Memphis Airbnb hosts getting hit, but optimistic for future
Jeff Bennett checks in on one of his two Airbnb properties on April 11, 2020, in Central Gardens. The properties are losing significant income as they sit vacant due to COVID-19. Bennett is riding out the virus with hopes that he'll be able to rent them out in the near future. (Jim Weber/Daily Memphian)
As COVID-19 keeps recreational travel in a holding pattern, Mid-South Airbnb hosts are collectively losing tens of thousands of dollars in supplemental income a month.
Last month when tourism came to a screeching halt, the largest home-sharing rental platform in the country abruptly announced it was issuing full refunds to all guests with check-in dates between March 14 and May 31.
“On March 11, when the World Health Organization declared a pandemic, we were faced with a dilemma. If we allowed guests to cancel and receive a refund, we knew it could have significant consequences on your livelihood,” wrote Airbnb co-founder and CEO Brian Chesky, in a March 30 email to hosts. “But, we couldn’t have guests and hosts feel pressured to put themselves into unsafe situations and create an additional public health hazard.”
Chesky then apologized to hosts for not forewarning them of the new policy, a significant change from the usual guidelines that allow them to set their own cancellation conditions and fees.
The surprise announcement was just one of several jolts in what’s turning out to be a turbulent year for Airbnb.
According to an April 8 Wall Street Journal report, insiders say the company – which, as of now, plans to go public later this year – is projected to lose $1 billion by the end of June. Its valuation in the private secondary market has dropped from $150 per share last month to less than $90 per share.
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Company executives, however, remain optimistic and continue to assure hosts that “travel will recover,” possibly to their benefit, as post-coronavirus travelers might prefer smaller, private places instead of crowded hotels.
Industry professionals share that optimism.
On April 7, New York-based developer Kenny Lipschutz filed a $2.4 million building permit for his $4.8 million South Main Airbnb project, at 400 S. Main St. in Memphis, which will include 18 Airbnb rental units and three retail spaces.
Meanwhile, more than 1,000 existing area Airbnb properties are now mostly vacant, as some owners take financial hits of up to $6,000 a month.
It’s a stark contrast from the scene last June, when business was booming and CBRE reported that Airbnb supply in Memphis had increased 31.4% and total revenue was up 39.2% during the previous 12-month period.
Jeff Bennett owns two Airbnb rental properties in Central Gardens in M idtown Memphis. Due to COVID-19, he's losing significant income as they sit vacant. His properties are still open to local medical professionals at a discount, but so far he's had no takers. (Jim Weber/Daily Memphian)
“I’m not suffering but yes, I’ve lost money. For April and May, I’ve lost $12,000. June could be another $6,000,” said Jeff Bennett, a Realtor with Hobson Realtors who owns Airbnb rental units in two Central Gardens duplexes. “Those two units that are sitting vacant should each be making $3,000 a month.”
Bennett said he primarily uses his Airbnb revenue to offset his kids’ education expenses.
Currently, he’s participating in Airbnb’s Frontline Stays program, offering his rentals at a discounted rate to local medical professionals who might want to quarantine away from their families. So far, he’s had no takers, despite his Facebook posts advertising the discount.
Downtown, Bridget Mirza’s vacant Airbnb condo is within walking distance from Beale Street. Right now, she’d normally be preparing for her most profitable time of the year, Memphis in May.
“In September 2017, I opened for business and immediately my place was booked. However, when the coronavirus struck, I went from being completely booked to empty. It’s definitely a financial blow,” she said. “Every month we were booked full. For little independent people like me, it’s a wonderful source of income and a great way to meet people from all over the world.”
Wesley Riddle, a small business attorney with the Law Office of Wesley J. Riddle, owns an Airbnb bungalow in the historic Cooper-Young neighborhood, as well as an Airbnb studio cottage behind it.
Like Bennett and Mirza, he and his wife, Mary, are losing monthly booking income, but they also initially invested about $12,000 for renovations, redecorating and other projects to make the units more appealing. In previous years, their properties usually booked out about nine months in advance, particularly during sports events or concerts.
Riddle is encouraging small business owners – including Airbnb hosts – to apply for the new SBA’s Economic Injury Disaster Loan and the COVID-19 Expanded Unemployment to help compensate for their COVID-19 losses, although he admits there’s some uncertainty as to their eligibility and the amount they’d receive.
The current guidelines don’t make those details very clear, he said.
“We fall into a weird category – we’re not really real estate landlords, it’s much more like small hotels. Airbnbs, for example, have a hard time getting underwritten by banks because they don’t fit federal underwriting guidelines,” he said. “I’ve been telling all my clients to just ‘apply, apply, apply.’ The worst thing that can happen is they say, ‘No.’”
Bennett said he also applied for the loan. And he shares the optimism of others who believe Airbnb will eventually make a comeback.
“I think Airbnb is going to be around for a long time,” he said. “It’s a great way to experience the communities that you’re traveling to. It’s a great way to stay in a wonderful neighborhood like Central Gardens, or if I’m traveling to Seattle, I can stay in a cool neighborhood somewhere and do the things that local people do. I love it, people love it, and when this is done, it’s going to be fine.”
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