Airbnb and its rental companies are putting pressure on travelers around the world to cancel their bookings. What happens to the empty apartments now.
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Many apartments will remain empty in the future.
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Difficult times are ahead for Airbnb rental companies. For example, for the 65-year-old from Zurich, who spoke to the NZZ but wants to remain anonymous: he normally has no difficulty in occupying the almost thirty apartments that he rents out in downtown Zurich, he says. But last week, tenants canceled their stay in droves. In March his apartments were only half full, and he expects occupancy of 25% in April.
He has to reimburse tens of thousands of francs. The expenses continue to run. “I employ two cleaning women who now have to work short-time.” He rented most of the rented apartments himself. Some owners had agreed to pay the rental payments in parts. «I also have savings. Luckily. It could be tight for some smaller landlords, »he says.
The housing market is easing in Dublin
In Dublin, the economist Ronan Lyons made a discovery: In an analysis for the real estate platform Daft.ie, he found that in the center of Dublin many more apartments are offered for rent as normal: in the first weeks of March 2020, Segment of 1- and 2-room apartments 73% more properties advertised than in the same period a year ago. In Dublin, where living space has been scarce for years, this is a sensation. “Everything indicates that these apartments were previously rented as vacation homes,” says Lyons on the phone with the NZZ.
As in many attractive tourist cities, Dublin had made Airbnb responsible for the limited living space. Lyon’s observation reinforces the hope that tenants could benefit if vacation rentals were offered in the long-term market again. But is that realistic?
Barcelona or Zurich in a different situation
Lyons speaks of a small quantity, but definitely
positive effect for Dublin, especially since most of these new offers are either unlimited or limited to one year. “Perhaps not all landlords who are now moving are aware of this – but those who live in an apartment for more than six months get certain property rights,” says Lyons.
There are some indications that the development in Dublin can only be transferred to other cities to a limited extent: compared to Switzerland or Germany, tenant protection in Ireland is still loose. In addition, in Ireland, like in the USA and Great Britain, apartments are often rented furnished. Both make it easier for landlords to quickly switch between short and long-term rentals.
In the short vacation hotspot Barcelona, the landlords are quickly switching to new target groups. Spanish tenancy law allows seasonal time limits. At the request of the NZZ, the real estate platform Idealista writes that there are new offers on the rental market that were previously listed as holiday apartments. Most, however, are only advertised for the coming months.
In Italy, Corona’s emergency regulations are so strict that it is only permitted in exceptional cases to conclude rental contracts at all. Not only is the market for holiday apartments completely frozen, but the entire property market.
Apartments as additional home offices
The Zurich Airbnb entrepreneur does not think about changing his business in the long term. A quarter of the apartments are still occupied. On the one hand, he owes this to long-term tenants who work for banks or technology companies and who had moved in for weeks or months before the Corona crisis. On the other hand, he now offers his apartments for 140 instead of 160 euros as sunny home offices with a view of the Limmat. There is also interest from couples who prefer to avoid something in quarantine times.
Some of these ideas would come up in times of crisis, says Andreas Loepfe, a specialist in real estate management at the University of Zurich: “Hotels and vacation rental companies will focus locally, rent out to people who find their home too tight in these times,” he says on the phone.
“But the number of those who can and want to afford such an extra apartment will by no means be enough to make up for the losses caused by holidaymakers and business travelers,” says Loepfe. If border controls and quarantines reduced tourism for a long time, some companies would go bankrupt and their property would be used differently. However, the share of holiday apartments in Zurich’s living space is around 1 percent overall so low that the rental market will not feel this change.
Airbnb is fighting slump in sales. . .
For Airbnb, however, the effects of the corona crisis are immediate. The “Handelsblatt” reports a halving of sales in Europe: In France, weekly sales fell from more than € 120 million in mid-February to € 55 million at the end of March, in Switzerland from CHF 20 million to CHF 7 million The company earns total sales through commission fees of between 14 and 20%.
The bad numbers threaten the IPO planned for this year. Although Airbnb has only been in the black in two years, 2017 and 2018, it was still one of the top-rated tech startups at the turn of the year. They believed in further growth. Now the ratings have to be corrected downwards. A bad time for the IPO, even if the company is still very liquid. It says it has $ 3 billion in the bank.
. . . and disappointed landlords
But Airbnb will not only take the loss of sales from the Corona crisis with it. Some landlords are also disappointed with the platform’s approach. Airbnb has granted free cancellations until mid-April so that all those who have booked vacations remain loyal to the portal. For some landlords, this measure threatens their existence. The Zurich landlord says: «Airbnb has completely failed. It did not treat the Corona crisis as an exceptional situation, but reimbursed it as if it were a normal flight cancellation without thinking about the landlord. »
Like many landlords, he is annoyed that he is not allowed to suggest that the guests share the expenses. In the future, he wants to increasingly switch to other platforms: “The commissions are higher there, but so are the guarantees,” he says. However, Booking.com has also classified the Corona crisis as force majeure and requires free hotel cancellations. Airbnb competition VRBO, which belongs to Expedia, lets landlords decide whether to refund half or more.
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