We get an weekly email from John Burns, a real estate consulting firm. What caught our eye was their discussion of Airbnb. Key quote:
We recently conducted an apartment feasibility study for a proposed new building where the developer was considering including some units devoted to Airbnb users. Even at conservative assumptions on rental rates and occupancies, the Airbnb apartments were likely to generate more revenue per unit than the standard leased units. Regardless of additional expenses (e.g., household supplies, furniture), it was clear that Airbnb was a viable option to consider.
So basically, a real estate developer in thinking of getting into the Aribnb rental business. As with all real estate businesses, the key factor is location. Quoting again from the email:
The key will be having a location that can tap into the burgeoning Airbnb user stream. The right location will appeal to tourists or business users, have an established Airbnb user pattern, generate strong rates and occupancy levels, not be oversupplied with hotel rooms, and have a favorable political environment.
The email's conclusion is:
We sense a trend developing, especially if the apartment markets soften. Apartment developers—even those building large rental complexes—could set aside a portion of their units as a kind of Airbnb rental pool to maximize revenue and market flexibility.
Interestingly enough, one of my relatives recently purchased a house in Asheville, North Carolina. Their long term plan is to retire there, but in the meantime they are renting the house on Airbnb.
They too did the math and discovered they can make more renting short term to tourists and business people than renting using 1 year leases. They also like the flexibility of being able to reserve a few weeks for themselves each year.
So developers and real estate moguls large and small are seeing the opportunity to create businesses using Airbnb.
And according to the Wall Street Journal's Rent Your Place on Airbnb? The Landlord Wants a Cut developers are even thinking about teaming up their tenants to rent rooms via Airbnb.
This is likely good news for the people who rent Airbnb spaces, but likely not good news for individuals who rent out rooms/apartments part-time.
The reason is larger businesses and professionals will likely win market share versus part-timers and amateurs.
Look at eBay. It started as a flea market for individuals, grew into a marketplace serving very small businesses and individuals and then became dominated by larger firms.
Yes, a lot of small businesses still are successful on eBay. But amateurs and part-timers no longer have a strong position on the site and many have moved elsewhere.
There's already ample proof this shift is happening. For examples, see our article Airbnb Creating Micro Hotel Chains or Fox News' Boutique hotels now listing rooms on Airbnb to fill vacancies
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