AIRBNB TO THE RESCUE OF PROPERTY OVERSUPPLY?

Nothing short of a phenomenon, AirBnb looks like it’s gearing up to conquer the travel supply chain; quite unexpectedly, a positive side effect of that is the rescuing of the property oversupply in some cities.

Text by Jan Yong

Having stayed at nice studio apartments in Osaka, Kyoto and Bangkok and a room in an apartment in Cameron Highlands, Malaysia – all booked via the short-term rental accommodation platform, AirBnb, I have to say they have been pretty mixed experiences so far. Only one of the apartments was actually managed by the owner herself; the rest were managed by hired hands who organised the reception, cleaning and everything else.

A common thread running among all of them was the hassle-free way of getting the key (the so-called reception) and returning the key when ‘checking out’. The most common way to get the key to the apartment was to get it from the mail box which was usually locked with a combination padlock. The padlock combination and a list of instructions on how to deal with the electrical equipment such as the cooker, air conditioner, television remote, and the high-speed WiFi password would have been e-mailed to you once your payment is confirmed at the AirBnb website.

That was how easy it was to rent an AirBnb accommodation.

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WIN-WIN FOR ALL

The road towards more options for guests and home owners via sharing or short-term rental is strewn with strong views for and against. Still, viewed against the larger picture, AirBnb serves many needs and ultimately may be the way to go, just like ridesharing platforms such as Uber, Grab and Didi. It is here to stay with many copycats in each country – just look at the situation in China.

The perception that AirBnB takes away business from hotels is unwarranted as statistics indicate different target markets for the two types of accommodations. Travellers who use AirBnb are typically under 36, stay longer and prefer an experiential stay while hotel guests enjoy the typical hotel ambience, privacy, service and amenities, and typically stay for a shorter period.

For investors who want a piece of the action, leveraging on such home-sharing platforms is perhaps the best thing to happen to the rest estate sector especially one that is experiencing an oversupply situation.

In many cases, the rental income from such short-term tenants exceeds long-term rentals by 2 or 3 times.

Thanks to AirBnb, you already have an online system that makes your accommodation available to travellers from all over the world (free worldwide advertising), guaranteed rental payment through their payment processing system, ready third party dispute resolution system, a review system that rewards good landlords and guests, and even insurance for damaged items in the accommodation.

Finally, despite some states or countries outlawing or attempting to outlaw AirBnB, this disruptive trend is set to continue. There is no stopping the democratisation of short-term stays. For the real estate industry, it means fewer vacant units, more transactions and higher rental income. A win-win for all; and from the point of view of the hotel industry, it forces the latter to keep on innovating and improving to stay ahead.

WHAT A GUEST WANTS …

From the point of view of the guest (which any investor hoping to rent out via AirBnb should know), the most important items are (in order

of importance):

LOCATION

Guests usually don’t have a lot of time, so being near tourist attractions or the transportation hub helps a lot. It also has to be in a quiet location, away from the hustle and bustle yet in the heart of the city. Otherwise, it helps if the AirBnb provider can provide free or subsidized Uber or Grab rides.

COMFORT & CLEANLINESS

A cosy place helps a lot to make the guest feel at home and want to return to stay. You will need at the very least a bed (in Japan, a tatami mat is considered okay), a sofa, TV and most importantly, free Wi Fi access. Also, curtains and paintings (you can buy cheap paintings from Daiso 100- yen stores). Even a low-cost apartment, if furnished luxuriously can fetch a high rental rate provided it is in a sought-after location. The basic rule of thumb is ask yourself if you yourself feel comfortable staying there. Your aim is to get them to be repeat guests or at least highly recommend your accommodation.

FACILITIES INSIDE THE ROOM/ APARTMENT

While outside facilities such as swimming pool and gym are low in priority, you must have at the very least Wi-Fi access. Toilet paper, mirror, cutlery, chairs, and fans (if there is no air-conditioner) are absolute musts. Dining table, chairs, TV, iron, hair-dryer, washing machine, towels, slippers and cooker are optional items.

Getting the above right will help you get a good review – every guest gets to review you too, so a good review goes a long way towards improving your chances at getting more guests in the future. Home-sharing platforms like AirBnb rely on reviews to ensure standards are maintained by the landlord. By the same token, the landlord gets to review the guest as well; a badly behaved guest will find it harder to find AirBnb accommodation in future.

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