Hacker News Reader

Comment by ping_pong | Hacker News Reader

I'm shocked that 2020 revenues will come in only 50% below 2019. I don't think anyone will be travelling for the bulk of this year, especially with the looming threat of potentially getting sick in a foreign country or away from your home.

It will take 5+ years for them to get back the same level of inventory/hosts/customers as they had in 2019. Many hosts will foreclose on their rented properties during 2020 or convert to long-term rentals. Airbnb may lost inventory for multiple years, not just months.

The second wave will be the nail in the coffin for a lot of companies, I think Airbnb is one of them unfortunately.

View on HN

> I'm shocked that 2020 revenues will come in only 50% below 2019

This is a fair point, but it also suggests strongly that a significant minority of their business is month to month rentals, possibly in place of leasing.

And hey, being frank, I wouldn't mind considering going somewhere else for a few months now that I can work remotely for a while.

> a significant minority of their business is month to month rentals

I was wondering about that too. My next-door neighbors vacated their place when the lockdown started, but someone else has been living there. Since they often rent their place on Airbnb for weekends, my assumption has been that this is another Airbnb renter. She's been there for over a month now.

I would too, but the thing holding me back is if the shit hits the fan, and I need to do something like buy a freezer to store extra food, I can't conveniently do that in an Airbnb. And if I somehow get sick, I'm at the mercy of the doctors and hospitals in this foreign land. I'd rather be in my own home with the doctors and hospital system that I'm familiar with. I think more than 50% of people feel this way, which is why I think a 50% cut in revenue is too little, I would say its more like an 80-85% cut in revenue. This is catastrophic for Airbnb.

> I’m at the mercy of the doctors and hospitals in this foreign land

That’s where you can carefully pick the foreign land whose medical system you trust more than your own home country

That would mean that a lot of people would avoid going to the US or other countries where health care is complicated and/or expensive. And I would harbor a guess that travel insurance companies will put in anti-pandemic clauses going forward. That has already started by the way, so who knows what insurers will cover in late 2020.

> This is catastrophic for Airbnb.

They have a functional system. If they can maintain it going on the cheap, they can pull themselves back up. Still, this gives times for alternatives to come and drink their milkshake.

They do have functional infrastructure but their business is suffering a catstrophic shift. As I mention, a lot of the hosts are either going to go into foreclosure or they will convert to long term rentals. A lot of people were buying condos and converting them to Airbnb because the revenues were so predictable. That won't happen in 2020 and 2021. It will take many years for inventory to come back up to 2019 levels and less inventory means less revenues, even if people started to travel again, which also is unlikely in the next couple of years.

I think it’s highly unlikely that an upstart is going to steal a noticeable amount of market share from AirBnb during this pandemic. It would be hard enough during normal times when travel volume is much higher.

If shit hits the fan, there won't be freezers to be bought... they'll get panic purchased instantaneously and, if you did manage to find one for sale, expect it to cost multiple times what you otherwise might have paid.

FYI - They're already gone.

Jeebus how is this possible - is our supply chain that fragile that things like hand sanitizer (that you can make with alcohol + aloe gel) and freezers run out?

Why is there no increased demand-driven supply on these things?

There are plenty of places where you can buy hand sanitizer currently. Any sort of manufacturing takes time to ramp up. There’s a usual demand for freezers and that’s how much is typically made. If everyone decides they want a freezer there’s not enough. Why is this surprising? Sure they may start manufacturing more freezers now, but it’s going to take time and it’s not clear if demand will stay high, so who knows how much will be made. These things continue to be made, so our supply chain is not breaking, it just can’t massively scale up production instantly. I don’t know why this would be surprising.

>Why is there no increased demand-driven supply on these things?

Most American states prohibit price hikes during a disaster, which prevents companies from producing more during high demand.

> Most American states prohibit price hikes during a disaster, which prevents companies from producing more during high demand.

Sorry, but how exactly does that follow?

It's basic microeconomics. Firms produce widgets until the marginal profit they get from the widgets goes down to 0. The marginal profit is based on the marginal cost of producing a widget and the current price of the widget. If the price goes up, the firm can now afford to produce more widgets. If the state introduces price controls to keep the price fixed during increased demand, the company cannot afford to produce more to meet this demand and shortages will result.

