Exclusive: Airbnb bookings have been decimated in popular Australian locations, threatening to send overleveraged investors who made a lucrative living from the platform into financial peril.
The flipside is Airbnb super landlords and mum and dad investors who now find themselves over exposed and facing savage cuts to their expected rental income.
New data obtained by nine.com.au has revealed Australian landlords have been hit by precipitous drops in bookings and revenues of more than 70 per cent in Sydney and Melbourne during April, when domestic and international tourism stopped.
Brisbane and the Gold Coast have also been badly affected.
“This is a real problem,” My Housing Market chief economist Dr Andrew Wilson said.
Dr Wilson said many Australians had “taken advantage of higher rentals and become enterprise Airbnb landlords” in what had evolved into a very lucrative venture in recent years.
“It’s a question of how those Airbnb landlords survive this,” he said.
There has been a steep decline in weekly Airbnb revenues across all Australian locations, according to AirDNA, a website that tracks the Airbnb economy. Comparing March 1 to the end of April, Melbourne was down 75 per cent, Sydney 71 per cent, Gold Coast 57 per cent and Brisbane 54 per cent.
A similar trend was reflected in weekly Airbnb reservations for the same time period. Bookings in Melbourne dropped by 72 per cent, Sydney 70 per cent, Brisbane 67 per cent and Gold Coast 51 per cent.
Chris Pettit, a professor of urban science at UNSW’s City Futures Research Centre, said the sudden Airbnb downturn would likely impact Australia’s broader property investment market.
Prof Pettit said the 200,000 Australian listings on Airbnb equated to roughly four per cent of the nation’s total housing market.
He said UNSW research indicated around 80 per cent of the 200,000 Australian listings were investment properties – not traditional holiday lettings.
“That is about six to eight per cent of Australia’s total investment market, which is a fairly reasonable exposure.”
Prof Pettit predicted upper to middle class investors with liquidity would probably fare okay and ride out the storm.
“But those who have leveraged significantly might face some issues and struggle,” he said.
According to Inside Airbnb, another website that tracks the platform, there are five landlords in Sydney who manage more than 100 listings.
Many Australians are linked to dozens and dozens of Airbnb individual listings.
“There will definitely be people who have Airbnb properties as a significant component of their investment portfolio (and) who are going to be exposed and hurting significantly,” Prof Pettit said.
“Some will look at switching (their property) to long-term rentals but their return will be a lot less. They could expect rental returns down 30 to 50 per cent.”
He said the shift from short term Airbnb lets to regular residential was “good news” for liveability in places like Bondi, Byron Bay, Hobart and the CBDs in Melbourne and Sydney.
Prof Pettit said long term residents had been pushed out of popular Australian neighbourhoods by landlords chasing bigger returns in the Airbnb game.
“What looked like a nice little side-earner for those who bought apartments to convert into Airbnb investments … is just gone and it’s finished.”
With international tourism “likely on hold for years”, Dr Wilson predicted Airbnb bookings to remain “subdued if not empty” for some time.
A few months ago Airbnb was valued at $48 billion and heading for a bumper IPO this year.
But the upstart disruptor of the hotel industry has been disrupted by the coronavirus, and the hotly-anticipated IPO may not happen in 2020.
With the travel industry smashed, Airbnb laid off 25 per cent of its workforce earlier this month.
In a letter to employees, chief executive Brian Chesky wrote, “We are collectively living through the most harrowing crisis of our lifetime”.
Airbnb’s Australian country manager Susan Wheeldon told nine.com.au the travel is “resilient in the long-term” and will ultimately recover.
International tourism is estimated to make up around 30 per cent of Australia’s total sector.
“We’re definitely seeing a strong resurgence in people planning trips for later in the year,” she said.
Ms Wheeldon said Airbnb had not seen a “material drop” in the overall number of listings.
In an attempt to shore up the Airbnb economy, the San Francisco tech giant in March set up a US $250 million emergency fund for hosts and US $17 million for superhosts.
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Source: 9News
