Airbnb Hotspots, Coolspots and London Housing

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Propcision compared over 17,000 Airbnb “actively-managed” listings for entire Studios and One and Two bedroom homes to understand more about the potential impact of Airbnb in London.

On average, short-term rental rates on Airbnb are twice as high as long-term rental rates. Considering that Airbnb landlords absorb costs for utilities, furnishings, and conveniences such as internet and rental flexibility, it is understandable that short-term rental rates are higher. After factoring occupancy rates and potential management fees, some Airbnb landlords may be earning slightly higher than long-term rental rates.

The argument that Airbnb is impacting affordable housing appears tenuous. The number of listings in Greater London areas is exceptionally low and highly unlikely to impact long-term rental rates in the surrounding area.

However, there could be a demonstrable threat to hoteliers. In Central London boroughs, there are over 14,000 “actively-managed” listings for entire Studios, and 1 and 2 bedroom homes. These figures do not include “shared accommodation”, “private room rentals”, and the rental of larger homes in these areas. When looking at figures for all “actively-managed” accommodation types, such as private rooms, shared accommodation and entire homes, the figure rises to over 40,000 listings for all of London – Central and Greater.

Therefore, from a purely economic standpoint, the data supports the argument that Airbnb rentals are impacting the hotel industry and, as a downstream effect, the ability for governments to collect tax revenue associated with the industry. However, for this to happen, one would need to assume that all Airbnb listings are fully-available for rental through-out the year and have over 85 percent year round occupancy rates. The nature of Airbnb listings is that most listings are “seasonal” and “occasional” thus not offered consistently throughout the year. Therefore, difficult to quantify the impact.

Certainly, seasonal and occasional Airbnb listings for concentrated areas near exhibitions centres, such as Excel Exhibition Centre, and seasonal events, as well as Wimbledon could draw guests away from registered hotels and B&Bs.

Whilst there are a number of other issues associated with Airbnb rentals that are outside the scope of this analysis, at the very least the figures shed light on quantifying recent arguments for, and against, the disruptive technology and associated effects.

Newham, Merton, Southwark and Camden offer the best returns over a long-term rental.

A 2-bedroom flat in Newham on Airbnb potentially generates 2.57 times more than the long-term rental of a 2-bedroom flat in the same area. Excel Exhibition Centre appears to be attracting short-term guests.

Merton comes in second where a 2-bedroom flat potentially generates 2.55 times more than a long-term rental of a 2-bedroom flat in the same area. Merton is home to Wimbledon where a seasonal crowd gathers. Rates could be seasonally-inflated for the tennis match with opportunist homeowners only making homes/flats available during the season thereby skewing data for entire borough.

Third is Southwark where a 2-bedroom flat listed on Airbnb potentially achieves nearly 2.41 times more than the long-term rental income of a 2-bedroom flat in the same area. Southwark is conveniently-located and offers many attractions for tourists.

And, neck-to-neck with Southwark is Camden where a Studio listed on Airbnb potentially achieves nearly 2.4 times more than the long-term rental of a Studio in the same area. Camden, too, is also conveniently-located and potentially attracts holiday-lettings all year round.

Given the low number of properties listed on Airbnb in Greater London boroughs, it would be highly unlikely that Airbnb is affecting affordable housing and overall rental rates in those boroughs.

For example, it would be misleading to say that short-term rental rates in Bexley are three times that of long-term rental rates. Data from InsideAirbnb suggests that in all of Bexley, there were less than 20 “actively-managed” Airbnb listings that offered the rental of the entire flat or house.