Airbnb’s Host Dilemma — 5 Percent Control Nearly a Third of All Rentals

Online Travel This Week

Airbnb’s strategy since the onset of the pandemic has shifted from striving to be a super brand of travel, with flights and hotels, to being a super band of hosts.

Airbnb’s current global TV and digital campaign — in which it spent close to $9 million just on U.S. TV in the first week — that’s designed to spread awareness of hosting on Airbnb shows the company is indeed going deep rather than wide. Sure, it is making a major play in Experiences, but the overall goal is to nurture growth among its ranks of hosts rather than focusing on flights and hotels, which it might return to later.

Individuals Versus Corporates

“Airbnb is a community of 4 million hosts, 90 percent are individuals, and they are who we prioritize because that’s where our guests speak,” CEO Brian Chesky told financial analysts last week. “Our guests want something that’s one of a kind, and this is typically offered by our individual host.”

That 90 percent figure may actually be an underestimate of the percentage of individual hosts. AirDNA found that in January 2021, 67.3 percent of hosts worldwide had just one listing, and 27.7 percent offered 2-5, for a total of 94 percent of likely individual hosts.

Chesky was referring to 4 million individual hosts accounting for 90 percent of around 7.2 million Airbnb listings while AirDNA tallied individual hosts as being 94 percent of 3.1 million total hosts offering 5.5 million active units.

Host Types as a Percent of Total Hosts, January 2016-January 2021

But Chesky’s individual host figure of 90 percent can be misleading because of the increasing footprint of professional property managers and corporations, from Sonder to Vacasa, in terms of listings and bookings, especially in major markets.

AirDNA’s global figures found that 4.4 percent of hosts with 6-20 units controlled 15.23 percent of the total units while just 0.6 percent of hosts with 21 or more units controlled another 12.7 percent of the active units in January 2021. So that means 5 percent of corporate hosts control rentals approaching a third of all global offerings.

That means corporate hosts control 28 percent of the units, and their bookings undoubtedly skew higher in major markets, squeezing out individual hosts that in many cases, especially in markets still under lockdowns, have been wiped out by the pandemic. Chesky said guests crave staying at individually hosted properties for their local flavor and unique experiences, but the growing corporate clout on the platform challenges guest aspirations.

Active Units by Host Types, January 2016-January 2021

“I think it’s just important to understand what their (Airbnb’s) definition of individual host is in this context and how that differs from ours,” said Jaime Lane, AirDNA’s vice president of research. “Our definition of hosts is based on the number of units that each host manages in any given month. With that definition, about 67 percent of active hosts have just one unit and those hosts control about 40 percent of the total number of units.”

But the footprint of individual hosts, the ones with just one unit out for rental, has been declining since 2016.

“The vast majority of hosts just have one unit,” Lane said. “They have just controlled a smaller number of the total unit count as more hosts with multiple units have started using the platform.”

Double-Edged Cudgel

The rise of corporate hosts cuts both ways for Airbnb. On one hand, Airbnb partners with many of them and has investments in several because they have marketing power to spur hyper growth and bookings, and they bring professionalism, however bland that can sometimes be, to the platform.

On the other hand, Chesky argued that Airbnb’s roster of individual hosts positions Airbnb “in a different space than our competitors,” such as Booking or Expedia/Vrbo.

But the diminished status of individual hosts on Airbnb challenges the guest experience. Airbnb’s current global marketing campaign is geared to spur growth by increasing its hosts’ ranks. Unlike the initial marketing campaign that has no call to action but is merely about spreading awareness of hosting, a marketing campaign to follow will target hosts in key markets, and induce sign-ups.

While many individual hosts feel great anger toward Airbnb, whether it be for its pandemic refund policies, technology glitches, or customer support inadequacies, Airbnb is counting on macroeconomic factors to help bolster their ranks.

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