How the pandemic tamed Airbnb’s excesses

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Always shunned by visitors, the most touristic European cities are once again becoming affordable for their inhabitants: the fall in Airbnb reservations has lowered rents.

Mayors dreamed of it, the pandemic did it. This is the little miracle of the coronavirus. In a few months he managed to deflate the bubble fueled by Airbnb. The seasonal rental platform between individuals had literally sucked up available accommodation in the most touristic areas, causing the real estate market to rise and city dwellers to flee. With the containment stretching, the uncertainties about travel, many owners have thrown in the towel: they have unsubscribed from the site to rent for the year. When they no longer manage to make their property profitable, some have even sold. In Prague, Airbnb rentals were halved and rental prices fell 8%. In Lisbon, rents fell by 15% between March and December 2020.

Is the mere drop in Airbnb bookings enough to ease the real estate market?

This is the main factor. In the top fifty European cities, the number of accommodations available on Airbnb has fallen by more than 20%. The drop in bookings has been dramatic: -70% for Venice if we compare January 2021 to January 2020. This city which receives 20 million tourists every year has emptied under real estate pressure. Before Covid-19, more than one in ten homes was reserved for tourist rental. Some 60,000 people still live there, 30,000 have withdrawn to the neighborhood because of the inflation of rents. They could come back, provided that the phenomenon of disaffection is lasting, which is not automatic, unless the public authorities intervene.

The mayors of these cities are now hopeful of better controlling the housing supply?

Since last spring, platforms have been obliged to share their data with the Brussels commission. We will know in the spring the number of rentals made and apartments available for the previous year. Twenty European mayors are now asking the committee to be included in the sharing of this data, which would allow them to better monitor the supply of available apartments. In Venice, the inhabitants clearly want empty apartments to be pre-empted by the city to resettle inhabitants.

Is the Airbnb model called into question?

The platform suffered several billion dollars in losses last year, its income fell by 30% but its accounts are already recovering. Compared to traditional hotels, Airbnb has weathered the tourism crisis relatively well by redistributing its offer to the countryside. In Italy, the clientele fled Florence or Venice to go to Sicily. In the UK, Devon has benefited. The platform also surfs on the revival of domestic tourism and on nomadism encouraged by teleworking. Its housing offer continues to grow in several European countries such as France, Germany and Spain. Its model is proving to be rather resilient, favorable to sustainable tourism which could be the new post-Covid trend. As for the cities which were suffocating under tourism, they are today in search of a new model sparing the economic interests and the purchasing power of their inhabitants.

In short

The recovery is starting to be felt in France. GDP should pick up slightly in the first quarter, forecasts the Banque de France. But activity will remain 5% below its pre-crisis level.

Janelle B. Smith

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