As Airbnb pivots to longer-term rentals, critics pounce: ‘The game is up’

As the global travel market has plummeted, Airbnb is pivoting its business to focus on a different kind of rental: long-term stays. On Thursday, the company will unveil a redesigned homepage that features monthly rentals right in between its options for normal stays and Experiences. The move prioritizes long-term bookings as one of Airbnb's top three business lines with more than one million listings now offering monthly stays, ranging from private rooms to entire houses.

"There's a housing space that needed to be served which is in fact someone's permanent home, but not necessarily year-to-year and certainly not a short-term type of deal," said Airbnb's head of global policy Chris Lehane. Amid the coronavirus outbreak, the company has seen the floor fall out of its travel business, but a noticeable spike in demand for monthly rentals after long-term bookings grew 20% at the end of March, compared with the previous year. One booking made in March was for 200 days, the company said. "In a really short timeframe, a little over two weeks, we have been able to modify and adapt the platform in real time to meet those needs and build this into actual real infrastructure on both sides, the guest and host side," Lehane told Protocol.

But Airbnb's push — and its hosts' interest in these longer-term rentals — comes with what critics view as a tacit admission that Airbnb has directly impacted the housing market all along. These are units, critics point out, that may have been in the regular rental pool already had Airbnb not made short-term rentals so appealing to landlords.

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"The fact that all of these short-term rentals are being purged out of that market and Airbnb is scrambling to reinvent itself demonstrates what a lot of us were concerned about in the first place: for the most part, short term rentals are just poaching what would otherwise be permanent rental housing," said Peter Cohen, co-director of Council of Community Housing Organizations, which advocates for more than 20 groups in the Bay Area.

For years, housing advocates and governments have argued that Airbnb drove up housing prices by shifting homes from the local rental market and moving it into the short-term market designed for tourists, effectively decreasing the number of units available for long-term lease. Studies in cities like New York and Boston found Airbnb to have at least some influence on the housing market and prices, but measuring what and how much has always been a challenge.

Airbnb, in response to those critics, has often criticized the data and reiterated in marketing materials and even lawsuits that the majority of its hosts are using the platform to make ends meet. The company paints the picture of the typical Airbnb host as someone with a spare bedroom, not a profiteering landlord: "We've always made the argument, and we'll continue to make the argument — and it happens to be backed up by data — which is that the majority of our hosts are using Airbnbs to help create economics to meet their monthly needs," Lehane said.

The company started 10 years ago with that ethos. The original story is that the cofounder Brian Chesky and Joe Gebbia rented out air mattresses to help make their rent payments (a third cofounder, Nathan Blecharczyk, ended up coding their website.) Over the last decade, Airbnb focused heavily on the short-term rental market, starting with hosts with spare bedrooms, moving on to offer full apartments or homes, and in more recent years growing into a travel brand that now welcomes professional operators like boutique hotels. Last year, the company got more seriously interested in a longer-term rental play after it saw more hosts listing more monthly stay properties and realized one out of every seven nights booked was for a longer-term stay, Airbnb said. In August, it acquired UrbanDoor to build out its corporate travel tools.

It was a natural expansion area for the company even before coronavirus, according like Evan Rawley, a business strategy professor at the University of Minnesota."It's not going to be the kind of growth and margins that they had in the short term rentals, but it's going to be a solid place to compete," said Rawley. "If they can do everything that VRBO can do and more, then all the hosts will list with Airbnb. Then they'll be able to take over VRBO's market."

But now it's a business imperative. Since the global travel market collapsed in March, Airbnb hosts have reportedly started listing their homes as long-term rentals on sites like Craigslist or Furnished Finder, a website popular with traveling nurses and interns. In London, for example, WIRED UK reported that the long-term rental market has been flooded in recent days by furnished units that appear to be "hastily rejigged Airbnbs." (This doesn't mean, necessarily, that those hosts have removed their homes from Airbnb. Lehane said Airbnb still has the same number of hosts as it did this time last year, and in some cities those numbers are growing.) But by emphasizing longer-term rentals, Airbnb can try to keep hosts from jumping to other platforms that are traditionally more focused on such stays.

Lehane emphasizes that these are not the Airbnb equivalent of leases. They are somewhere in between short and long-term rentals that fill the gap for people on extended work placements or interns who only need a three-month stay. And while coronavirus certainly accelerated Airbnb's plans, Lehane said that Airbnb was already seeing people, like law school students and traveling nurses, looking for furnished monthly rentals that didn't lock them into year-long leases. Host listings for monthly rentals also grew by 30% last year.

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"People have migrated to put this on Airbnb because it gives them the ability and the platform to build and manage a lot of stuff and they get insurance products, right?" Lehane said. "They get all the stuff that comes with Airbnb and they're able to do a lot more in an easier way, but it's not impacting the number of units on the market one way or the other."

There's already mixed speculation on whether Airbnb's longer-term rental push will create more affordable housing. Housing advocates, like Cohen, are hopeful it will help return some units to the longer term rental pool. "I think the game is up in terms of the short-term rental industry claiming that they somehow were not having an impact on the availability of housing, specifically in these hot market communities," Cohen said.

But measuring Airbnb's influence on rent prices — if any — will be hard, when the housing market is already feeling massive impacts from the pandemic, warned University of Southern California marketing professor Davide Proserpio, who has studied Airbnb's impact on housing. If new long-term rental units enter the market in a meaningful way, it could speed up already decreasing rent prices, but it will be hard to separate out the Airbnb impact from the larger pandemic picture, Proserpio said.

The pandemic has threatened Airbnb's entire business model, and the livelihoods of hosts who depend on Airbnb rental income. The company sees long-term stays as a long-term part of its own recovery, and the recovery of populations hard hit by the virus. In China and other Asian countries where the pandemic hit first and has now begun to subside, Airbnb says people are booking long-term stays because they were displaced and now are adjusting to life in a new home. "I think we're gonna learn an awful lot about what people are looking for, given the massive changes going on in the world," he said. "We're always going to just try to have that adaptability mindset."