Updated June 25, 2024 at 5:00 p.m.*
PARIS — “Stop overtourism: Saint-Malo is not Disney Malo”
It was last July when this banner was hoisted high on the ramparts of the French coastal town, reminding summer visitors of the excesses of mass tourism, largely encouraged by the proliferation of Airbnb and other seasonal rentals.
The introduction in 2021 of one of the most drastic regulations in France (quotas per neighborhood, only one property authorized per owner) has been challenged in the courts — and has not really changed the situation in a town of 47,000 regular inhabitants that can welcome 250,000 visitors on a typical sunny day.
While investors are a little less present in the previously lucrative short-term lodgment segment, real estate agents have not noticed any significant shift by owners towards longer-term rentals, which would enable local people to find accommodation all year round. According to the local authority, only 400 properties have changed to long-term since the new regulations arrived.
In scenic Saint-Malo, as in so many other towns hit by the housing crisis, Airbnb continues to be accused of a litany of ills. Some 250 of 4,000 municipalities in France where the site operates have introduced regulations of varying strictness (registration number, restrictive change of use for second homes, etc.).
This is also the case for 80% of the platform’s markets worldwide.
Criticized in Paris, Biarritz and Marseille, but also in Amsterdam, Barcelona and Los Angeles, almost banned from its historic stronghold of New York (where since September it’s no longer been possible to rent an entire apartment for less than 30 days) criticized for its questionable legal arrangements that enable it to limit the tax it pays to certain states, and subject to a tax catch-up in Italy, the undisputed leader in short-term rental never ceases to be in the spotlight, and rarely for good reasons.
And yet the company’s results have never been as rosy as in this post-pandemic period of so-called “revenge tourism,” with 2023 breaking global travel and vacation records. Booking.com had the best performance in its history. Airbnb, which made its first net annual profit in 2022, continued to ride the wave of strong demand. Its sales ($9.9 billion) have doubled since the 2018-2019 financial year. The latest results, published at the start of February, belie the impression of a company in trouble.
In the first quarter, business was further boosted by the frenzy of foreign travel and the increase in long-term bookings, particularly for stays of more than three months (+20%). Almost 99 million nights and “experiences” — cooking classes, unusual visits and other local activities offered in addition to accommodation — were booked, an increase of 12% over the previous year. In this respect, the quarter was the fourth best performance since the start-up was launched in 2008.
Brisk pace of innovation
With the boom in tourist and business travel and the proliferation of major conferences and sporting events — including this summer’s Olympic Games in Paris — the planets seem to be aligned for the near future.
On Wednesday, Airbnb unveiled a series of changes at a major event in Los Angeles, designed to further stimulate growth. The company introduced Icons, a new category of “extraordinary experiences hosted by the greatest names in music, film, television, art, sports, and more” — like Disney’s Up house, the Ferrari Museum in Italy, the home Prince purchased for his Purple Rain movie, or a room at Paris’s Musée d’Orsay. Other new features were also rolled out, meant to facilitate the planning of group trips, as well as upgrades for hosts.
The contrast with the COVID period is striking.
“What’s important is the pace of innovation over the last two or three years,” explains Emmanuel Marill, CEO of Europe, the Middle East and Africa. “Now, every year, November and May are highlights for new products. This is unprecedented in the company’s history.”
In any case, the contrast with the COVID period is striking, when Airbnb was forced to shed a quarter of its workforce in the face of a slump in business.
To explain the apparent paradox between the proliferation of regulatory obstacles and the reality of a flourishing business, CEO Brian Chesky explained to shareholders in November that the media generally focuses on markets that are important but not always financially significant. Before its strict Local Law 18 came into force, New York generated just 1% of the company’s business.
But the key to its success lies in its vast portfolio of 7.7 million “unique and different” properties, which means that Airbnb far outstrips its competitors.
Active in some 220 markets, the multinational business can compensate for a slump in one territory by expanding into others. With its traditional flats, but also its lighthouses, yurts, caves and containers, it is able to meet the needs of customers whoever they are, wherever they are and whatever they want. Some 1.5 billion travelers have experienced a piece of since the company was founded in 2007.
The revenge of advertising
Some campaigns are particularly glamorous, like the Malibu mansion transformed into a Barbie house, which caused more ink to flow in the international press than the IPO at the end of 2020! France also had its fair share of dream offers, with the possibility of sleeping in the Palais Opera House, Moulin Rouge or the Louvre Pyramid.
The range of accommodation on offer gives Airbnb unrivaled flexibility. While the pandemic led to a boom in rentals within 50 kilometers of home and a preference for remote, sparsely populated locations, “big cities are becoming trendy again,” says Nate Blecharczyk, one of the three co-founders and now Chief Strategy Officer of the company.
Two-thirds of areas in the countries where Airbnb operates have no hotel infrastructure.
A return to its roots: In 2008, Airbnb was originally launched under the name Airbed & Breakfast to offer an inflatable mattress and breakfast in San Francisco. For a long time, the platform was associated with big cities and major international destinations (80% of overnight stays booked before COVID). Today, offers are evenly split between cities (49% of bookings worldwide) and other areas.
