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Airbnb yields in Melbourne dropping

Discussion in 'General Property Chat' started by geoffw, 5th Oct, 2016.

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  1. geoffw

    geoffw Moderator Staff Member

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  2. albanga

    albanga Well-Known Member

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    Is this a suprise to anyone though? What's property 101? Supply and Demand.
     
  3. Depreciator

    Depreciator Moderator Staff Member

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    I suspect what happens with Airbnb in all markets is that there is a flurry of activity and lots of people jump on board. Then some people start to find it's not as lucrative as they thought it would be and they pull out so a sort of equilibrium is reached. I think Sydney and Melbourne are still going through that exuberant phase. I have heard that the insane number of hosts in Bondi have meant slim pickings for lots of hosts through the winter. The smart ones do longer term rentals during the winter and cash in on short term stuff during the summer.
    My main pad has been on Airbnb now for over 4 years and occupancy would be over 95%, but it's in a part of Sydney that is not as seasonal as the beaches.
     
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  4. Sea Eagles88

    Sea Eagles88 Well-Known Member

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    Even a disruptor like Airnbnb and Uber will hit a wall once the market is flooded with suppliers
     
  5. geoffw

    geoffw Moderator Staff Member

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    With the advantages of hindsight, yes. But I don't recall this having been mentioned as a possibility in previous Airbnb threads.
     
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  6. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Airbnb now has an agreement with Qantas. .. go to the Qantas website and book on there and you get 1 point per dollar spent.

    Re: supply-demand: I think airbnb has gone quite mainstream. There will still be people who haven't used it and there will also be people who have had a bad airbnb experience and have vowed never to use it again.

    I think the guests have changed though.... they used to regularly give gifts, now they don't...
     
  7. geoffw

    geoffw Moderator Staff Member

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  8. albanga

    albanga Well-Known Member

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    Sorry don't frequent the Airbnb threads :p

    The natural next stage in this development is the discounting of hotels to compete as they will feel the hurt more and more as this gets even more highly adopted as a way to travel.

    When hotels start to discount, travelers then get choice and if that choice becomes hotel or Airbnb and the price is similar then what do they choose? Some people will still prefer Airbnb but I know myself personally I would choose hotel everytime.

    My point is that there are three stages at play here. One is what we are seeing right now, the more and more Airbnb supply which has started to effect prices. This will ripple onto stage 2 which will see hotels reduce prices to compete as Airbnb due to all the discounted stock is too attractive for travelers to now ignore. Stage 3 is likely more pain for Airbnb to again reduce costs to become more attractive than hotels.

    My guess would be the pricing will eventually level out with the big winners travelers and the big losers being Airbnb landlords and hotels/motels.

    Now this won't effect everyone. Specialist Airbnb accomodation, Airbnb accomodation in places where there are none or minimal hotels.
    Resort and specialist hotel accomodation.etc

    I imagine the pain will be most felt in inner city capitals where there is an abundance of Airbnb apartments and hotel options.
     
  9. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    I still think Airbnb has an advantage in the bookings of over a week or so (say a week to 3 months), people want a kitchen and someplace more spacious than a hotel room. There is a pretty large demand for longer term stays.

    Secondly, I think Airbnb takes away from backpackers or lower end hotels or from motels. Who wants to stay in a backpackers where you have 4-8 people sleeping per room, shared bathroom when you can stay in a private room in someone's private home typically with your own bathroom for just a bit more money?

    And... I think worldwide travel is a market that is still to get even bigger. More Chinese travelling. This just gives more options to stay.
     
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  10. geoffw

    geoffw Moderator Staff Member

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    There's a couple of different styles of airbnb. One is sharing a house with a host, and one is having the place to yourself. Some hotels advertise themselves on airbnb so it's not mutually exclusive.

    When I travel solo, I prefer airbnb. I enjoy finding out about the place I'm in, what it's like to live there, and what to see. I still have people I stayed with in latin america who I keep in contact with.

    But my wife feels like she's intruding on somebody else's property. For our next trip we are planning some hotels and some exclusive use airbnb.

    There are self catering units available as hotels too so the distinction gets further blurred.

    In some cities hotels have been able to get bylaws introduced to really restrict airbnb. Medellin is one example, where technically units can only be let where the majority of the unit holders approve. Many ignore this.
     
  11. dabbler

    dabbler Well-Known Member

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    I think that is a good point, it can be very awkward in someone elses place.

    Also lot of the places have people who may not be so reliable, also, when you turn up late, that is also awkward.

    When getting a place to yourself, is it really that much cheaper than going to a place with staff or managers full time on site ?
     
  12. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    It's not always about the savings.

    For us - carting around a couple of kids means staying in a house/apartment provides more space. Sometimes there's already toys/books/kids stuff that they play with and there's cooking facilities for us to sort out meals - eating out is usually not an option :-(

    Also - it can provide access to parts of cities/towns that you don't normally experience when staying in hotels.

