Rosie (30 years old, Quy Nhon), Duy Anh (27 years old, Da Nang) and Ho Long (Ho Chi Minh City), three Airbnb business owners in Vietnam, shared their business journey before, during and after the pandemic. The information provided a multi-dimensional perspective on the Airbnb accommodation service business market.
STRUGGLE, CUT-DOWN AND CLOSURE OF BUSINESS...
"Before the pandemic, the apartments I managed usually had a room occupancy rate of 70% - 95% per month on Airbnb," Rosie shared. Duy Anh and Ho Long also had a booking rate that was always maintained at 90%. Cancellations were very low, only fluctuating around under 20% or negligible. Most Airbnb business owners were operating smoothly in the accommodation business until the Covid pandemic appeared.
Rosie said: "When the Covid epidemic hit, the booking rate gradually decreased. The peak was the period when Ho Chi Minh City implemented isolation in July-September 2021, the apartments I was running had to completely close and not accept guests." She had to stop operating 28/30 Airbnbs in Ho Chi Minh City with different types such as: homestay, hostel, serviced apartments, luxury apartments,... "Luckily, I handled it by letting guests rent long-term, the landlord also supported a little so it was enough to pay the rent, only a small loss for a few months," she confided.
Rosie promptly grasped and turned the situation around to "survive" during the epidemic.
But not all Airbnb business owners can apply that method to solve the problem. Duy Anh shared that, during the epidemic, there were almost no customers, the situation of room cancellations occurred massively and continuously, forcing him to decide to stop operating all 10 apartments in Da Nang. Meanwhile, in Ho Chi Minh City, Ho Long also had to cut the number of apartments for rent because the booking rate was unprecedentedly low.
Duy Anh was forced to close all of his business apartments because he could not bear the costs during the pandemic.
DIFFICULT PROBLEM: HOW TO RECOVER FROM THE PANDEMIC?
Sharing with reporters, Rosie said: "Everything started to recover to pre-pandemic levels for the two properties I manage since December 2021. Since then, the two properties I operate have always achieved an 80-95% booking rate even though they are only rented on one Airbnb platform." However, currently all three business owners are facing their own difficult problems.
Facing the difficulty of costs is always a constant difficulty for accommodation service business owners. Room rental costs also increased after the pandemic, operating costs including electricity, water, management costs, interior decoration... causing business owners to have headaches. Ho Long said: "After the Covid pandemic, the number of international visitors was less, all costs increased". Therefore, he shifted his focus to the domestic market and reduced the number of apartments for rent.
Duy Anh also pointed out the changes he encountered: "Customers often book rooms closer to the date than before the pandemic. They often come closer to the date and want to get discounts on accommodation services. Consumption trends are also gradually shifting to low and mid-range, with fewer customers booking luxury rooms." He offered three solutions to the difficulties he faced: changing the pricing policy, changing the cancellation policy and supporting policies for customers who need to rent rooms long-term.
Finding staff to clean the rooms before handing them over to customers is also a challenge for Rosie. "This is a key factor in deciding the Airbnb accommodation business. If a new guest arrives and is not satisfied with a room that is not cleaned to their satisfaction, they may leave immediately; or if they stay, they will leave a bad review. No matter how enthusiastic the host is, it cannot be saved," Rosie shared.
Rosie said she has had to change her cleaners no less than 20 times over the past six years.
IS AIRBNB STILL HOT AFTER THE PANDEMIC?
Rosie said she regularly monitors the latest updates on tourism market activities and trends. According to AirDNA's Airbnb booking demand report, she predicts 2023 will be a year of stronger growth than before the pandemic. One-bedroom and two-bedroom apartments continue to be the main investment trend, accounting for the majority of market revenue.
Airbnb Booking Demand Report (May 2018 - February 2023). Source: AirDNA
From a consumer's perspective, Ngoc Thu (23 years old, Hanoi) said: "The last two times I went to Ho Chi Minh City, I chose Airbnb to book accommodation services." She shared that compared to Booking and Agoda, Airbnb gives customers like her more 'quality' options that are more suitable to their needs. She often reads reviews on this platform very carefully before booking a room. "Luckily, the rooms I have rented are quite true to the description and reviews, so I feel quite secure when booking Airbnb," Ngoc Thu shared. She also said that Airbnb will be her next choice when coming to big cities.
Booking Holding, Expedia Group and Airbnb 2021 revenue. Source: Company Reports
In the current OTA (Online Travel Agents) market, Airbnb is ranked 3rd. Compared to its 2 competitors founded in 1996, Airbnb appeared in the market 12 years later but is not inferior to the top 2 OTAs. According to the 2021 report, Airbnb is 5 billion USD and 3.6 billion USD behind Booking Holdings and Expedia Group, respectively.
Total booking value by quarter, Q2.2019-Q2.2021. Source: Company Reports
Marketing spend as a percentage of total revenue for Airbnb, Booking Holdings, and Expedia Group.
However, the "youngest" Airbnb showed an impressive breakthrough after the pandemic, when Airbnb's gross bookings increased by 73% from Q2.2019 to Q2.2022. While that number was 38% for Booking Holdings, and Expedia Group was -8%. More specifically, the marketing costs of the three giants in the OTA segment were inversely proportional to their total booking value. In the first half of 2022, Airbnb spent only 20% of its total revenue on marketing costs, while Booking Holdings and Expedia Group spent more than double, at 41% and 47%, respectively.
Not to mention, the latest quarterly report of the home rental platform Airbnb recorded a 46% increase in net profit compared to the same period in 2021 to $1.2 billion, confirming that the recovery of the tourism industry after the pandemic continues, in the context of inflation occurring in many countries.
Airbnb said it has improved its inventory of available rooms, addressing a top concern for hosts, adding 900,000 active listings year-over-year. This brings the total number of listings available on Airbnb to 6.6 million, an all-time high and up 16% from 2021.
According to the General Department of Tourism, in January this year, the number of international visitors to Vietnam reached more than 871,000, an increase of 23.2% compared to December 2022 and more than 44 times the same period last year. Not only that, the tourism industry also aims to welcome 8 million international visitors this year. This is a great opportunity for Airbnb business people.
From the above signals, it can be seen that Airbnb is still not "hot" yet. When tourism in open countries, plus a solid position in the current market - shown through the data tables above, Airbnb in the near future can still be a "delicious cake" for businesses intending to invest in accommodation services.
