Is the real Airbnb hell about to begin?
A site called airbnbhell.com, a rabbit hole of “uncensored” stories of host and guest experiences, reveals detailed anecdotes ranging from pet problems and parties, to discrimination and fraud.
It is no longer an active site but the holiday home rental app had a hell of its own on Wednesday when shares plunged 16 per cent after its second quarter earnings and third quarter forecasts fell south of expectations.
Although quarterly revenue of $2.75bn (£2.16bn) actually topped Wall Street’s consensus forecast of $2.74bn (£2.15bn), earnings per share disappointed at 86 cents versus an estimate of 92 cents. Profit also missed the mark at $555m (£436m), against an anticipated $650m (£511m).
Airbnb also downgraded its revenue guidance for the next quarter to between $3.67bn (£2.88bn) and $3.73bn (£2.93bn), missing analysts’ mid-point consensus estimate of $3.84bn (£3.02bn).
The company has seen booking windows become shorter – meaning more last-minute bookings – leading to greater uncertainty and reduced financial visibility.
It said the downturn was due to “pressured” domestic travel in the US, which accounts for nearly half of the company’s revenues, as Americans are growing more cautious with travel spending. Analysts have said this deceleration could pose a short-term concern for shareholders.
But long-term, Airbnb – and its rivals like Booking.com and VRBO – may have a bigger problem than stiffening demand. Governments worldwide are tightening controls on tourist rentals to address local housing shortages and rising property prices.
At the start of August, Spain’s Valencia region, where notorious tourist hotspot Benidorm is situated, announced stringent regulations on short-term rentals to mitigate the impacts of mass tourism, including social issues, housing shortages, and rising property prices.
The new law will fine homeowners up to €600,000 (£515,000) for illegal rentals, require short-term apartments to provide 24-hour reception and mandate a five-year operating licence.
This crackdown follows similar measures in Barcelona, which plans to close 10,000 tourist flats by 2028. It is part of a broader national effort to lighten the load of overtourism, an issue that has sparked a number of protests across the country in recent months.
In the US, New York City introduced its Local Law 18 in September last year to restrict short-term rentals by requiring hosts to register with the city, stay on the property during rentals and limit guests to two at a time.
Similar restrictions exist globally, including in cities like San Francisco, Amsterdam and Berlin, which have implemented various limits on short-term rentals to protect local housing markets.
AJ Bell investment director Russ Mould warned that “the more cities that follow the example of Barcelona, Valencia, Berlin, New York and others to either ban or tightly regulate short-term lets, the less scope there may be for Airbnb to grow, especially as such action may prompt other cities to follow suit.”
Mould went on: “How many will impose bans or tighter rules is impossible to tell – and they may be more inclined to welcome tourists if their economies slow down or into recession, given the influx of cash that travellers bring”
The Conservative government proposed similar actions in the UK. In February, it announced plans to introduce new regulations this summer requiring planning permission for properties rented out more than 90 nights annually, aiming to give local authorities greater control over rental housing stock.
Airbnb welcomed the former UK government’s announcement and is understood to be keen to work with the new government to make these rules a success.
An Airbnb spokesperson said: “The root causes of housing and tourism challenges in Europe are a lack of new homes being built and decades of hotel-driven mass tourism.
“In contrast, Airbnb accounts for a small proportion of visitors to Europe and creates an economic lifeline for families that helps them afford their homes.
“We welcome regulation and have led our industry in working with governments on rules that balance tourism benefits with protecting housing, and we are eager to advance this work.”
The success of these regulatory clampdowns and how they will affect rental apps like Airbnb remains uncertain. But scrutiny continues to heat up and according to Mould, there is “no shortage” of competition as travellers have plenty of alternatives for accommodation.
“Online reviews will provide a good guide as to whether Airbnb’s service and the lets it provides are keeping customers happy or not,” he said.