Airbnb Eyes Longer-Term Rentals

Airbnb CEO Brian Chesky wants to draw things out — customer stays, that is. He told the Financial Times that next year the company would “go a little bit beyond its core business,” including going beyond its travel roots.

Chesky is specifically looking at longer stays of up to a year. “In this post-pandemic world, there’s this . . . unrecognized market of a month, two months, three months, because people can work from laptops, people are going away for the summer,” he told the paper.

There’s been a lot of rocky news for the company of late. The company’s lawsuit against New York City’s registration rules for short-term rentals was dismissed. Airbnb has removed 59,000 listings at least this year over high fees and fake listing, as the Associated Press reported. Competitors like Hyatt are trying to expand efforts to provide marketplaces of short-term rentals.

It’s not that Airbnb hasn’t tried to expand rental times, which would increase revenue per transaction. Chesky told the FT that in the second quarter of 2023, only 18% of gross nights booked were for stays longer than 30 days.

Longer stays have had some interesting results, like the guest who booked a six-month stay and then refused to leave after April 2022, demanding that the property owner pay her a $100,000 relocation fee.

But such things are minor compared to the larger strategic issues facing Airbnb. To move toward longer-term rentals, only up to a year, sounds in a way like a consumer version of WeWork and some of the problems it faces.

As a middle link in a transaction, Airbnb is a rentier, to use the economic term for a party that makes money by taking a fee between end parties. The company’s search for longer stays brings it into competition with traditional multifamily owners and operators as well as other businesses that have long run extended-stay accommodations.

Airbnb does have strong brand recognition and it has forged partnerships with apartment owners for its rental platform, but it isn’t a landlord. Unless that changes, it will need to gain cooperation from property owners, especially larger ones that might not want individual renters to sublet. Different self-interests of both parties might not align. There might be a point at which there would be little economic sense for the property owner to give up a significant portion of profit to work with a middleman. True disintermediation would put landlords into a disadvantage as it would require them to perform all the marketing and billing activities necessary. But then, Airbnb has convinced landlords to cooperate with them before and it might well again.