COVID-19 hits Airbnb. What now?
The COVID-19 pandemic impacts almost all industries and businesses around the globe. As world-wide travel came to a standstill the effects on the business of Airbnb became visible. In May 2020 Brian Chesky, Co-Founder and CEO of Airbnb, announced that the company will let go 1900 employees, more than 25% of its workforce.
Can Airbnb survive this pandemic? Was this 25% cut really justified or was it an overreaction in the heat of the moment?
Let’s have a look at some real numbers by the example of Airbnb listings for Seattle. Insideairbnb.com is publishing regular snapshots of the website data from airbnb.com. Seattle is a valid choice to look at the numbers not only because it’s a beautiful city, but because the available data for 2019 and 2020 is regularly scraped every month and has the same structure and attributes for this timespan.
What was the impact of COVID-19 to Airbnb?
If you compare the year 2019 with the beginning of 2020 you can see two important developments for Airbnb in Seattle:
First of all the number of listings increased until October 2019. Airbnb was doing good. At the end of the year there is always a slight decline in listings, so nothing to worry about. But with the beginning of the COVID-19 pandemic in January 2020, the number of listings began to fall.
Now let’s have look at the average availability of listings:
As you can see in 2019 there was a drop in availability beginning of February when the weather get’s better. Not in 2020! During the first wave of COVID-19 the availability went up. That means there where no guests looking for rooms in spring!
If you look at the announced prices you can even see a much greater drop at the beginning of the pandemic:
From June 2019 to June 2020 there is a drop in listings of 33.3%, the utilization dropped 7.1% and the announced prices dropped by 7.4%.
That’s some significant impact for Airbnb! There is not enough data to analyze how man listings where really booked or not booked in Seattle. But if you look at the data and think about the rest of the world, it’s obvious that Airbnb experienced a massive drop in revenues in the first half of 2020.
Who is offering a COVID-19 deep cleaning?
There is not much Airbnb or a host can do against a global pandemic. One of the things a host can offer is a COVID-19 deep cleaning compliant with CDC standards. So let’s have a look if this was a thing:
With beginning of March 2020 a deep cleaning was offered in the description of 42 listings. That’s not much. But in June 2020 it was already available at 4.6% if all listings!
Let’s try to find out who is offering this kind of deep cleaning. Which kind of listings are more tending to offer this?
After some investigations you might realized that only the availability (=non-utilization of a listing) is the one major factor for a host to offer a COVID-19 deep cleaning. This is clearly visible with a correlation matrix based on hamming distances:
So, what does it mean? It could mean that only when the utilization is low, the hosts tends to offer a COVID-19 deep cleaning. If the utilization is good, they’ll not offer such a thing.
That’s understandable from a market perspective. You don’t change your product if it’s successful. You keep it as long as you can, especially if the change is expensive.
There is another minor correlation with the number of bedrooms shown. This kind of cleaning is offered more often on “bigger” listings than on smaller ones, which makes sense.
Is a COVID-19 deep cleaning offering helpful for hosts to get a better utilization?
That is one of the more interesting questions for hosts. Does it bring you anything? Does it help to get new guests? Does it increase your revenue?
For this to answer you can compare the availability for listings which offer a COVID-19 deep cleaning and which do not offer this:
As shown the utilization for listings which offer a COVID-19 deep cleaning is somewhat worse than the overall utilization. If you keep this in mind and compare the utilization over time you can see that a deep cleaning is not really helping the host to get a better utilization. The charts look very similar from their respective starting points.
So the answer is no, offering a COVID-19 deep cleaning is not helping you to increase the utilization of your listings. Of course, it helps you and your guests to avoid infections, but it will not increase your revenue at least in Seattle.
So what now?
The COVID-19 pandemic hits Airbnb really hard. In the first half of 2020 the drop in listings, guests, utilizations and revenues had a major impact on hosts and on Airbnb. As shown there is not much the hosts can do for now. A COVID-19 deep cleaning is great, but it’ll not really help your revenues. Airbnb on the other hand is cutting their expenditure. Time will tell if this is enough to get through this pandemic or if the next wave will force fundamental changes to the business model of Airbnb.
Stay safe!