Normally shortages lead to increased price in the short term and in the long term lead to increased production and movement to the price equilibrium.

Scenario:

-oil shortage.

-Price is capped at $50/barrel to prevent “price gouging”.

-A bunch of shut down wells that are only profitable at $70+ stay shut down.

Do you see how price caps prevent supply with higher production cost from entering the market?

Yep. Ordered a freezer in March from Costco, delivery scheduled for June.

I think you're missing my point.

To my mind, a freezer is a pretty low priority item if you are trying to mitigate “shit hits the fan” tail risk. You can easily survive without a freezer, and a dependency on a freezer isn’t a good thing in that scenario. Then you just have a bunch of food that’s doing to go bad if the power goes out.

I have no real data, but anecdotally a large number of my peer group (tech folks in NYC) fled the NY Metro Area in March. Those who had (not at-risk) family nearby stayed with family, while others (like myself and my partner) are quarantined in Airbnbs in more remote areas (although still close to a functioning medical system).

It's costing us an arm and a leg, but we've been very fortunate in that we can afford it. We normally live in a high-traffic apartment building with multiple dogs that require walks, so exposure seemed likely (and indeed a doorman later tested positive).

>I wouldn't mind considering going somewhere else for a few months now that I can work remotely for a while.

So... you want to take a holiday during a global pandemic?

I was also thinking about this, but I'm wondering if it's irresponsible. Thoughts?

As someone who's spent a significant amount of time staying in AirBnBs and other transient living, renting month-to-month on AirBnB is a terrible idea unless you're fine paying 2-3x more while AirBnB takes the difference. Also if you show up to the property and aren't satisfied with something (eg. WiFi doesn't work), or need to modify your booked dates, it is extremely difficult to get a refund because AirBnB's customer service is awful (to be fair I last had to deal with them in 2017, so maybe things have improved since then).

The smarter move is to book a 2-3 days and work out a deal with the host.

The current property I'm staying in I originally found on AirBnB for twice the price at which I'm currently paying. And I have the peace of mind of not being locked in to a place for weeks/months in advance since I don't know how long I'll stay here.

I have a potential theory of future revenue for them - as "work from home" becomes more accepted and popular, working vacations or nomadding even within the united states will become a lot more popular for couples looking to get away, singles looking for new locations to try out and even families on trips.

There's been this sweet spot with AirBNB where you can rent a place for 1-2 months for a relatively small monthly premium over a 12-month lease that I've been planning to take full advantage of this year, already having been remote. A lot of AirBNB hosts have started preferring these sorts of arrangements because people are less likely to cause trouble. I can't help but think the AirBNB that replaces hotels might drop by a lot, but the mid-term monthly rentals might bounce back a lot quicker as people become less location dependent on work. I know I absolutely am planning to go somewhere warmer in the winter months.

There's still a huge opportunity in a hassle free monthly rental experience. Month to month through almost any legacy property management company is an absolutely dreadful experience with huge up front deposits and being treated basically like a criminal. I have no idea how big this market is admittedly but its been a very interesting value prop for me.

You might be surprized how many people are "stuck" around the world right now, and are staying in Air B N B's waiting for all the closures to end.

For example Argentina has cancelled ALL plane flights (in/out and domestic) until September.. and unless you have signed authority you can't even drive town to town. So anyone that was travelling there is now stuck, and are essentially forced to rent a place and stay put.

A few friends are caught there, and many others in similar situations around the world.

So Germany basically collected all its citizens that could be found (and that wanted to) around the world back home last month, including chartered airplanes and special permission organized for them to travel to the airport (~200.000 people).

Is that unusual?

https://de.wikipedia.org/wiki/COVID-19-R%C3%BCckholprogramm_...

Lots of countries had repatriation flights like that, but many thousands of people chose not to go, or couldn't make it work for various logistical reasons (they're travelling with a vehicle or a pet or who knows why)

You vastly underestimate how little of a shit is given by Millennial and Gen Z travelers.

Outside of the bubble of Bay Area and North East tech industries, a lot of younger people couldn’t care less, especially when seeing how insanely low the mortality/hospitalization rate is for their age group. Before I get the lecture, I know that them spreading it is also a risk, spare me.

