Airbnb and the Upcoming Recession: What to Expect

How to Respond to Negative Airbnb Reviews

As the economy enters a recession, Airbnb hosts may be wondering how this will affect their businesses. 

While the platform saw growth during the last recession in 2008, it’s important to consider that not all properties will see an increase in demand during this time. 

Which properties will be hit the hardest? Which ones might not be affected at all?

Does the market you’re in play a role?

In this video, I provide my thoughts on how I see the next few months and years playing out.

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Expand Transcript

Hey, what’s up guys, in today’s video, we’re gonna be talking about what happened on Airbnb during a recession, we’re going to talk about the impact to Airbnb hosts, we’re going to talk about the impact of travellers, we’re going to just generally talk about what exactly is going to happen, my predictions of what’s going to happen over the next four months, a couple years, as things are obviously not so great economically in the world, and specifically in North America. Where I want to start with that is really talking about the general trend that we’ve seen looking back in the past, because I always say that the past is a really good indicator indication of what’s going to happen in the future. So the best thing that we can use to allow us to predict the future is what happened in the past. And so if you look back to 2008, the last financial crisis, the last time that the North American economy was really in a terrible spot, because we’ve been on a really big run since then. And what really happened there is Airbnb took off. And the reason for that is because fundamentally, Airbnb is a platform that allows people to make additional income, whether it’s from a spare space in their home, or a vacation home they have or an investment property they have Airbnb just fundamentally allows people a different medium through which to make money on their property. And so as a result of that, when more people want to make additional money or need to make additional money, Airbnb tends to grow. And when I say Airbnb tends to grow, I don’t necessarily mean that more people are travelling through Airbnb, we’re going to talk about that a little bit later in the video. But I do mean that more people start hosting. And so what I expect is going to happen over the coming months and years is that we’re going to see an uptick in the growth rate of new people coming on to Airbnb. And we already saw that massively. So it may play a role that we’ve already had a huge run up and a lot of markets where it now they’re starting to get oversaturated. But my prediction is that as more people need to make additional income because times get tighter financially, they’re going to turn to Airbnb as one of the ways that they can do that. And that’s going to show up with more people listing their spare bedrooms and their houses if rent or their mortgage is getting a little bit too much to manage, or more people going and listing their vacation home or their cottage because now suddenly, it’s a little bit more of a liability than they expect it to be a little bit more burdensome than they expect it to be. They’re just overall more people putting properties on Airbnb. But that’s not to say necessarily that those properties are actually going to get booked, and that they’re actually going to be met with additional increases in demand on the travelling side. And actually, that’s likely going to be the opposite of the case and a few different segments of the market. So let’s just look at a few different segments that fare relatively well and fare relatively poorly during tough economic times. Well, the first one that doesn’t do that well, which should be obvious is high end luxury travel. Now, it’s not to say that it completely grinds to a halt, or that there isn’t demand out there for luxury high end properties. But it is to say that some of the more high end more expensive properties are going to be hit the hardest from a recessionary period, when people are just more willing to sacrifice on the luxury high and stay stay in a place that’s maybe just not quite as nice, not quite as high end and pay me a lot less for it. And so if you do have a property that is more high end, you should expect that over the next couple of years here, it’s likely going to be a bit slower than normal. And so as long as you have enough to cover your nest egg to cover your monthly expenses, then that’s a good thing. You want to make sure that with any of those high end properties, you’ve got a lot of buffer room there where you’re not going to be cashflow negative, because obviously that can land you in a tight spot. And so the other thing you can do if you are seeing a decline and you have a more high end property, as you can look at different options for that property, you may decide that you want to rent out longer term, you may decide that you want to rent it out. For a studio space using things like peerspace, you may decide you want to just expand to multiple platforms to get more demand for the property. But you should expect that in a lot of markets, luxury high end properties are going to be taking a hit during a tough economic time. Now, that is also not to say that that’s the case in every single market. In fact, just in a recent video, I analysed some properties in Hawaii. And there are certainly lots of high end properties that are still getting booked up doing exceptionally well. And in my market like Hawaii, for example. Specifically, I saw a huge uptick in demand in 2022. And so it just goes to show that certainly not all travel is dwindling. And not all segments of travel are dwindling. It really does depend on both the macroeconomic factors and the micro economic factors. So you know, honestly, there’s no real true one answer to this question. Now. That’s what I suspect will happen with luxury high end properties. But what about more mid range and lower end properties? Well, lower end properties, more economic properties or economic options such as shared space, something like that they’re typically going to do relatively well because people