusing on what guests actually want to book – they’re a for-profit business. Sure, they’ve pivoted somewhat from being a paid-for couchsurfing site, but that’s because people have clearly shown that that’s what they want. If that’s all people are looking for in a stay, they can still book that. But the success of Airbnb has clearly shown that that’s not how the majority of people want to travel and use their service. Homeowners are still more than capable of renting out their spare room, so it’s not like anyone’s prevented from doing that; Airbnb just has even more options now than they did in the past.
As for institutional investors buying up properties, I don’t really see the issue there either. The exact same complaint could be levied against hotels – they buy land which takes away from land that could be used to build houses or apartments, thereby pushing up the cost of local housing because there’s not as much supply as there could be. Sure, there’s someone with 17 properties on Airbnb in Atlanta, but I’m sure there are many landlords around the country with far more than 17 properties. Why is it wrong for someone to buy properties in order to lease them out as short-term rentals? If they did this via Craigslist ads I doubt anyone would be complaining, so why is it a problem if they do it by using Airbnb as a platform to make their properties easier to find seeing as that’s where people are looking?
If cities want to reduce the cost of rent, there’s an easy solution – approve the building of more apartments and houses.
As for parties, Airbnb banned parties in all properties at the start of the pandemic and that policy is in force at least until the end of this summer. I therefore doubt there are that many places where parties are constantly being held and if there are, that’s the fault of the host and guests.
As for being worse value than hotels, it completely depends on your situation. For one or two night stays then sure, hotels often work out to be cheaper. I read recently though that something like 25%+ of Airbnb bookings are now longer-term stays. Many people would rather have a property to themselves than stay that long in a hotel, so being able to easily book furnished rentals is a huge bonus for people considering that 20 years ago you’d have had a much harder time finding somewhere to stay when moving to another location.
I checked my account and we’ve spent about 325 nights in Airbnbs in the last four years. I’ve always done the cost/benefit analysis of whether we’re better off staying in hotels or Airbnbs and so pretty much 1/4 of the time Airbnbs have suited our needs – and budget – more than hotels have even when accounting for elite status, points, cashback, etc. I know Shae and I are in a somewhat unique position, but if you’re staying somewhere for more than a week and value having a kitchen and the guarantee of at least one bedroom (rather than hoping you get upgraded at a hotel), Airbnbs will often be the way to go.
When it comes to finding properties that meet your needs, the quality of Airbnb’s search engine greatly exceeds anything offered by any hotel chain. The ease with which you can filter for required amenities, pet policies, prices, number of bedrooms, etc. is unmatched. As someone who spends far too much time having to look at accommodation options every week, Airbnb saves me a huge amount of time by allowing this compared to the search functionality offered by Hyatt, Marriott, Hilton, IHG, Choice, etc.
Ultimately, it’s clear that for society as a whole, Airbnb hasn’t been a net negative because they wouldn’t be as successful as they are if they didn’t benefit society. They’ve allowed homeowners to make money, allowed entrepreneurs to make money and enabled travelers to have experiences that they might not have been able to afford if booking hotels. Just my (multiple) 2 cents 😉
I think you got at least 60 cents in there haha :). I thought it was an interesting debate to have, especially in popular areas like NYC where housing is so expensive and severely limited does Airbnb cause even more of a shortage with the rise of investors? There is no doubt it is a useful platform for longer stays or when you need more space, like to cook etc. or a hotel just won’t work.
No longer an airBB fan. Our once quiet and quaint beach residential neighborhood in South Florida has now been transformed into a loud, rowdy, dirty, noisy all nighter party town as more and more homes are being bought up by investors who do not even live there and don’t give a damn about locals who live here, turning each of these homes into airBB’s, unaware of their customers bad behavior and lack of consideration for the locals. It has truly morphed into an ugly unregulated business. Won’t hesitate to stay in hotels again.
