How Airbnb Is Crushing Retirees Eager for Rental Income
Hosts refusing to use its Instant Book feature are seeing earnings dwindle
(A longer version of this article originally appeared on Deborahjacobs.com.)
An Airbnb policy, designed in part to combat racial and ethnic discrimination against travelers, has, in effect, discriminated against homeowners eager to earn money through Airbnb by renting out their residences. Among those feeling the pinch: retirees and people nearing retirement who’d planned to use income from Airbnb rentals to supplement savings, cover unexpected expenses or make up for reduced earning power in a world that is inhospitable to older workers.
Those opportunities were derailed or substantially curtailed after Airbnb rolled out a feature known as Instant Book. It lets guests (as they are called in the company’s parlance) book automatically, without prior approval by the host. Since introducing Instant Book in 2015, Airbnb has stepped up the pressure on homeowners to use this system. For example, New York City hosts who signed on to Airbnb last November to update the calendar for their listings received this message from the company: “Last month, New York hosts who let guests book instantly got up to 245% more views.”
An Airbnb System That Puts Some Hosts at a Disadvantage
The flip side is that hosts who want to vet their prospective renters and elect not to enable Instant Book, have seen their Airbnb rentals dwindle or evaporate. That’s because the Airbnb algorithm, which determines the company’s search rankings, prioritizes listings that allow Instant Book. Details are proprietary, but as an Airbnb host, my experience with the platform (plus interviews with other hosts on three continents) suggests that those who decline Instant Book are now operating at a noticeable disadvantage.
Generally speaking, unless a host has enough prior guests and positive ratings to offset the substantial weight given to Instant Book, his or her rank drops so low in Airbnb search results that prospective guests are not likely to find the listing. (Airbnb did not respond to my request for comment for this article.)
Loretta Egan, an “over 60” Australian TV and film costume designer, and her husband live in New South Wales and for the past five years have rented their sunny studio in Bondi Beach (a Sydney suburb) via Airbnb. Though multiple bookings and five-star reviews earned her “Superhost” status — a designation that applies to only about 7 percent of Airbnb hosts — Egan says that since declining to use Instant Book, she has had very few inquiries, requests or bookings.
Why This Retired Journalist Won't Use Instant Book
Nanine Alexander, 69, is a retired American journalist who now attends the Barcelona Academy of Art. Her Airbnb listing is for a private room and bath, with kitchen and living room privileges, in her 1,000-square-foot Barcelona condominium. “The idea that I would do Instant Book is crazy,” says Alexander.
Instead, she requires prospective guests to post a clear headshot on their Airbnb profile; she won’t accept a caricature, photo of the family pet or fuzzy beach panorama that some people use instead. And she wants to see at least one positive review from a prior Airbnb host or a LinkedIn profile that establishes the person as a “solid citizen.” For one last check, her wife, Tamsen Wassell, 61, a management consultant, meets prospective guests at the bus stop or train station. Airbnb lets hosts turn away people they aren’t comfortable with in person; so far, Alexander hasn’t had to do that.
In a search for private rooms in Barcelona, Alexander’s listing still shows up on the first page, but only after an Airbnb users eliminates Instant Book as a filter. Travelers who aren’t fluent with the Airbnb platform may not be sophisticated enough to do that. Despite Alexander’s strong track record on Airbnb (47 five-star reviews from guests), she, too, has had a decline in bookings since ignoring Airbnb’s e-mails urging her to use Instant Book.
To pinpoint the shift, Alexander reviewed her records for 2014 to 2017, looking for seasonal patterns. After a steady stream of three or four guests per month from June through September in the first three years, she says, bookings “dropped off a cliff” the summer of 2017. Last year, she had three guests per month in May and June, but only one a month in July, August and September.
Substantial Hardship to Some Airbnb Hosts
The decline in revenues from Instant Book can pose a substantial hardship to some hosts.
Simone Wallace, a retiree in Venice, Calif., spent $60,000 to convert two rooms of her three-bedroom house into a studio apartment with a separate entrance for Airbnb. She’d been on track to recover that investment within three years, after which she expected her venture would become profitable. But as Airbnb increased pressure to use Instant Book, interest in her property declined. In 2016, Wallace, 72, received several inquiries a week and was typically booked two months in advance, but after not allowing Instant Book, she didn’t get a single inquiry during the November 2017.
“I never made a lot of money during my professional career,” says Wallace, who co-owned a community feminist bookstore for nearly three decades and then taught English as a second language. “I need this annual revenue to stay in my home.”
The Effect on This Writer's Financial Planning
Instant Book has also profoundly affected my own financial planning.
In the autumn of 2015 and 2016, my retired husband, Ken, and I (then 63 and 59, respectively) rented out our Brooklyn townhouse for three months — once through Airbnb and once through competitor HomeAway (which also owns VRBO). The proceeds completely covered our expenses as we spent three months of each year in France while I wrote a book about living on both sides of the sharing economy.
Between trips, we carefully vetted prospective guests who contacted us, turning away a couple of scamsters whose criminal records we uncovered and a movie producer who thought it would be great to have his crew work in our historic limestone.
I shudder to think what might have happened with Instant Book.
In 2017, as Airbnb pushed Instant Book more aggressively, our game plan to use rental income to finance foreign travel fell apart: We did not have a single inquiry from Airbnb or from HomeAway, which also installed Instant Book.
We went to France anyway last fall and found other ways to make the trip pay for itself. Since then, we’ve adopted Plan B: cultivating relationships with real estate agents to help us find tenants, rather than relying on homesharing websites.