It's kind of frightening to think of the broader economic impact it would have on the whole real estate market if Airbnb went belly up. Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate? That cash just dried up over night and there doesn't appear to be any incoming federal support.
Edit: Look, I'm all for affordable housing, but when viewing this within the context of a looming recession and potential financial crisis I can assure you that the last thing you want to do is add in a potential amplifier to a housing market crash. Houses may get cheaper, but everyone is going to suffer in very difficult to imagine ways. Corporate debt markets are looking scary as hell right now. If you threw a housing market meltdown at it right now, we could easily be looking at something much much worse than what we saw in '08.
As someone that would like to buy a house one day, I welcome this. People owning multiple houses to rent out to vacationers that people would like to actually live in doesn't upset me at all.
If people buying houses to rent on Airbnb artificially inflated the housing market, it's just a necessary correction and federal support would be a mistake.
There are only so many possibilities for the housing market.
One possibility would have been to take advantage of the boom times and strong economy over the past decade, and build lots of housing to support the huge influx of new jobs created in big cities. Make our prosperous cities actually feel prosperous, and accessible to anyone who wants access to opportunities. Creating this world would inherently mean that housing is not nearly as good of a capital investment for individuals. That would make property owners less vulnerable in an economic downturn. Low risk for low (financial) reward. But the public has and continues to overwhelming reject this option.
Another possibility, is that we could have gone a very long time without a downturn, and let our housing values just increasingly get more and more expensive with no upper limit. This is clearly the path most homeowners were hoping for. It creates a more and more stratified society, where only the very wealthy and the very few lucky subsidized-housing lottery winners can live in or near prosperous cities. We're already there in many places, and it certainly would only keep getting more and more extreme if unchecked.
And then there's the new scenario you suggest and that we may be approaching - a major crash that will lower prices that have grown unchecked for a long time.
I would have really, really liked to see the first option. Maybe one day we will. But since that's off the table for the foreseeable future and the only remaining possibilities are the 2nd or 3rd options, it seems like a major correction in the housing market is the preferable one. Obviously the coronavirus outbreak itself where many people might get sick or die is terrible, and I really hope that the shelter in place measures will be effective to stop the spread. And I feel for people that are losing their jobs at this time. But as far as just the impact on the housing market, this correction may turn out to be a good thing for the majority of the population who are not wealthy homeowners. It could transfer a lot wealth from the older generations to the younger ones, whereas our society has been doing the extreme opposite for a long time now.
I don’t think that’s frightening at all. A bunch of rent seekers lose everything, and everyone else wins. This practice should be, and in some places is, illegal.
> It's kind of frightening to think of the broader economic impact it would have on the whole real estate market if Airbnb went belly up.
Oh I (living in Munich) hope for AirBnB going belly up. This will free a LOT of apartments back to normal rental markets. The rental markets won't be "hit" at all, the landlords will only lose the difference between "30 days of rent at AirBnB prices" and "30 days of rent at market value".
The winners will be those priced of their own home cities by hipsters and the neighbors of current AirBnBs who don't have to suffer from people running, essentially, illegal hotels in their houses - with people abusing apartments for sex orgies/porn sets, mass parties, or simply losing their keys and mashing on the doorbells.
Airbnb and VRBO have similar revenues (~2.6 billion). So im not sure the hosts will be out of options, but you aren't wrong that a ton of mortgages could be foreclosed due to the lack of revenue for hosts for the foreseeable future
Travel certainly will be hurt. All said, my guess is the hardest hit travel industry will be cruises, followed by resorts, followed by business travel (we've all learned to work remotely better). Vacation rentals will take a hit but will also absorb some of the loss of demand to cruises/resorts.
Consequently, my guess is AirBnB owners aren't hit too long in the medium term (1 year out). Not too much demand hit in rural areas -- and in urban areas they can switch to long-term rentals.
Airbnb would be “going up” if rentals cratered, losing it doesn’t have that many second-order effects. Vacation properties are going to get slaughtered for the next 2 years because no one wants to vacation.
I'm not sure you're assessing the damage that Airbnb inflicts to locals and the lower/middle class in major European cities - which also happen to be touristic hotspots.
> Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate?
So buyer beware does not apply to housing? In case you buy the wrong thing or in the wrong place or the wrong time you just get reimbursed?
what do you think happened during the great depression? People before it got greedy and would buy property and mortgage it to buy the next, and so on and so forth. they were highly leveraged and lost it all because of that. The lucky ones were the ones that didn't mortgage nor collateralize the house they lived in, so they didn't become homeless.
This is fair. A lot of hotel groups have seen their revenue drop 75 to 90 percent. Airbnb was never profitable (I think) and this round of trip cancellations put them deeply in the red.