People who think no one is going to travel this summer are deeply deeply entrenched in their preachy sanctimonious echo chamber of friends. Go look at how many young people were having picnics in groups at NYC parks this past weekend and then tell me no ones going to travel this summer. Get real.

Plenty of social media posts in my uni network (23-25 years old right now) on all the cheap deals they are getting.

Is there any early data on current AirBnB price trends in key markets?

I was looking at some listings in Amsterdam and the prices seem really cheap for a weekend at the end of this month.

The inventory seems fairly limited, however. Perhaps hosts are already pulling their properties off the short-term market.

Hosts definitely are pulling properties already - based off stories I've heard/read, many AirBNB hosts were/are overleveraged on their properties and have had to sell or convert to long-term now that their income has dried up, to avoid defaulting.

Further anecdotally, I've been closely following the rental market in my city because I'm looking for a long-term place for August. There's been a noticeable drop in prices, and _huge_ quantities of listings in buildings that were notorious for being "AirBNB hotels". Furthermore, lots of listings are obviously ex-AirBNB units - tells include being only available furnished, only available for ~4 month rentals, descriptions that include "Perfect for your next stay!" or words to that effect, and my favourite: hotel-style "No smoking" cards caught in the listing photos.

> I don't think anyone will be travelling for the bulk of this year, especially with the looming threat of potentially getting sick in a foreign country or away from your home.

I became an Airbnb customer in early April because of the disease. I was consulting for a client away from home, but my hotel room's mini-fridge was not cutting it, so I rented an Airbnb suite which contained a washer, dryer, oven, microwave, freezer and full refrigerator. I go to the supermarket, stock up on food, and don't have to leave for a week.

Airbnb is dead, long live Airbnb. Somebody else will take their place but I'm wondering how publicly traded companies like Booking and Expedia are going to handle this crisis.

I was too, but I have a few friends who own multiple AirBnBs. They are all fully booked with long term renters. Some of them were forced to stay because they have nowhere to go.

So I guess it isn't quite as bad as you'd imagine. I'd guess the purely vacation rentals are suffering, but the ones that were typically business renters could be converted to long term.

I think they're going to poach a ton of business away from hotels once things start opening back up. It's way easier to maintain social distance in an AirBnb (hotels have check-in processes, hallways where you have to pass other guests, etc), and I think more people will be travelling to rural areas where Airbnbs have an advantage.

Yeah but do you trust someone to sanitize their home properly after the previous guest or would you trust a hotel to do that correctly? Thats the question my friend circle has been thinking about...

They're probably about the same in my mind, but I have nothing other than my gut instinct to back this up.

Family-owned restaurants can be clean or dirty, and a corporate chain can be clean or dirty too.

A Hyatt, whether in Delhi, Denver or Dublin will have certain minimum standards, which I would trust more than an Airbnb host in any of these cities.

I trust that I will sanitize it properly vs. a minimum wage housekeeper who prob needs to clean 50 rooms a day. Thats my plan is all airbnb and when I get there will do all the cleaning myself.

I mean it’s just a forecast. I don’t think it will bounce back as quickly as they are forecasting, though.

I was under the impression they were pivoting rather hard into events, to diversify their income streams?

What sort of events would be taking place at this point? I have a friend who works in conferences, and he said his business is 0 now.

I don't understand how AirBnB can pivot to events - the locations managed through their site tend to be quite small... Can you clarify?

I think he was referring to "Experiences" section on Airbnb where you can go surfing, kayaking and stuff like that.

Ah got it, thanks for the clarification. Might be a good way to backfill a portion of lost revenue, but I still don't think travel is going to pick up in Q3/Q4 as much as AirBnB is forecasting.

Only time will tell.

Travel to cities is certainly done for a while. Travelling to rural areas might still have a chance. I have heard of families getting away to cabins in the woods where no human contact was needed. (Of course whether or not that should be allowed is a different conversation.)

I have no idea how big this market is, but I know some people who have fled COVID cities like NYC to spend 2 months in an Airbnb house with a backyard.

People may “travel” within their local area.

Reply on news.ycombinator.com