The coronavirus pandemic has many smaller property owners looking to unload their properties to save money, which could lead to big owners seeing a market ripe with purchasing opportunities, according to a CNBC report.
The companies on the defensive right now also include venture capital-backed rental companies and vacation rental apps like Airbnb.
The U.S. travel economy has taken a decisive $195 billion revenue shortfall since March when the pandemic began, according to CNBC, which cited a report from the U.S. Travel Association. Airbnb has had to lay off almost 2,000 employees and undergone other cost-cutting measures as it raised $2 billion in new debt funding at its $18 billion valuation.
Vacation rental companies, backed by venture capital funds, include names such as Washington state-based Stay Alfred, San Francisco-based Sonder, and Airbnb-backed companies like Zeus Living and Lyric. Stay Alfred announced that it would be shutting down soon, while the other companies all announced layoffs and new debt.
Those kinds of companies, CNBC reported, operate via master leases from apartment buildings, which they use to pay landlords set leases and then use the apartments for their own companies, capturing the difference from the customers who stay there. But the pandemic has eaten away at their business as people cancel vacation plans.
Individual landlords have not been left out of the devastation, either, with CNBC quoting two individuals who rent out properties and, due to the pandemic’s crunch, have plans to sell off those properties.
The companies coming out on top, CNBC reported, include those which shifted their business models ahead of the pandemic’s worst effects. Vector Travel, which furnishes properties, handles marketing and does guest communications for landlords looking at doing short-term rentals, has instead pivoted to mid-term rentals during the pandemic. The company used to allow bookings for up to 29 nights but is now offering up to 90 nights.
The issue also goes the other way, with some former Airbnb hosts jumping ship to market their rental properties by themselves.