    Cheers

    Jamie
     
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  13. dabbler

    dabbler Well-Known Member

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    Hi Jamie, understand that.

    I have, way long before AirBNB, hired apartments from professionally run places, so there has to be a money difference, otherwise would go with a normal professional business, myself.
     
  14. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    That's the beauty of choice - different strokes for different folks.

    Last place I stayed at was owned by a travel writer - we shared a cuppa, talked about travel and photography and he gave me some awesome tips on the area. Got to enjoy eggs from his chickens and help ourselves to the veggies in his garden. His kids left out some of their toys and movies for my kids. It was quite lovely.

    He charged more than the Novotel down the road - but I'm reasonably certain that we had a better experience staying at his place than we would have at one of the international franchises closer to town.

    All in all - it's what you feel comfortable with and what you expect out of a trip. I like the homely feel of airbnb and meeting new people (when possible) and I usually (on average) pay more for it - but do usually get a larger place and have had mostly awesome experiences.

    Cheers

    Jamie
     
  15. dabbler

    dabbler Well-Known Member

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    That sounds good. I can see how some like that sort of thing.
     
  16. geoffw

    geoffw Moderator Staff Member

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    I went to Guatemala nearly two years ago. I stayed at an airbnb in the lovely colonial city of Antigua. The couple were also hosting another guest. It was the Day of the Dead in Guatemala, and the couple invited us to go to the nearby Sumpango kite festival. It was a spectacularly colourful event- google pictures. But it wasn't just the event. I was there with people I got along well with, and got to know them. It cost me the price of petrol. One very big guy, and his heavily pregnant wife, in a very small car.

    I've since been back to meet their baby, and keep in touch.

    When I do stay in these places, I really feel that my money is going into the local community, and not going towards a multinational conglomerate. When I do stay in hotels, i prefer the small local ones for the same reason.
     
  17. albanga

    albanga Well-Known Member

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    These are all great examples of the positives that Airbnb offer and I too have had many great expeiences with it. I think these experiences though and the views on which is better doesn't change the economics of the situation.

    More and more people now know there is easy money to be made by using it as a landlord and people now have options. Options means competition and competition means discounting.

    This then has a detrimental effect on the hotel market. This is ripping food directly from their mouths and there is no way they will (CAN) sit back and watch this happen.

    This is not theory, it is fact. Simply ask yourself, when I travelled 5 years ago, where did I stay? How did I find it? Answer in majority of self booked cases will be Hotel/Online site like Expedia. These days those exact questions will be met with a lot of AirBnb thrown in. That answer directly massively effects hotels bottom lines.

    The hotel discounting is already happening, make no mistake about it but when it happens more prevalently I would ask this question. Would more space and a kitchen still be as attractive as say a swimming pool and play centre for the kids, buffet breakfast each day, hotel restaurant discounts and a turn down service....for a similar price?

    And I know there are exempt properties, I am not talking sbout those or scenarios like longer stays. I am talking tourist bread and butter spots.

    All we need now is an uber airline and we could see the world on a months salary.
     
  18. geoffw

    geoffw Moderator Staff Member

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    Airbnb is a disruptor. In just the same way that Uber is a disruptor for the taxi industry. Much of what is being said about the economics of Airbnb is the same as Uber vs taxis.

    Much has been said of supply and demand in terms of the supply of rooms (or taxis). But one thing that will happen when prices drop is that demand goes up. More people will go away for a stay, or will travel, when it becomes cheaper. It's not a zero sum game- although this may take a while to happen. I am more likely to use Uber now in situations I would not have used a taxi.

    Then there's the matter of preferences. Many people will always stay on a hotel. I can't see the luxury hotels losing many customers to Airbnb. In many cases it's not a matter of cost, it's a matter of how people want to stay. I may have started with Airbnb because it was cheaper but now I see it as an alternative style. In some situations I prefer hotel style, and in some Airbnb. (Leaving aside the hotels which put themselves into Airbnb).
     
  19. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Articles like the original post are possibly good for us existing hosts - might keep some new people away from thinking of doing it. Plus it might stop some people from simply buying properties to Airbnb. ;)

    But as an existing host, i'll keep doing it as long as it makes sense. When I first listed, I was concerned I wouldn't get booked but in reality I've really had no occupancy issues.
     
  20. bashworth

    bashworth Well-Known Member

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    The first time we used Airbnb was three years ago in Rome. Twice the room compared with the hotel we were considering at half the price, and a really convenient location. Felt more like we were living in the city than visiting.

    Just returned from 3 weeks in Japan stopping in a range of accommodation. We preferred the Airbnb in Tokyo compared with a professionally run apartment (booked through Agoda) in Osaka.

    We also stayed at a Hotel, smallest space and highest cost.
     
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