Sorry to hear that briggs
Preach! Our quiet beach town is over run in the summer and empty now in the winter. Homes are snatched up by “investors” who rent by the week forcing middle class folks out of town when there is no affordable housing. On a block there might be 1 or 2 homes that are lived in year round now, the sense of community is gone. When this started the city should have put in some limits before it became out of hand.
That stinks. It hits summer towns the worst I think.
I agree with most on here who have a prefer for hotels. I stay at hotels for the same reason I buy name brand products or use name brand services. I know what to expect and hotels offer a much easier route for recourse. There is also the safety factor and cleanliness factor. When I travel for leisure (all my travel up to now), it’s always 5 stars (with the occasional Aruba Stellaris 4 star). Finding the cheapest accommodations is not the concern. I want to enjoy my vacation. If I am traveling 5000 miles from home, I’m not going to try to save money staying in someone else’s apartment or home.
Airbnb makes sense for those who live locally and need a month or two accommodation because their house is being renovated. Airbnb makes sense for areas where there is no proper hotel chain available. It makes sense for certain beach areas for families.
The big concern about Airbnb is stopping people who want to ban it. Just because I don’t prefer it doesn’t mean it should be banned. Why should we get in the way of people trying to make a buck on properties that otherwise sit empty.
I like that if there is an issue there is normally another room they can move you too etc. at a hotel. If at an Airbnb you are likely stuck with it.
1) When someone is looking at a place on AirBNB, AIrbnb shows the price of the room and the cleaning fee on the listing. ie, if it’s $100 + $20 cleaning for 2 nights, the user will see $60/night, not $50.
2)Cleaning fees encourage bookers to book longer stays and keep shorter term guests from taking up valuable nights. I always encourage any host that would listen to me drop their listing fee and increase their cleaning fee. a 10 night stay with a $100 cleaning fee and a 1 night stay with the same.
3) Just like everything else, hiring labor to clean up the place is very expensive and with the covid requirments very time consuming. Most AirBnB hosts don’t see the cleaning fee as a profit center and usually they charge less for cleaning than actually paid to the cleaner.
The last sentence of the second paragraph should have said” A 10 night stay with a $100 cleaning fee and a 1 night stay with the same cleaning fee is a bad value for the short term guest, but it is the same cost either way to the host.”
Also, if a host doesn’t actually hire outside help and does the cleaning themselves, the number of hours put into will make the “hourly wage” of the cleaning very low.
1. The cleaning fee isn’t shown in search results, only on the property’s page which makes the search much less useful.
Nobody is disputing that cleaning fees are good for hosts. It’s bad for guests, particularly those with shorter stays.
The cleaning fee is included on the main search results page. Airbnb displays the nightly cost, then below that it shows the total cost for the stay minus taxes. That total cost includes the cleaning fee.
Cleaning fees aren’t bad for guests per se because it’s those fees that help ensure you have a clean property to check in at. Like I said in my original comment though, it does make shorter stays more expensive but in that case you have the freedom to choose a cheaper Airbnb or hotel. That’s why we don’t tend to book Airbnbs for stays of less than a week.
Hotels don’t have to charge a separate cleaning fee because they have fairly fixed housekeeping costs, other than possibly some seasonal fluctuations in staffing needs depending on the location. For Airbnb hosts, their cleaning costs will often be fairly similar whether a guest has stayed 1 night or 10, so they can’t charge a tenth of the cost for a 1 night stay versus a 10 night stay.
Yes, I totally agree. Been to about 10 airbnbs, I’d say 2 were nice. Hotels every day for me, at least you can change rooms if something is wrong.
On two occasions the hosts cancelled our reservations after we had already paid…..they refunded money but left us high&dry
Airbnb corporate was no help.
In addition, there are hosts in my condo community that rent out their units to unsuspecting tourists that do not know that 1. Short-term rentals are against the law in our city, and 2. it’s against our condo rules. On any given stay, there is a non-zero probability that the renter may get to the guard house and not be allowed back onto the property after heading out for a nice day at the beach. That would be a heck of a fun trip.
