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Diabierna, 3 November 2023 AWEMainta BUSINESS & FINANCE 41

Airbnb Oversupply Challenges Hosts as

Wealthy Investors Empty Properties

THE Airbnb market appears to be

grappling with an oversupply of rental
properties, impacting hosts who are
witnessing declining occupancy rates
despite the company reporting its

“most profitable quarter ever.”

Speculation about an “Airbnbust” has
been circulating on social media, with

concerns raised by short-term rental
hosts about the declining demand,
especially as the holiday season
approaches. However, market analysts

suggest that a surge in short-term
rental listings by wealthier individuals
and investors, following a pandemic-
fueled boom, is contributing to this

situation.
According to AirDNA, the number of
available short-term rental listings in
the U.S. increased by 23.2% year-over- this trend has now shifted. Occupancy more options and the ability to be

year to reach 1.38 million in September. rates fell in 31 of the top 50 largest discerning about the properties and
This surge in supply has led to a highly U.S. short-term rental markets from hosts they choose. Personalized
competitive market, impacting occu- July through September, with markets customer service and positive reviews
pancy rates for hosts. experiencing over 50% supply growth are becoming increasingly important

witnessing an average occupancy for hosts to maintain or grow their
The increase in supply can be attrib- decline of over 10%, according to occupancy levels.
uted to several factors. In the wake of AirDNA. As interest rates rise, investing in short-
the pandemic, many wealthier home- term rentals may become less attrac-

buyers purchased second homes, Despite these challenges for hosts, tive, potentially slowing the growth in
encouraged by low-interest rates, Airbnb itself has continued to experi- supply. Hosts are advised to update
extra savings, and the ability to work ence a strong year in terms of demand, and improve their properties to stand
from anywhere. Sales of luxury second bookings, and revenue. Some hosts are out in the competitive market.

homes and investment properties in still able to successfully book guests
the U.S. were up approximately 235% on the platform, with more individuals This evolving landscape, some hosts
compared to pre-pandemic levels, looking to leverage their properties for may be considering moving out of the
according to property broker Pacaso. extra income. short-term rental business, opting for

The oversupply hasn’t yet translated long-term tenants. The oversupply and
The surge in short-term rental offer- into lower prices for travelers. In changes in the industry may prompt
ings came as a result of former long- September, average daily rates expe- more individuals to question the prof-
term landlords shifting to short-term rienced significant year-over-year itability of short-term rental invest-

rentals to maximize returns, and insti- growth. However, in areas where occu- ments.
tutional investors acquiring properties pancy rates have dropped, there is As the Airbnb market grapples with
for rental on platforms like Airbnb. potential for price rates to decrease as this oversupply, the future will depend

hosts compete for bookings. on how hosts adapt and the evolving
While the rapid increase in supply dynamics of the short-term rental
resulted in occupancy highs last year, For travelers, the higher supply offers industry.