Airbnb: Will Barbie Save The (Disputed) Collapse?
Airbnb (Nasdaq: ABNB) has made headlines again with its latest promotion, bringing back the iconic Barbie-themed hot-pink DreamHouse mansion in Malibu. In partnership with Warner Bros., Airbnb is offering two lucky applicants a chance to enjoy a two-night stay in the luxurious mansion as part of the upcoming comedy film featuring Margot Robbie and Ryan Gosling.
The announcement has garnered attention, but beneath the excitement, concerns arise as new data indicates a drop in rental revenue in major US cities.
According to a tweet by Nick Gerli, CEO of Reventure Consulting, short-term rental data and analytics group AllTheRooms revealed a significant decline in revenue per available listing (RevPAL) across various top US cities. The data, calculated on a three-month-average basis between May 2022 and 2023, showed a staggering 47.6% drop in Sevierville, Tennessee, the hometown of country-music legend Dolly Parton and a popular tourist destination.
Similar declines were observed in Phoenix and Myrtle Beach, with revenue per available listing falling by 46.1% and 45.1% respectively over the one-year period. Even popular Florida destinations, including Panama City and Orlando, experienced a significant decline of nearly 35%.
Gerli drew attention to the vast number of Airbnb and vacation rental listings, estimated to be around 1 million, compared to only 570,000 homes for sale in the US housing market. He suggested that the potential struggles faced by Airbnb owners could result in a “huge home price downside” if they decide to sell their properties.
“What’s scary for the U.S. housing market is just how many Airbnbs there are. Data from AllTheRooms shows 1 million Airbnb/VRBO rentals. Compared to only 570,000 homes for sale,” Gerli said.
The consulting firm chief also pointed out the risk for “newbie” owners who purchased properties at high prices with substantial mortgages, leaving little room for financial flexibility.
However, an Airbnb company spokesperson disputed Gerli’s claims, stating that their own data contradicts the reported decline in revenue.
“The data is not consistent with our own data,” said the spokesperson in a statement. “As we said during our Q1 earnings, more guests are traveling on Airbnb than ever before, with Nights and Experiences Booked growing 19% in Q1 2023 compared to a year ago.”
The figures were contested by Jamie Lane, chief economist and senior vice president of analytics at AirDNA, who presented a more modest decline of 8.4% for Sevierville in a conflicting tweet compared to the 47.6% drop in Gerli’s data.
While concerns about declining rental revenue persist, the US consumer’s appetite for vacationing remains strong. Recent surveys predict a record-breaking number of travelers, exceeding 50 million, during the upcoming Fourth of July holiday. Additionally, total vacation spending for the summer is projected to surpass $200 billion, indicating a shift in consumer spending from goods to experiences.
Back in April, Airbnb’s shares plummeted after a short study suggested that, among other issues, the company’s top hosts have began competing directly with Airbnb on new platforms. In a report by The Bear Cave, amid countless scandals and horror stories, the Airbnb platform has switched towards professionally managed apartments, many of which are now preparing to compete directly with the company.
As Airbnb prepares to report its earnings on August 1, all eyes will be on the company’s performance and whether the concerns surrounding rental revenue will impact its future growth.
Airbnb last traded at $127.63 on the Nasdaq.
Information for this briefing was found via MarketWatch, TastyLive, and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
