The fast and monumental rise of Airbnb together with its singular origin story have perhaps also led to a number of myths and misconceptions about the biggest online short term rental booking platform in the world. Here, we debunk the most persistent myths and misconceptions that surround hosting on Airbnb.
You can choose to host full-time or part-time or only seasonally, it can be your primary source of income or just a side gig, but hosting an Airbnb vacation rental is always a business. You have to pay taxes, follow local, state, and federal regulations, and be liable for violations as a business owner. In fact, the IRS considers a legitimate business to be any activity that is conducted for income or profit with continuity and regularity. So while running an Airbnb can be fun and a very personal or personality-based activity, it is nevertheless a business operation.
There are many so-called rules of thumb about minimum night policies on Airbnb though perhaps the most prominent is that a 1-night minimum night stay policy is the best, allowing for maximizing of occupancy and revenue. However 1-night minimum stays can also put you at risk for attracting bad guests as well as close your calendar from attracting guests looking for longer stays due to intermittent single day bookings. Furthermore, the best minimum night policy for your Airbnb vacation rental should be dynamic and based on a number of different factors.
Perhaps because of the quick work and scale of disruption caused by Airbnb to the travel accommodation industry and the sheer novelty of regular people hostings strangers in their homes at the time, the idea that the short term vacation rental industry is unprofessional or disorganized has continued to be sticky. The truth is that while Airbnb disrupted the travel accommodation industry, causing hotels to freak out and lobby for legislation and the vacation rental industry boomed over the last 10 years leading to Airbnb’s massive IPO in 2020, the vacation rental industry has existed for far far longer. Vrbo was founded in 1995 for example while the Vacation Rental Management Association (VRMA) began in 1985.
The belief that long term rentals don’t pay off has been a persistent myth but long term rentals are a short term rental market trend for 2022. In fact, between business travelers, digital nomads, and families, many travelers are choosing longer stays. The average number of nights per booking has increased to over 4 nights in 2021 on Airbnb and bookings 28 days or longer are capturing overall market share. 2022 will see these traveler groups continue to prioritize vacations and bleisure trips and stay longer while doing so.
You don’t need to employ a property manager to ensure you can travel. Most cities don’t expect hosts to stay on their properties while it is being rented out and even in cities or for property types where there is a host stay requirement, you are allowed to have a designated assignee in most instances. You can also give yourself a holiday as if you would in any other instance and just not rent your Airbnb during the period of your vacation.
The pandemic had a huge impact on travel, bringing it nearly to a halt across the world. International travel and flying in particular were significantly impacted. Lockdowns also led to domestic travel affected. As the pandemic continued and restrictions began to ease in certain areas and locations however travel picked up as people cramped in their homes were desperate to get out. While the type of travel and accommodations that people sought changed, with Airbnbs in cities in particular, badly affected, Airbnbs and vacation rentals in other areas such as in rural areas and near popular national parks experienced a boom. In fact, 2021 was the best year in the history of Airbnb, ending the year with 25% revenue growth over 2019. Meanwhile, according to a report from Airbnb, first-time hosts who welcomed their first guests since the start of the pandemic had earned over $1 billion by the beginning of 2021.
Airbnb got its start in San Francisco, founded by 3 Americans and initially was relegated to the US alone. Soon however it was expanding to cities in Europe and then the rest of the world. Today there are 6 million active listings worldwide in 100,000 cities and towns in over 220 countries and territories. Over 4 million hosts operate on Airbnb and over 1 billion guests have checked into an Airbnb since it began. With customized local payment options, accepting payments in local currencies and even localized sign up methods, Airbnb has utilized a ‘glocal’ approach to ensure it thrives worldwide.
The traditional model of operating an Airbnb is to list part of or an entire property that you own. You may choose to host it yourself, hire a co-host or even a property manager but the idea was that you owned the property yourself. As with all growth markets however, innovative operators found a way to hack the model and Airbnb rental arbitrage was born. Airbnb rental arbitrage is when you list a property on Airbnb that you rent in long term. An increasingly popular model as home prices skyrocket, it also offers less risk and an accelerated means to scale. (Check out our blogs on Airbnb rental arbitrage for cities across the US).
Unlike renting out your property on the long term where people spend a lot of time in the property and use all the furniture and amenities daily, despite a faster turnover, actual use of property inside your Airbnb is most often going to be relegated to guests sleeping overnight rather than spend their entire day in your vacation rental, minimizing wear and tear in comparison. This of course may not apply to ultra luxury properties, tent cabins, and other camping spaces where guests are more incentivized to stay inside the property for longer.
Known as the ‘party house problem’, the number of people booking Airbnbs solely to host parties took off during the pandemic as certain people looked for ways to let go in the midst of social distancing and other restrictions. While Airbnb took several steps to prevent parties, such as restricting the number of guests, barring guests without a history of positive reviews and even those under 25 from being able to book during big events like the Fourth of July Weekend and New Year’s Eve, the idea that all hosts were at risk for illegal or unpermitted parties had already taken hold even as the restrictions eased and the need for such parties decreased.
While the risk of your Airbnb used to host an unpermitted and potentially illegal party does exist, it has reduced considerably since its hey day, particularly with cities also cracking down. While some hosts are more at risk than others, all hosts can take care to reduce or even eliminate any such risk by screening guests beforehand and utilizing smart tools to monitor for noise, etc.