2 years ago
2 years ago
Valued at $25.5 billion and responsible for 17 million short-term stays between Memorial Day and Labor Day last summer, Airbnb has proven disruptive in the truest sense of the word for the hospitality industry. Could it do the same to multifamily?
Probably not, but some property owners and managers are still concerned about the prospect of their renters offering strangers short-term stays in their multifamily assets.
Airbnb is aware of these concerns, and according to a recent NMHC article, has been running a ‘listening tour’ of meetings with some of the biggest apartment companies in the country. We’re talking REITs like Equity Residential, AvalonBay and Camden Properties. It turns out this is in preparation for the 2016 launch of a multifamily-specific Airbnb platform, which will be piloted in California.
Many apartment community owners aren’t exactly welcoming Airbnb with open arms. Concerns over short-term rentals in apartment buildings typically boil down to four areas: legal, security, financial and quality of life. NMHC’s Kevin Donnelly writes:
For many in the apartment industry, the short-term rental industry represents a number of threats. First and foremost, apartment owners and managers have legal concerns, as most leases have been written such that short-term rentals are prohibited.
They also have security concerns because they often lack information about which residents are renting out their units and to whom. There is fear over the extra wear and tear on the facilities, as well as potential damages to units and common areas.
Liability is also an issue, as apartment firms do not want to be responsible for anything from the banal like a guest slipping and falling to the extreme like a guest assaulting another resident.
All of these pain points are addressed in Airbnb forthcoming multifamily platform, which will give property managers with more control, transparency — and of course — a share of the revenue. One aspect of the plan is emailing property owners and management companies with upcoming Airbnb activity at their community and a year-to-date summary. This practice is already occurring in Airbnb’s hometown of San Francisco).
Property owners will also have a portal where they can log in and see real time activity at their community.
The revenue component comes from Airbnb’s suggestion that property manager’s charge their residents 5% to 15% in fees/commission on all short-term hosting transactions. Instead of pocketing this change, Airbnb says it’s best practice to put it towards a resident party or a new amenity like a bike repair shop or electric vehicle charging station.
While it’s unclear how property owners will utilize the ancillary income, it remains clear that Airbnb is causing mixed opinions for apartment industry professionals. If you’re interested in this topic, be sure to check out Multifamily Executive’s story published earlier this month.
According to the article, more property owners and managers are warming up to the idea of residents using the service. The real issue is with non-residents renting out units with the sole purpose of ‘subletting’ them with short-term Airbnb visitors. Take what Mark Durakovic, principal officer and vice president of management services at Kass Management Services found last year:
This past summer, we had a group of individuals approach us to rent a group of apartments claiming that it was for ‘company purposes,” Durakovic says. “Immediately, that raises red flags for us, and we were correct; it was a group looking to rent and lease units on Airbnb as a business venture.
Will Airbnb end up as a net benefit for the apartment industry by putting more cash in the pockets of both renters and property owners? Or will the service be more trouble than it’s worth for multifamily owners? Let us know your thoughts in the comments below.
We’ll be keeping tabs on what Airbnb’s multifamily program looks like as the details emerge in upcoming months. Be sure to subscribe to ALEX Chatter updates to stay in the loop.
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