That was a big problem for a while where hosts would cancel to rent it out at a higher cost or would strand people right before their trip.
I totally agree with you. As a former Airbnb host, I can definitely tell you that it morphed from its original purpose. Originally most of my guests were foreign visitors that liked the convenience of having a host available to get hints about where to go and how to get there. Before the pandemic, guests were like hotel guests who complained when the TV was in the living room instead of the bedroom. Many would move the furniture around as if they were in a hotel instead of someone’s home. In fact, many of the Airbnb offerings were, as you say, actually not homes but places bought by investors for the sole purpose of running a dispersed hotel business.
Thanks for sharing your experience Michael.
I travel about 60 nights a year for leisure and have not once found AB&B to be a better option than a hotel. I’m happy it siphons away people who might have otherwise been in competition for a hotel room Then again, I do a lot of last minute travel, don’t have a whole family to house, and know how to read the fine print.
Let’s look at my last vacation, a Mon-Fri stay in Greenville, SC this past week. 4 nights at the Hyatt Place Downtown was $560 cash all-in and after getting 11,000 Hyatt points back on the stay through various bonuses, my after-point cost was about $360, or $90 a night. Looking at ANY AB&B for downtown Greenville for any upcoming week in June (a few dozen properties), the cheapest one costs twice as much. And it’s no HP suite – it’s just a rundown, dated 1 BR apartment with a tiny bed suitable for a college kid. Most are at least 3 times as much per night, and you don’t get the other hotel perks. I’m sure someone can scrounge up a single example of how they once found a “better deal”, but AB&Bs are for those who either think hostels and couch-surfing are a fun way to travel, have 5 kids, or can’t do basic all-in math. I look at AB&Bs all the time, just to compare shop. The math never works. You can keep your expensive rentals with a mile-long list of punitive house rules, I’ll be down in the lobby bar having a drink.
This is crazy talk. Airbnb is awesome. Some suck, but some hotels suck. And the same stupid taxes also apply to hotels. Moreover, for families, there comes a time when it’s multiple hotel rooms vs the entire house, kitchen and laundry often included.
Lastly, San Dimas High School football rules!
AirB&B and EXPEDIA have now pretty much cornered the vacation rental market; buying up any viable competitors, but still running them all as if they are separate operations. So that allows them to jack up fees and prevent hosts from finding other ways to advertise. Gone from basement businesses to world-wide monopolies in a decade. Welcome to the New World Odor.
I love Airbnb. Not only over a few years did it make me the money (as a host) to finish remodeling my house, but I got to meet a lot of great people. I also put in the time, effort, and money to make it super clean and super nice. 100% 5 star ratings all the time. READ THE REVUES, FOLKS!
But I have also used it a lot. One must put in a little time but you can get great places. I spent 3.5 months in Europe the winter of 2019-2020 (Ending right before the plague) and stayed in lovely and affordable places, all of which I liked and also enjoyed meeting the owners OR operators.
Longest stay was 6 weeks in Florence and I loved my apartment. Stayed in Prague in a 3 floor apartment with a balcony over a lovely 3-way intersection that was like live screen TV for enjoyment.
There are a lot of both pluses and minuses, but for a skittle effort, you can find a lot of great places. Hotels are OK for a day or two but for longer stays, I like having “my own” place to myself.
I agree that it is a great option for longer stays, far exceeds a regular hotel room if the prices are about the same.
Not a fan of Airbnb. I appreciate the consistency and accountability of hotels. Many of the beds at Airbnbs are simply unusable. The quality of cleaning is also often subpar. If there’s a problem at a hotel then it gets taken care of very quickly. Good luck getting any assistance with an Airbnb. Short stays are not feasible with most Airbnb’s due to the fee structure, but it’s too risky for me to book a long stay at a place on Airbnb sight unseen. I’m done with them. I can see it being an option for broke college students to rent a room or whatever, but personally I’ll never use the service again.