Why was AirBnB never profitable? How do they even loose anything? All they seemingly do is maintaining a website a small team can maintain. Obviously they also pay for an office, hosting, legal support and ads. I can only see some millions (at most) of expenses per year here. And they are extremely popular, most of the people I meet use AirBnB regularly, they are for short-term living like what Gmail is for e-mail.
Are they refunding booking fees to customers while paying hosts?
Traditional hotels lose money because of huge amount of, costs (both fixed and variable) associated with running a hotel.
shouldn't Airbnb be making so much money at this point?
Edit: "...at this point?" not in reference to the current pandemic, rather at this point of how far Airbnb has come and how they've become a household name all over the world.
Why would they be making lots of money when their business is tanking? Their reservations have more than halved, so that's a huge drop in revenue without much if a drop in costs (unless they fire half their workforce and walk away from half of their office leases).
The opposite: we moderate HN less when YC or YC startups are involved.
Obviously the trust of the community is critical and we would be dumb to risk that.
It doesn't mean that we don't moderate such threads at all, though. We penalized this one the same way we've been penalizing almost every coronavirus story, because if we didn't, HN would have consisted of nothing but coronavirus for the past week. I don't see this story as significant or interesting enough to rise above the threshold. "$Company is losing money" is a dog-bites-man story right now, especially in that industry. No?
If you didn't know this already. "Poor" AirBnb here is simply letting customers cancel their stays without even letting hosts know and is then not paying hosts [1].
Note that a lot of these "hosts" are often small guesthouses that barely make rent and now have basically nothing for the next months. Of course you have your fair share of "rent hackers" on AirBnb but beyond that a lot of people run genuine small businesses around the platform and care a lot about their guests.
Weren't they already losing money prior to this? Seems like a lot of companies are attributing losses to the Coronavirus masking the actual problem behind it all.
We recently bought a small condo in Portland for our weekend use and as we were shopping around it seemed like the whole Airbnb-triggered rental market was already hopelessly overheated. With the capacity that's there I can't imagine occupancy rates averaged over the year being worth it for the condo owners. I'm guessing there will be a glut of condos available after the virus, many of them in foreclosure.
I'm not very surprised, most of the travel industry is getting hit hard. On a side note, I had a very bad experience with Airbnb. I found out, because it happened to me, that they remove negative reviews of hosts. I lot of the rating on their site are goosed.
It will be interesting to see what happens to all these VC-backed companies that have been losing money for years and are still not profitable.
When the VC money runs out not even government bailouts will help. Helping money-losing companies to lose more money isn't in the interest of a government unless they are essential to the rest of the economy or national security.
Maybe the bay area will be hit much harder than other companies.
A lot of the herd will be thinned out for sure. Customers of ours are starting to lay folks off.
Ultimately, it's a question of how long and deep the downturn is. A couple of months and VC-backed companies already losing money may be ok. A couple of quarters and you'll see a lot go belly-up depending on who they sell to.
They've massively overbuilt their product, and I'm sure wasted millions in the process.
I recently booked and I had to actively avoid CTAs for things I wanted nothing to do with: tours, food offers, I don't even know. Finding a place to rent practically meant looking below the fold.
Also, pretty sure they developed their own fonts and I shudder to think what they paid for the new utero-logo.
Isn't it hilarious looking back, people were making the argument "In the next recesion co-working spaces are going to explode as a great way of managing costs". Turns out... maybe not this recession.
[+] [-] chadmeister|6 years ago|reply
Edit: Look, I'm all for affordable housing, but when viewing this within the context of a looming recession and potential financial crisis I can assure you that the last thing you want to do is add in a potential amplifier to a housing market crash. Houses may get cheaper, but everyone is going to suffer in very difficult to imagine ways. Corporate debt markets are looking scary as hell right now. If you threw a housing market meltdown at it right now, we could easily be looking at something much much worse than what we saw in '08.
[+] [-] tylerchilds|6 years ago|reply
If people buying houses to rent on Airbnb artificially inflated the housing market, it's just a necessary correction and federal support would be a mistake.
[+] [-] cactus2093|6 years ago|reply
One possibility would have been to take advantage of the boom times and strong economy over the past decade, and build lots of housing to support the huge influx of new jobs created in big cities. Make our prosperous cities actually feel prosperous, and accessible to anyone who wants access to opportunities. Creating this world would inherently mean that housing is not nearly as good of a capital investment for individuals. That would make property owners less vulnerable in an economic downturn. Low risk for low (financial) reward. But the public has and continues to overwhelming reject this option.
Another possibility, is that we could have gone a very long time without a downturn, and let our housing values just increasingly get more and more expensive with no upper limit. This is clearly the path most homeowners were hoping for. It creates a more and more stratified society, where only the very wealthy and the very few lucky subsidized-housing lottery winners can live in or near prosperous cities. We're already there in many places, and it certainly would only keep getting more and more extreme if unchecked.
