Airbnb's Apartment-Rental Programme Rakes in $7 Million in the First Year
According to data provided to MarketWatch by the company, Airbnb Inc.'s innovative apartment-rental program, known as Airbnb-friendly apartments, generated about $7 million for hosts in its first year.
Launched a year ago, the programme allows renters to sublet their apartments on the Airbnb platform while they are away, with significant apartment owners such as Greystar, UDR Inc., Equity Residential, Starwood Capital Group, and several real estate investment trusts participating in the initiative.
Jesse Stein, Airbnb's Global Head of Real Estate, revealed that the programme currently encompasses about 400 buildings in 40 metro areas. Renters participating in the programme have earned an average of $3,500 in the past year.
"We are actively adding markets every day," Stein stated, expressing Airbnb's anticipation of significant growth and monetization in this new line of business. The platform sees a "massive" opportunity within the U.S., with plans to expand nationally and internationally.
Airbnb is targeting the estimated 45 million units of multifamily properties in the U.S. as of 2022. Despite challenges posed by the pandemic and increased financing costs for landlords, Airbnb aims to assist owners in attracting renters amid heightened competition.
While Airbnb has faced criticism for exacerbating housing crises, especially in cities like New York, Stein contends that the Airbnb-friendly apartment programme provides a solution to surging rental costs. He argues that the initiative does not deplete housing stock but rather contributes to easing the burden on renters.
New York City's crackdown on short-term leisure rentals in September, including those offered by Airbnb, has been described as a "de facto" ban on such businesses. However, Airbnb-friendly apartments continue to operate, providing a potential avenue for hosts to cope with the housing crisis.
In terms of fees, Airbnb typically charges hosts a 3% fee for bookings on its platform, while the apartment-share programme involves a "revenue share" fee paid to landlords, often ranging from 10% to 20%, in addition to the 3% Airbnb fee.
Despite regulatory challenges, Airbnb reported revenue of $3.4 billion in the third quarter, marking an 18% increase from the previous year. The success of the apartment-friendly programme aligns with Airbnb's broader strategy of diversifying its offerings beyond leisure rentals, aiming to attract smaller landlords and condo developers to the platform.
Shares of Airbnb have surged by 71.5% year-to-date, reflecting positive momentum and investor confidence in the company's evolving business model.