Airbnb has had hoteliers on their heels since inception in 2008, with some estimates suggesting the housing share company takes hundreds of millions of dollars
from the hotel industry each year.
It doesn’t take a crystal ball to see that Airbnb could hugely impact the multifamily industry as well, but for better or worse?
For starters, unverified guests increase security and damage risks for landlords. In response, landlords deploy a variety of solutions to keep tenants from vending their space to unwanted guests, including new clauses in lease agreements, steep fines and even planting digital tracking systems in keys
to ensure they don’t change hands too frequently. Airbnb itself suggests potential hosts obtain permission from their landlords before listing.
But there may be as much opportunity as there is risk in Airbnb for larger multifamily landlords. During a session at the 2015 National Multi Housing Council OPTECH Conference & Exposition last November in San Diego, Jaja Jackson, Airbnb’s head of landlord partnerships, sought to address a number of the multifamily industry’s chief concerns
after announcing the firm was currently testing a pilot program in California.
Jackson’s scenario consists of landlords and tenants cooperating, with a percentage-based fee being paid to landlords from tenants. Everyone walks away happy. Maybe.
In one version of that story, Airbnb gets hurt most. When fees for the seller increase, they typically do for the buyer too. If housing-share prices were to approach hotel prices, hotels will win with nearly every consumer because they are dependably safer and cleaner. Moreover, tenants who choose not to list on Airbnb—or rather, tenants intending to use their units exclusively as residences—likely won’t be happy if the volume of itinerants gets too high. Both safety, and a sense of ‘community,’ come into question.
But if landlords choose to cooperate, why not simply cut out tenants all together? To be sure, any landlord listing all units in a 100+ unit building would a) have a tough time generating enough demand and b) get pounced on by one or (even more likely) several governmental regulatory authorities. Hotels, after all, operate under a whole different set of regulations.
Obviously, listing a whole building on Airbnb isn’t viable, but what about a small portion of the units? New communities strategically staggering their lease ups, or communities below their optimal occupancies, could reap a benefit here. Local economies do too when you consider that an empty unit can’t dine out at ground floor retail.
Some back of the envelope math makes a compelling argument. I took a look at Airbnb listings across several markets and compared them to 1 BR apartment listings on Apartments.com within two blocks (based on pin placements—note that Airbnb is approximate). This is using base rates for Airbnb. It does not include holidays or peak occasions (such as Christmas, or Mardi Gras in New Orleans).
The first landlord bold enough to venture into this kind of commerce will surely come under scrutiny, as will the line between apartment community and hotel. But if regulatory authorities permit landlords to list a small portion of their units on Airbnb, everyone—minus the hotel industry—stands to benefit.