Maria Irene 

Picture perfect vacation towns, bustling city centres, serene mountain ranges; Airbnb hosts in America had a lot to offer, yet are now finding themselves in hot water as revenues tumble down.

Renowned data analyst Nick Gerli recently drew attention to the sharp decline in Airbnb revenues, particularly in eastern Tennessee’s vacation town, Sevierville, located in the Smoky Mountains. There’s an oversupply of Airbnb properties in Sevierville, with ten times more Airbnbs than homes listed for sale, while owner revenues have nosedived by nearly 50%.

Central Texas also hasn’t been spared from the Airbnb squeeze. In cities such as Austin, San Antonio, and Uvalde, revenues have plunged by 40-50% year-over-year (yoy). The Pacific Northwest/Mountain Region, encompassing states like Montana, Idaho, and Oregon, isn’t faring any better with a 40% decline in revenue per listing.

The reduction in remote working and vacationing post-pandemic, coupled with a surge in Airbnb supply, has fueled this crash. The decrease in demand has arrived just as the Airbnb supply is ballooning, leading to a disastrous imbalance for Airbnb hosts.

Airbnb owners are just starting to feel the pinch, with many of them observing a 50% revenue drop. The mainstream narrative is yet to catch up with this trend, potentially leaving many hosts oblivious to the broader downturn in the market.

The obvious fallback option might be to pivot towards long-term rentals. But this option isn’t a safe haven either. A significant surge in long-term rentals hitting the market has already been observed, leading to an excess supply that could potentially crash this market too. The impact could be especially severe in dense urban areas, the locations where the majority of Airbnbs are found.

The new entrants to the Airbnb scene, who made their property investments over the last one to two years, are potentially the most vulnerable. Having bought in at a high price and dealing with hefty monthly payments, they have little margin for error and could be among the first to sell once the season ends in 2023.

In contrast, the seasoned Airbnb operators who made their property investments before the pandemic might have more leeway. Having acquired their properties at a lower cost and with more manageable mortgage rates, they also bring more experience to the table. Consequently, they may be less inclined to sell their properties in the face of falling revenues.

As Gerli prepares to reveal more data on the Airbnb crash in the coming weeks, the Airbnb saga continues to unfold. With revenue declines hitting from the Smoky Mountains to the Pacific Northwest, hosts, guests, and investors are left to wonder: what’s next for Airbnb in America?