You're unlikely to find a U.S. city dweller who hasn't heard of Airbnb. Since its launch in 2008, the online hospitality marketplace has exploded and revolutionized the way travellers think about choosing and booking short-term rentals, especially in major metropolitan areas. Although the New York Post reports the company's growth is slowing, Morgan Stanley still predicts that Airbnb demand will account for 6% of the total lodging industry by 2020 - and with plenty of competitors like FlipKey and HomeAway, it's safe to say this business model is here to stay.
What does the rise of the tech-enabled rental-by-owner market mean for traditional real estate rentals in major cities? Nine members of Forbes Real Estate Council shared their thoughts on the way companies like Airbnb have changed the industry.
1. The Market Is Moving Toward 'Experiential' Real-Estate
The arrival of Airbnb and other long- and short-term rental-by-owner services is a large step in the direction of experiences for the residential real estate market. By merging hospitality-like amenities, flexibility and unique experiences, such providers are challenging what it means to be competitive in the multifamily market. This trend may mirror the recent transition to experiential retail. - Benjamin Pleat, Doorbell Inc.
2. Empowered Individual Landlords Mean A More Diverse Rental Pool
Rental-by-owner services like Airbnb make it easy to become an independent landlord, as people now rent their former primary residence and are buying properties to rent. This increases the supply and diversity of available rental properties. As a result, consumers no longer have to choose between buying a home and living in a faceless, institutionally-managed apartment complex. - Ryan Coon, Rentalutions
3. Multiple Properties Per Host Means Decreased Rental Inventory
How many times have you looked on sites like Airbnb and seen the same host on multiple listings? These can't be people who are renting their home out when they're out of town. These kinds of listings are highly commercial in nature, and taking inventory out of the rental market. - Susie Algard, OfficeSpace.com
4. There Are More Opportunities To Decrease Vacancies And Create Additional Income
This trend is a boon to the rental market. Landlords are able to supplement short-term vacancies as well as make model units income-producing through sites like Airbnb. With the advent of technology there will be increasing opportunities to decrease vacancy and create additional income. - Lee Kiser, Kiser Group
5. Longer-Term Rentals Are Fetching Increased Prices Due To Low Supply
The popularity of the vacation rental market has tightened supply for rental accommodation and thus driven up the price for longer term rentals. The basic question residential real estate investors ask now is, "Why should I accept a lower monthly rent, when I can make double the return on an Airbnb or HomeAway rental, if rented at even 50% occupancy?" - Ali Jamal, Stablegold Hospitality
6. Investors Can Diversify Their Portfolios By Catering To Both Travellers And Tenants
When considering Airbnb as affecting the rental market, you're really discussing the difference between hospitality industry and real estate investing, as tenants and travellers are different customer sets. That being said, there's great opportunities for real estate investors to diversify their portfolios simply by earmarking ideal properties for vacation rentals or for long term tenants. - Tracy Royce, Royce of Real Estate
7. The Growth Of Hotel Rental Rates Is Restricted
Platforms like Airbnb have absolutely restricted growth in hotel rental rates in major markets, specifically in gateway cities and seasonal tourist markets. - Colin Bogar, Property Passbook
8. 'Professional Airbnb Investors' Are Rising
We noted the rise of professional Airbnb investors years ago, and see it has a huge opportunity for growth in real estate investing. Homesharing has had some effect in the most housing-starved metro areas, but the majority of benefit and use has been quite independent of the long-term rental market. - Nav Athwal, RealtyShares
9. It's Changing The Way People Buy And Renovate Real Estate
The arrival of these sources and products have made a significant shift in the way people are buying and how much they are spending. People are getting smart! Instead of buying a home that costs $130K they are opting to buy larger homes to renovate (or that are already separate) to make extra income from these products. Make an extra $800 a month? No brainer. - Kevin Taylor, Sand to City Real Estate Team