Big rental companies eating up millions in Airbnb revenue

A small group of Airbnb hosts are exerting an increasing amount of control on the short-term rental market in Toronto, Montreal and Vancouver, according to a new report that has crunched the data on Airbnb listings between 2014 and 2017.

There are currently 81,000 active listings in Canada’s three largest cities — 6,500 of those account for 34 percent of total revenue received by all Airbnb hosts.

Researchers at McGill University’s School of Urban Planning are calling those particular listings the “unholy trinity” — short-term rental listings which are full-time (rented out for 60 days or more), entire homes, and multi-listings, meaning that one host manages two or more listings.

“These listings are growing more rapidly than any other category of listings, and in Toronto, their share of total revenue increased by 125 percent in a single year,” said the report, a draft copy of which was obtained by VICE Money.

What’s even more problematic is that a good number of these “unholy trinity” listings are operated not by individuals, but companies that manage hundreds of properties across Toronto, Montreal and Vancouver, often catering to the luxury rental market.

Sonder, for example, is a San-Francisco based company offering what they term a “hometel experience”, geared towards people who “desire the authenticity of peer-to-peer home rentals, plus the dependable elevated services of a hotel.” Sonder has 184 listings on Airbnb in Montreal, generating some $2.45 million in revenue each year.

A company called Toronto Suite Rentals is yet another example of this growing trend in bulk listings — it has 128 Airbnb listings in Toronto, generating $1.34 million in annual revenue. This is in stark contrast to the average revenue individual Airbnb hosts receive — $5,310 per year, per host.

According to the report’s lead author, David Wachsmuth, the Canada Research Chair in Urban Governance at McGill University, Airbnb host revenue is highly concentrated among the most successful hosts — just 10 percent of hosts earn a majority of overall revenue.

Wachsmuth and his colleagues used a consulting firm, Airdna, to “scrape” Airbnb’s public website for data on the number of hosts who use Airbnb, daily asking prices, and details about the kind of space hosts are offering for rent.

They say Airbnb has been “resistant” to undertaking data-sharing agreements, a situation that has made it hard for policymakers and industry experts to assess the extent to which Airbnb is disrupting the rental market.

A secondary issue highlighted in the report is that a majority of Airbnb listings in Toronto, Vancouver and Montreal are full homes rather than private rooms that one can share with the owner.

Moreover, these homes are rented for 60 days or more every year, which reduces the likelihood that it will be rented out to long-term tenants, effectively contributing to the dwindling supply problem in the rental markets of Toronto and Montreal, especially.

“Many neighbourhoods — above all in Montreal — have seen two or three percent of their entire housing stock converted to de facto hotels,” said Wachsmuth.

While this might seem like a negligible number, keep in mind that the vacancy rate in Montreal, that is the number of homes that are available for rent, is a mere 2.8 percent. Airbnb is potentially taking away an equal sum of available housing on the rental market.

The Airbnb Response

“The author of this study has a history of manipulating scraped data to misrepresent Airbnb hosts, the vast majority of whom are middle class Canadian families sharing their homes to earn a bit of additional income to help pay the bills,” Airbnb spokesperson Lindsey Scully told VICE Money.

Scully claims that more than 80 percent of their host community in Toronto, Montreal and Vancouver, share their primary residence, and are doing so “three to four nights each month to earn a modest, supplemental income.”

Indeed, Airbnb frequently touts itself as a company that is “connecting the world” by building a greater sense of community and belonging. The company even named its new logo “Bélo”, an “international variation” of the first four letters of the word belong, according to its Chief Marketing Officer Jonathan Mildenhall.

It’s global advertising campaign featured a single white female on an “eat, pray, love” adventure of sorts, who ends up “finding herself” while living with a Brazilian family. “You can just see how she’s gone from solo to this wonderful sense of belonging. We start off with the uncomfortable truth but we end up with this beautiful celebration of what our brand is,” Mildenhall was quoted as saying.

But the slow commercialization of Airbnb into a platform where just a few hosts generate a majority of revenue by operating hundreds of listings at the same time, is a vast deviation from Airbnb’s apparent mandate of being a “community driven marketplace”.

When asked about the exact number of hosts on Airbnb who list more than 100 properties in Canada overall, Airbnb had no specific response.

“People often overlook that a host can have multiple listings that all refer to the same property. For example a host can share a room in their home when they are home and the entire apartment when they travel,” said Scully.

Wachsmuth claims he is by no means disputing that. “All I’m saying is that increasingly, a smaller number of hosts are accounting for the majority of money and activity on Airbnb, and that moves us very far away from the idea of home-sharing.”

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