Big city roots
The situation in the United States, which remains the biggest market ahead of France, is emblematic. Jamie Lane, chief economist at AirDNA, a website specializing in analyzing holiday rental data for investors, has calculated that the slow in demand seen between 2018 and 2021 in the now-regulated metropolises (Miami, Boston, Los Angeles, San Francisco, Denver, Washington, etc.) was partially offset by the progress made in rural areas (+24% in 2023), which are only too happy to welcome tourists to places that have been overlooked. According to official Census Bureau statistics, two-thirds of areas in the countries where Airbnb operates have no hotel infrastructure. In France, the platform operates in nearly 25,000 towns and cities, while only 7,500 have hotels.
Researchers at France’s national scientific research center (CNRS) and at Université Paris Cité have undertaken a survey of furnished tourist accommodation in Greater Paris, based on AirDNA figures. Their conclusion: In less than ten years, the explosion of the market in the Paris region has mainly benefited the inner and outer suburbs, most of which are unregulated. While in 2016 Paris accounted for 81% of Airbnb bookings, by 2022 only 54% of overnight stays would be in the inner city.
Other post-pandemic trends also favor Airbnb over hotels. On the American market, Jamie Lane has noticed a craze for spacious accommodation (three rooms or more), rented by larger groups, and often for periods well in excess of a week. Since COVID-19 demonstrated that it was possible to work remotely, the public is willing to combine business and leisure travel, extending a holiday with a professional stay: a so-called “workation.”
Hybrid travel
Airbnb employees are the embodiment of this. Since 2022, the company has made it possible to work from virtually anywhere in the world with no impact on salary. A Japanese employee, for example, can spend a month in Colombia. Nate Blecharczyk himself is making the most of this opportunity. With his casual polo shirt and tanned complexion, the 40-year-old is currently on a nine-month family trip that will take him to around 20 countries.
“I’ve already spent 110 nights in different Airbnbs and I’ve discovered some really exceptional places. I generally trust the new ‘Travelers’ favorites’ tab to book in the best-rated places,” he says, drawing our attention to his spectacular screen background: A luxurious tree-house in the depths of Indonesia, where he’d been staying
Functionalities have recently been added to better highlight offers that meet the needs of this type of customer. The “wifi” filter has become a key feature. Another filter isolates ads that are open for more than one month. Many accommodation providers offer reduced rates and discounts for long stays.
Staying reasonable for the Olympics
Retired for almost a year, Thérèse has been offering a duplex apartment for four people with its own entrance in her main residence in Gentilly, 50 meters from Paris. “Over and above the financial aspect, which is not insignificant, it’s a way of maintaining social contact. I welcome people from all over the world to my home,” explains the owner.
She has welcomed Danish, Spanish, Korean, Japanese, American, Australian and Chinese guests among the more than 20 rentals since last March. To make them feel welcome, she has hunted out crockery, bought beautiful linen and invested in audio equipment. “I experienced Airbnb as a tenant and I want to offer the same level of service that I would have liked.”
Thérèse only offers her accommodation when she is available to welcome tourists, below the 120 days authorized per year. Aware of the unpopularity of cleaning charges, she has got rid of them, like many owners, and is content in just asking for the premises to be left clean. Despite two disappointments and the chores involved in renting (“I’ve never cleaned so much in my life”), she is satisfied with her experience.
To determine her rates as accurately as possible, she scans the advertisements of other hosts in the area and the Ibis and Novotel hotels at Porte d’Orléans. “Even for the Olympics, I want to keep the price reasonable. I’ll be getting between 150 and 190 euros per night, excluding commission. At that price, the three weeks were booked in a few days.”
While France is one of the handful of mature markets on Airbnb (with the U.S., Canada and Australia), other destinations are growing much faster. In Brazil, the market has almost doubled in four years. Since the end of the pandemic, Germany has become one of the three largest European markets, after France and the UK.
There are now thousands of rentals available in cities in Ghana, Liberia and Sierra Leone.
In Taiwan, Thailand and Indonesia, overnight stays increased by 30% last year. Korea is also booming. “And you can’t even imagine the network I take care of in Africa,” says Emmanuel Marill. “There are now thousands of rentals available in cities in Ghana, Liberia and Sierra Leone.”
In the future, will Airbnb be more than a simple accommodation site?
After COVID, management focused mainly on improving the basic offering. Now that the results are in, isn’t it time to consider diversification? In 2016, CEO Chesky had envisaged bringing together all aspects of travel in an “all-in-one” app including plane tickets, car hire, restaurant reservations. The project never materialized, but with advances in AI, it is more feasible now than ever.
The multinational, however, has no intention of jumping the gun. “We’ve got a certain humility,” says Blecharczyk. “Before launching anything, we want to identify the activities in which we can really make a difference.” Despite the critics, the 16-year-old unicorn still has its life ahead of it.
*Originally published April 20, 2023, this article was updated June 25, 2024 with Extra! information about Barcelona.
