Short-term rental services Airbnb and Vrbo are seeing business evaporate in Canada as travel has all but stopped and several provinces have restricted the use of their services due to the pandemic.
The number of new bookings across the country on Airbnb and Vrbo dropped from 72,000 in February to 23,000 in early April, according to new data from AirDNA, a research firm for real estate investors and property managers.
The country’s major Airbnb markets took a big hit, with revenue in Toronto and Vancouver sinking nearly 70 per cent over the past three months, and declining 42 per cent in Montreal, according to AirDNA. New bookings in the three cities were down between 55 per cent and 67 per cent from late February to late March.
“This drop in new bookings shows the extent to which travelers aren’t willing to make future plans considering the unpredictable nature of the pandemic, and as well as how the crisis might have a lasting effect on hosts’ short-term rental calendars,” Scott Shatford, AirDNA’s chief executive, said in an e-mail.
Industry watchers say the decline could lead some property owners to put their short-term units on the long-term rental market – which could cause rents in major cities to ease – or put them up for sale.
“We are seeing people who were Airbnb investors deciding to just ditch it and go onto something else,” said Carl Langschmidt, owner of brokerage condos.ca, who noticed one Airbnb host list her property this week.
The collapse in travel has slammed the accommodation industry. More than half the hotels in Canada have temporarily closed, and upward of 200,000 jobs have disappeared. The travel industry has been calling for government aid. Airbnb sent Ottawa a letter in March asking for tax relief and employment benefits for its hosts.
Airbnb said on Friday that there has not been any meaningful change to its supply in its major markets. It said hosts are accepting longer-term stays and many are providing discounts for stays of one month or longer.
Active Airbnb and Vrbo listings in Canada dropped slightly from 161,000 in February to 148,000 in early April, according to the research company.
With a shortage of housing in major cities and many people unable to afford rent, local governments had already started to restrict short-term rentals. The pandemic triggered further limits in Ontario and Quebec.
Tim Syrianos, a broker with Re/Max Ultimate Realty Inc. in Toronto who used to head the local real estate board, said the city and board have always tried to figure out how many properties were used for Airbnb. “I believe the virus will flush some of the info out,” he said.
He is anticipating that Airbnb and Vrbo hosts will convert their properties to long-term rental or be forced to put them on the market, which is starting to occur.
As well, rental prices in the Toronto area are starting come off their peaks. Mr. Syrianos said he has noticed $50 to $150 discounts on one-bedroom condos and one-bedroom plus den condos.
The slight dip in prices for long-term rentals is occurring as thousands of new condo units and apartments are scheduled to be completed in the greater Toronto area this year. That was expected to provide additional housing and potentially ease rental prices in a city with a vacancy rate of 1.5 per cent. Vancouver and Montreal’s vacancy rates are below 1.5 per cent, according to the country’s national housing agency.
The addition of Airbnb and Vrbo properties could further reduce rents.
“Thousands of housing units have been converted into full-time short-term rental or removed from the rental market," said David Wachsmuth, a McGill University professor who studies the short-term rental market. "To the extent that they are coming back now, that means there is more housing available for people, and that’s going to lower rent and increase the vacancy rate.”
Mr. Wachsmuth is tracking new long-term listings on Craigslist and Kijiji and matching them to Airbnb listings. “A bunch are coming up now that are clearly former Airbnb," he said.
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