The short term rentals sector remains in flux. One trend that is gaining momentum among short term rental companies is a move to mid- and long-term rentals. This is necessary given that travel has halted and many cities have banned the operations of vacation rentals to limit visitors. Will the shift remain after the pandemic?
The wealthy are driving up demand for longer-term temporary stays
Bloomberg reported that affluent Manhattanites are bidding up prices on short-term leases for homes in Greenwich, CT. The demand for short term leases is strong. In March, 53 single-family homes were leased, up from 27 a year earlier. In April, there were 32 lease agreements, up from 14 last year. The average leasing prices are up too. In March, about 25% of the deals were above the asking price. The higher price is to compensate for shorter leases of around 6 months.
Luxury hospitality company D. Alexander has moved to mid-term rentals offering destination isolation packages for one- to three-month stays. The company which launched in 2019 looks to create quality and consistency standards for short term rentals.
Luxury Swiss hospitality company Le Bijou is selling “quarantine apartments” with optional add-ons like in-room health services and personal chefs. CNBC reported that Le Bijou’s CEO Alexander Hubner saw reservations for 14 days or more outpaced the shorter 3-night bookings.
Airbnb Sees Long Term Opportunity in Longer-Term Stays
Airbnb is moving into longer-term stays. These bookings are now prominently featured on its website. From all indications, Airbnb is invested in longer stays beyond the current crisis. Airbnb founder Brian Chesky shared in a recent Masters of Scale podcast why Airbnb is pivoting to longer-term stays.
The next thing is the nature of housing is going to change. With all of this video conferencing, I think we’re starting to realize we don’t have to necessarily be tethered to one city. And so because of that, I think you’re going to see a generation of people that are less tethered to any one city and they’re going to want to live around the world. And so what we’re going to do is provide longer term stays, monthly rentals.
Chesky elaborated on where he thinks the world is going, giving an in-depth insight into Airbnb’s post-pandemic future. [Full podcast transcript here]
I think you have to be anticipating where the world’s going. I think many of us are feeling this longing for a connection. We don’t need all the things we thought we did. But I think the thing that we know we need are people we care about and basic human connection.
But I also think the world is going to change forever. I can’t quite predict how it’s going to change, but I think that all of us are getting a glimpse of a different way to do business and we’re realizing that you can do a lot on video conferencing and Zoom. And so I think that business travel isn’t going to… It’s not going to go away, but it’s going to come back in a very different way. But I also would say what used to be was we would go to work for business, travel for business and often entertain ourselves at home, on screens. And I think that may inverse. I think you may actually see more people doing business on screens, but if you’re on a screen all day, the last thing you want to do is vacation on Zoom. You want to actually get out.
And before this crisis, we brought 2 million people together a day. And I think that when this starts to reconnect once again, we’re going to go back to our very basic mission of bringing people together. And to do that, the first thing we need to do is be really nimble. “We need to be scrappy and we need to simplify. We need to simplify how we’re run, so we can move very, very quickly. And what we’re going to focus on is anything that makes us different.” I told the team, “Let’s make a list of everything we’re doing and at the top of the list, we’re going to double down to the things that make us most different.” What makes us most different are our hosts, the incredible design that we like to focus on, and the basics. And so we want to go back to host and regular people.
And I think the way travel is going to recover is first, I think people are going to take trips that are close to home, destinations of under 300 miles. Next, people are going to want things that are cheap and affordable. In a recession or depression, people want to save money.
And then finally providing experiences in your own city. Restaurants aren’t all coming back online right away. Theaters aren’t all coming back right away. But we have a community of hosts that can offer all sorts of experiences, from concerts in living rooms to outdoor activities to experiencing the animals. We announced yesterday that we launched Online Experiences – another thing we put together in 14 days. We have five Olympians doing Experiences. That’s just kind of what we’re going to be focused on right now. When the world recovers, that’s what we’re going to do, having regular hosts, offering short-term stays, long-term stays, and experiences for people in their own city or people traveling.
In early April we wrote about the demand for quarantine shelter that had contributed to an increase in longer-term bookings. We believe that after this pandemic, consumer work/live behavior will evolve and the desire for rootedness could further erode. This could be a boon for companies that diversify into mid- to longer-term stays.