that are just needing to travel and don’t really want to stay in the highest end place. They’re going to go to those budget options and those really don’t generally get You heavily impacted, the mid range options are where it’s going to be really kind of hit or miss. And that’s why I think that for anyone that has a mid range property that isn’t a shared space, it’s not the cheapest place in town, but it’s not luxury, high end now is really going to be a time when you’re going to be tested. Because there’s fundamentally just a lot of supply there, there’s a lot more mid range properties than high end properties, there’s a lot more options for people to choose from. And so what’s going to happen here is it, there’s still going to be a decent amount of demand for those mid range properties. Because a lot of people that booked those places are already being budget conscious when they booked them. And a lot of the demand that is leaving those high end properties is going to kind of flow into those mid range properties. So there’s still going to be demand there, there just may not be as much demand as it would take to fill up everyone’s listings. And so my prediction is that those mid range type properties, things are going to get even more competitive. And we’re already seeing that happening right now, where a lot of people are calling an Airbnb bus and they’re saying they’re just not getting booked. And even though they haven’t gotten a single booking in several months, and the reality there is that I’ve even seen it play out with some of our properties. And seeing that the ones that we spend the most time working on really optimising dialling in the pricing dialling in the listing itself, those ones get bookings and the ones that were more passive more, you know, laissez faire with, they just tend to not get booked as much. So now is the time for you to really pull up your bootstraps and become a professional host learn the skills to be able to really optimise that listings performance. If you’re serious about generating really good revenue with it over the coming months and years, it’s not going to be a walk in the park like it has been over the last couple years. So that’s why again, checking out this channel, watching their videos upskilling yourself. So you know what it takes to actually perform really well, that’s going to be an absolute game changer. I think it’s gonna be really tough for a lot of people, especially if they’re paying a property manager, or if they’re doing it themselves, and they’re just not really optimising, it’s going to be tough for them to cover their carrying expenses. And we’re going to see some people starting to sell their properties, because they just can’t bring in enough to support owning the property. And that’s unfortunate, but it’s what we’ve been talking about for a number of years on this channel is that you really need to make sure if you’re buying a property as an Airbnb, that you’ve got enough room for margin for error that if things don’t go well, and we end up in a worst case scenario, that you’re never going to be cash flowing negative on the property. And so unfortunately, some hosts are going to be in that position. And those for those of us who are well positioned is gonna be a really great buying opportunity where you can buy properties that are going to be significantly discounted from what they would have sold for a couple of months or a couple of years ago, and that still have really great potential as a short term rental. Guys just want to take a quick break to say that for those of you watching, who want to build cashflow, and long term wealth by purchasing Airbnb ease and short term rental properties, there’s a link in the description down below for a free training, they’ll walk you through my exact strategy for investing successfully in Airbnb as the training walks through the three most important things that you need to know if you want to successfully buy your first or next short term rental property. And again, the link is in the description down below for you to sign up completely free. When you sign up for the training, we’re also going to send you our ROI analysis tool completely free so that you can analyse properties the right way and find properties that will generate amazing returns. Again, the link to sign up is in the description down below. And both the training and the ROI analysis tool are completely free. So overall, if you’re in a luxury, high end property, you want to make sure that you’re optimising things and potentially be willing to lower your price to accommodate for the more constrained budgets that people are going to have. And then if you have a low end, kind of economical listing, really, you’re not going to be too heavily impacted as my prediction, I think things are going to be relatively stable in that part of the market. Though to be fair returns are never all that phenomenal in that type of the market to begin with. That’s more gonna be if you are just, you know, listing a spare space doing something in your own home, that sort of thing. If you happen to be in that mid range, then that’s really the group of people that I think needs to upskill because there is actually a whole lot of opportunity, but you need to have the right skills and the right tools to be able to capitalise on it. So again, check out the trainings, we’ve got linked down description below. Check out the other videos on this channel to learn exactly how to do that. Those are my thoughts I’d love to know yours as well let me know if you agree if you disagree if you think I’m right if you think I’m completely out to lunch with this, let me know in the comments section down below. If you liked this video, if you thought it was insightful or helpful in any way then make sure you hit that like button really does help me out tremendously with growing this channel and getting these videos in front of more people. And last but not least, make sure you hit the subscribe button to stay up to date with the two new videos we post every single week on this channel. That’s all for today. Thanks so much for watching, and we’ll see you in the next one

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