It’s been nearly ten years since the launch of AirBnB, and five years since it arrived in Australia.
Much like Uber before it, the home-sharing platform’s grand promise to democratise the hotel and holiday rental market has brought with it a lot of problems – especially for hosts’ neighbours, bodies corporate, real estate agents, and of course onsite managers.
We decided to explore onsite managers’ sentiment around AirBnB, so we reached out to our members and asked them to share their thoughts and concerns.
This article is the first in the series. To kick things off, we looked at the pro-AirBnB side: those who have found themselves accepting – or embracing – the sharing economy.
Some background
The case for AirBnB varies as much as onsite managers’ letting pools.
They may operate in residential complexes, mixed-use properties or dedicated short-term accommodation. And they may be in a tourism hotspot (e.g. inner-city or other high-demand destinations) or somewhere with a mainly residential profile.
Adding to the mix, it’s sometimes the owner who pushes for AirBnB, but it’s sometimes the manager, or it’s a mutual decision.
There’s no one-size-fits-all definition, but for the purposes of this article, we’ll focus on the common factors influencing onsite managers to use AirBnB.
With the above disclaimer in mind, let’s look at what our respondents told us.
The bottom line
There’s no delicate way to say it, so let’s be frank: this whole thing is mostly about money.
Consider for a moment that there are twice as many AirBnB listings in Bondi and Kirribilli than normal rental listings. This isn’t homesharing any more than Uber is carpooling.
Managers live under the constant threat of losing tenants off their rental roll, and this means they have to innovate if they want to stay above water.
AirBnB is a readily available revenue stream, and there’s nothing wrong with managers acknowledging that. Property investing and management are, after all, profit-based endeavours.
Let’s explore how exactly AirBnB helps managers’ bottom line.
It’s what owners want
Owner churn is a common thread in almost all the responses we received.
Jonathan, who manages a large residential complex in the Newstead area in Brisbane’s inner east, wrote, “The risk of losing business makes us hustle to find a way to keep it. In my situation AirBnB was the answer, and it worked out well.”
Another manager (let’s call her “Beth) who runs a mixed pool (short term, with some rental) near the Brisbane CBD said she had already lost a number of owners, who moved to dedicated AirBnB-only agents.
In her own words, she “hates the idea of AirBnB”, but recognises that she needs to get any booking she can if she wants her pool to deliver a return.
A third respondent, from Port Douglas, told us that they do AirBnB because unit owners wanted to get on the bandwagon, so they had little choice but to comply – or lose the account.
But beyond the feeling of having to do AirBnB to placate owners, there is a silver lining in that it seems to end up bringing more guests in.
It fills vacancies
Beth uses AirBnB on a needs basis as a supplementary source of revenue, and it appears to work for her.
“As a trial, I have placed three listings up for units in my short-term pool. I have made $8662 from 21 bookings across 69 nights, averaging $125 per night. But as soon as I have about 10 rooms left, I close the listings and also block out peak periods in the future in advance,” she said.
Similarly, Jonathan told us he started using AirBnB in December 2016 when he had a furnished unit vacant (an all-too-common situation these days, thanks to Brisbane’s oversupply of inner-city units).
The unit was hard to rent as the owner was not willing to meet the market, and the fact that it was furnished was also limiting its appeal.
Although not a fan of AirBnB, Jonathan suggested it to the owner, who agreed as he was highly leveraged and relying on the income to cover his debts. The revenue covered the expenses of the unit (council levies, rates, utilities) with a little left over for the owner. But it wasn’t all plain sailing.
“The management of this was a killer. Dealing with keys, letting guests in, guests being locked out and cleaning the unit after guests vacated really added to my workload,” he said.
“I did not enjoy using it as a platform to rent units as it was more work than I am used to, running a permanent management rights business. But it helped me keep the business.”
Another manager, this time in Maroochydore, painted a positive picture, referring to frequent bookings, generally clean, tidy and friendly guests, and immediate payment. She also found AirBnB’s daily pricing tips helped her better understand and meet the market.
It offers managers some control
Speaking of the market, it’s clear that consumer demands are changing. The demand for AirBnB-style rentals is there, and it’s up to managers to address it.
In the minds of our managers, the only way to stay on top of what’s happening in their letting pools is to be part of it, whether they like it or not.
For example, if owners to decide to start letting their units on AirBnB, there’s nothing an onsite manager can really do about it – and rightfully so. There’s no existing law in Australia that can stop them, but managers may find some success in adding special clauses in new leases to disallow subletting via AirBnB without owners’ consent.
As the representatives of owners and working arm of bodies corporate, managers are uniquely placed to oversee what’s happening in their complexes, and to ensure by-laws are adhered to.
It’s just another platform, so why not?
Brisbane manager Beth thinks that AirBnB is just another tool in an onsite manager’s advertising toolbox – and a more affordable one at that.
In her view, other third-party booking engines can charge upwards of 15% commission, while competing with the very accommodation providers they promote. This leaves managers in a tough spot, as they’re forced to accept whatever they can get from the big travel sites.
The logic is sound; if you’re already doing short-term rentals through a different platform, it makes sense to add another string to your bow.
The bad press is overstated
On the surface, AirBnB guests have a less-than-rosy reputation with onsite managers, but this appears to be confined to the mainly residential locations with high owner-occupier numbers; short-term properties don’t tend to notice the difference.
For example, Jonathan, who we mentioned earlier, told us that the majority guests of were considerate, although there were a few parties, which drew the attention of the body corporate.
However a manager on the Gold Coast’s glitter strip wrote, “I don’t think it’s an issue as they don’t cause any problems. I feel they just want a bed and a roof over their head.”
Beth in Brisbane said that all her AirBnB clients have been great, except one – and she noted that she also gets very few cancellations.
Managers use AirBnB themselves
Onsite managers travel too – and many of our respondents noted that they enjoy using the service as guests.
The AirBnB sales pitch seems to ring true; the personal touch, local knowledge, user-friendly website and homely service are very much real, although as increasing numbers of complete-property listings grows, this image may well decline.
The fact that onsite managers, who you’d imagine would be the last people to endorse AirBnB, are in fact using the service themselves, speaks volumes.
It’s the future
It might sound like a cliché, but it’s true.
AirBnB and other platform-based booking engines are here to stay. This writer doesn’t necessarily agree with the way that AirBnB, Uber and their ilk seem to operate by steamrolling into markets with little concern for existing legislation, but that’s not the point of the article.
The economy is only going to get more digitised and on-demand, and short of lobbying local governments (as suggested here) and asking them to foot the bill for enforcement and regulation, perhaps the best option is to take the path of least resistance: if you can’t beat them, join them.
Laws may eventually catch up (the NSW government’s Options Paper is one example of them at least trying), but that’s what the taxi industry tried, and… well, we all know how that turned out.
Author’s Note: Before commenting below, please note that this piece purposely only looked at the positives of AirBnB, as reported by the managers who wanted to share their thoughts with us. The next article will look at the other side of the argument.