Could COVID-19 be good for Montreal’s housing crisis? A look at post-crisis Airbnb
By Lou Seltz
Since March, fully furnished listings that “sleep 11” and come with pool tables have materialized on long-term rental sites by the hundreds. And Montreal, one of Canada’s housing markets most impacted by Airbnb, is taking a moment to point its finger and laugh.
While real estate investors of all varieties are nervous about the market, short-term rental operators are facing the most immediate hit as demand for travel shriveled with the spread of stay-at-home orders in March. To the (sometimes humorously viral) outrage of hosts, Airbnb allowed all travellers a full refund for booking cancellations to discourage spread of the virus, largely at the expense of hosts. Beyond the initial shocks of the crisis, Airbnb operators are facing some potentially existential threats.
Shifting Attitudes Toward Travel
First of all, it is unclear how norms around travel will change in the long-term. As tourism rebounds, travellers may be more inclined to trust hotels, with professional cleaning staff and centralized sanitation protocols, more so than informal accommodations. On the other hand, Airbnb’s gradual comeback in recovering China has raised speculation that travellers are more likely to opt for a short-term rental unit than a hotel room adjacent to hundreds of other guests. Additionally, most travellers who use short-term rental platforms as an alternative to hotels do so because of their lower cost, and budget will certainly be an even greater concern in the wake of a COVID-19 recession or depression.
Regardless of whether the hotel industry is better positioned to weather the crisis than the platform economy, experts disagree on the future of the travel industry more broadly. Perhaps pent-up demand for travel will result in a travel boom once lockdowns are lifted, an outlook bolstered by reports of a rise in bookings for mid-summer and fall. There is also a credible argument that tourism won’t rebound as quickly as after other disasters due to the pandemic’s sheer global scale. Or maybe the style of travel will change, with a clear focus on domestic rather than international travel already seen in China. There are also indications the crisis will force consolidation and downsizing in the airline industry, raising the cost of flight travel and further suppressing international travel.
Government Support and Differential Impacts
So far the traditional hospitality sector is reeling alongside Airbnb, although formal hotels are also more likely to be the recipient of government bailouts. While the US has allowed Airbnb hosts to take advantage of COVID-19 relief measures after heavy lobbying from Airbnb, the Quebec government refused the same. And why should those who have profited by avoiding accommodation-sector taxes and often operating illegally have a right to ask the government for small business grants and unemployment insurance? It is hard to justify subsidizing an industry with as many externalities as short-term rentals: undermining the taxpaying hospitality industry, disrupting quiet neighbourhoods, tangibly contributing to the housing crisis.
Government support should clearly be extended to workers forced into precarious ‘sharing economy’ employment in the face of dwindling job security, but most Airbnb operators are not part of this group. It is not precarity that encourages most careers in short-term rentals, only possible for those who already possess significant capital or access to credit. Unlike Uber drivers or TaskRabbit gig workers, the small core of Airbnb hosts who earn the majority of the platform’s revenue are not working-class households, but property management companies and rental arbitrage startups with hundreds or thousands of listings.
Most of Airbnb’s actual working-class hosts occasionally renting a spare room earn very little on the platform. While these hosts are the constant talking point of Airbnb—affording a veneer of sharing economy legitimacy in an escalating fight against municipal regulation—they should not be dramatically affected by temporary changes in Airbnb demand.
On the other hand, small-scale commercial hosts, many of whom have taken out multiple mortgages on properties to rent on Airbnb, may be hit the hardest. Like other sharing economy models such as Uber, Airbnb operates as a hyper-outsourced ‘lean platform.’ Not only is capital outsourced (Airbnb is famously the world’s largest hotel but owns no property), workers are also outsourced, with hosts legally treated independent contractors. By significantly reducing labor costs—avoiding the payment of benefits, overtime, or sick days—the lean platform model offloads risk to workers. If workers are lucky, this risk is also partially transferred to government safety nets. “While Airbnb has in the past asserted that it offers an empowering tool for the middle class,” notes a post from Platform Labor, “the current crisis shows how volatile this ‘solution’ is in practice.”
Larger-scale commercial hosts, many of whom don’t actually own any units, may be more likely to have enough resources, industry connections, and portfolio flexibility to weather the crisis by temporarily leasing in other markets. This crisis is being presented by some Airbnb influencers as a strategic time for short-term rental entrepreneurs to aggressively pitch to cohosting to landlords, whose long-term tenants are increasingly unable to pay their rent. Leasing to hospital staffing companies is another way megahosts are attempting to stay in the short-term market. Airbnb is running a campaign to get hosts to provide their units to medical workers for free or heavily discounted. From anecdotal newspaper reports and posts in mutual aid Facebook groups, it appears to be entirely good-hearted small hosts offering their units in the program, while big-time operators try to capitalize on this new demand. If Airbnb does survive the crisis, it may emerge with listings even more consolidated among financialized megahosts.
The Future of Short-Term Rentals
As of April, Airbnb is trying to keep hosts on the platform by promoting long-term stays, with ‘Monthly stays’ as well as ‘Online Experiences’ given center stage on the site’s homepage. If Airbnb manages to convince renters to look on the site known for its travel accommodation, perhaps it will leave the crisis with a permanent footing in long-term housing, levering this feature in the face of increasing municipal skepticism. While thinly disguised Airbnb units are being noticed on long-term housing sites, consulting firm Airdna reports that long-term and mid-term stays are playing an unprecedented role in filling bookings on Airbnb itself, with half of booked nights in early April part of stays that lasted over two weeks. This demand appears crisis-dependent, with Airbnb used temporarily by essential workers worried about infecting their families, stuck travellers, and those simply seeking refuge away from urban hotspots. Even after the crisis, the role of long-term stays (defined by Airbnb as over 28 days) may also be spatially uneven, with the many listings in remote areas and tourist destinations potentially facing a lack of long-term demand.
Screenshot taken April 28, 2020 from www.airbnb.ca.
Still, Airbnb is clearly facing dramatic losses through the pandemic. One real estate firm told the Wall Street Journal that they have seen a flood of Airbnb property owners nearing foreclosure and desperate to sell, which has brought down overall property values.
A message from Hochelaga-Maisonneuve, one of the new frontiers of Montreal’s financialized gentrification.
In 2019, Montreal’s rental vacancy rate fell to 1.5%, low enough to signal the acute housing crisis that was already clear to renters waiting in lines outside apartment visits and bidding up landlords in desperation. If a chunk of Montreal’s estimated 20,000 listings were returned to long-term housing market, the vacancy rate could shift much closer to the 3% marker of a healthy housing market.