As the coronavirus pandemic progresses, each passing day brings new policies and rulings that are impacting our global economy in profound ways.
In the past week alone, there have been issuances on border closings and travel bans, mandated closing of schools, businesses, and large gatherings, and an emergency Fed rate cut to help limit the eventual economic slowdown we are sure to feel in the coming weeks and months.
One industry that is being hit especially hard by the coronavirus is the travel industry, including short-term rentals.
Short-term rentals are getting hit hard
Companies like Airbnb and VRBO, who is part of the Expedia Group (NASDAQ: EXPE), are already feeling the effects of COVID-19 with Airbnb seeing a 29% to 96% drop in bookings in areas where the virus outbreak is the highest including New York, Beijing, Shanghai, Tokyo, Seoul, and Rome, according to AirDNA.
A Wall Street analyst states Expedia Group could see as much as a $470 million dollar loss in the first quarter of 2020 alone from the spread of the virus. The canceling of major events such as the Mobile World Congress in Barcelona, Spain, and South by Southwest in Austin, Texas, among others, are leading to millions of dollars in lost revenue and increased cancelations in vacation rentals.
While short-term rentals in large metro areas are seeing huge declines in bookings, some vacation rentals in more rural or remote destinations aren't experiencing as high of a cancelation rate.
While cancelations are spiking now, long-term outlook is positive
As officials continue to urge travel to stop in order to slow the spread of the virus, it's likely future bookings over the next 30 to 60 days will be canceled across urban markets in the United States and the globe.
Alexa Michna, a real estate investor in central Florida, has seen a 20% to 22% decrease in occupancy in March and April for her seven vacation rentals since the outbreak. She expects a slowdown for the next four to eight weeks but hopes to see an increase in bookings after that.
"I think that with all the social distancing in the news, people will rather stay at an Airbnb or Vacation Rental than a hotel when they resume traveling," Michna explained. "I consider this a temporary slowdown in an ever-changing industry and plan to watch and adjust accordingly moving forward."
Vered Raviv Schwarz, COO of short-term property management platform Guesty, which helps hosts automate and run efficient businesses on Airbnb, Booking.com, and other channels, notes: “In the past week, we did see an increase in reservation cancellations in key areas impacted by coronavirus, such as Italy, as well as reservations around event cancellations and restrictions. Currently, we mainly see cancellations and reductions in new reservations for the near future; i.e., in the next 30 days. It’s clear travelers still hope they will be able to proceed with their summer vacations when things are back to normal.”
It's clear consumers, companies, and property owners want the epidemic to be controlled as quickly as possible and are taking the proper measures to contain and reduce the spread of the coronavirus. Hopefully, with the measures being taken, this market can recover in a short period, but only time will tell. For now, the industry will continue to take the hit, hoping for a speedy recovery and a thriving summer and fall.