And then there's the new scenario you suggest and that we may be approaching - a major crash that will lower prices that have grown unchecked for a long time.
I would have really, really liked to see the first option. Maybe one day we will. But since that's off the table for the foreseeable future and the only remaining possibilities are the 2nd or 3rd options, it seems like a major correction in the housing market is the preferable one. Obviously the coronavirus outbreak itself where many people might get sick or die is terrible, and I really hope that the shelter in place measures will be effective to stop the spread. And I feel for people that are losing their jobs at this time. But as far as just the impact on the housing market, this correction may turn out to be a good thing for the majority of the population who are not wealthy homeowners. It could transfer a lot wealth from the older generations to the younger ones, whereas our society has been doing the extreme opposite for a long time now.
[+] [-] ukabwlsbeux|6 years ago|reply
[+] [-] ss2003|6 years ago|reply
[+] [-] mschuster91|6 years ago|reply
Oh I (living in Munich) hope for AirBnB going belly up. This will free a LOT of apartments back to normal rental markets. The rental markets won't be "hit" at all, the landlords will only lose the difference between "30 days of rent at AirBnB prices" and "30 days of rent at market value".
The winners will be those priced of their own home cities by hipsters and the neighbors of current AirBnBs who don't have to suffer from people running, essentially, illegal hotels in their houses - with people abusing apartments for sex orgies/porn sets, mass parties, or simply losing their keys and mashing on the doorbells.
[+] [-] Ar-Curunir|6 years ago|reply
[+] [-] sharkmerry|6 years ago|reply
[+] [-] usaar333|6 years ago|reply
Consequently, my guess is AirBnB owners aren't hit too long in the medium term (1 year out). Not too much demand hit in rural areas -- and in urban areas they can switch to long-term rentals.
[+] [-] agilebyte|6 years ago|reply
[+] [-] awinder|6 years ago|reply
[+] [-] samsonradu|6 years ago|reply
> Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate?
So buyer beware does not apply to housing? In case you buy the wrong thing or in the wrong place or the wrong time you just get reimbursed?
[+] [-] chewz|6 years ago|reply
[+] [-] pwned1|6 years ago|reply
[+] [-] unknown|6 years ago|reply
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[+] [-] compsciphd|6 years ago|reply
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[+] [-] saltedonion|6 years ago|reply
[+] [-] qwerty456127|6 years ago|reply
[+] [-] drwl|6 years ago|reply
Do you have any sources for this?
[+] [-] yesplorer|6 years ago|reply
Are they refunding booking fees to customers while paying hosts?
Traditional hotels lose money because of huge amount of, costs (both fixed and variable) associated with running a hotel.
shouldn't Airbnb be making so much money at this point?
Edit: "...at this point?" not in reference to the current pandemic, rather at this point of how far Airbnb has come and how they've become a household name all over the world.
[+] [-] CydeWeys|6 years ago|reply
[+] [-] listenallyall|6 years ago|reply
[+] [-] dang|6 years ago|reply
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
It doesn't mean that we don't moderate such threads at all, though. We penalized this one the same way we've been penalizing almost every coronavirus story, because if we didn't, HN would have consisted of nothing but coronavirus for the past week. I don't see this story as significant or interesting enough to rise above the threshold. "$Company is losing money" is a dog-bites-man story right now, especially in that industry. No?
[+] [-] hkmurakami|6 years ago|reply
[+] [-] moneymattress|6 years ago|reply
Note that a lot of these "hosts" are often small guesthouses that barely make rent and now have basically nothing for the next months. Of course you have your fair share of "rent hackers" on AirBnb but beyond that a lot of people run genuine small businesses around the platform and care a lot about their guests.
[1] https://www.forbes.com/sites/johnkoetsier/2020/03/15/airbnb-...
[+] [-] imperialdrive|6 years ago|reply
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[+] [-] mrnaught|6 years ago|reply
[+] [-] neonate|6 years ago|reply
[+] [-] foepys|6 years ago|reply
When the VC money runs out not even government bailouts will help. Helping money-losing companies to lose more money isn't in the interest of a government unless they are essential to the rest of the economy or national security.
Maybe the bay area will be hit much harder than other companies.
[+] [-] shartshooter|6 years ago|reply
Ultimately, it's a question of how long and deep the downturn is. A couple of months and VC-backed companies already losing money may be ok. A couple of quarters and you'll see a lot go belly-up depending on who they sell to.
[+] [-] qiqitori|6 years ago|reply
[+] [-] subpixel|6 years ago|reply
I recently booked and I had to actively avoid CTAs for things I wanted nothing to do with: tours, food offers, I don't even know. Finding a place to rent practically meant looking below the fold.
Also, pretty sure they developed their own fonts and I shudder to think what they paid for the new utero-logo.
[+] [-] fbonetti|6 years ago|reply
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