By Richard Vaughton
As a former microbiologist (many moons ago), I can’t help but draw comparisons between the rapid rise of short-term rentals and the spread of viral and bacterial diseases. Just as COVID-19 made us acutely aware of viral transmission and infectivity, the proliferation of short-term rentals has swept through cities with a similar, albeit less deadly, impact.
At the recent Your Air Success conference (an excellent event organised by Holiday Cottage Handbook and Your AirHost), I shared a historical overview of the industry pre- and post-1990. It struck me how the growth trajectory of vacation rentals mirrors what I used to see in the lab: a petri dish of bacteria or virus cell culture quietly brewing, followed by exponential expansion once conditions were just right.
In the early days, short-term rentals were a small, niche segment like a single bacterial colony on an untouched agar plate. But then along came Airbnb in 2008, acting as a potent growth factor. The financial crash compounded this, pushing countless properties into the rental market. With low interest rates and the allure of easy profits, everyone jumped on the bandwagon, creating the perfect medium for explosive growth. It was FOMO in cell culture media!
And so, like a bacteria or virus culture hitting the exponential phase, the short-term rental market surged. We saw entire neighbourhoods “infected,” with the online and offline media acting as a hyperactive transmission vector. By the time anyone realised what was happening, it was too late – the industry had gone viral.
The vaccination moment
As with any unchecked growth, there comes a time for intervention. The rise of short-term rentals has been seen by many as an ailment – a strain damaging local ecosystems, economies, and cultures. Enter the regulatory "vaccines": bans, taxes, licensing, and registration schemes rolled out globally in an attempt to curb the spread.
But just like in a pandemic, the effectiveness of these measures is debatable. Vaccines are made by pharmaceutical companies with a vested interest in profit, and here, too, political motives and a lack of data have led to hasty, reactive policies. In a rush to contain the “Airbnb strain,” we’ve seen some severe side effects at local and national levels: oversupply, lower ADRs, and increased costs, all compounded by increased interest rates.
It’s as if the market is now entering a plateau, or perhaps even the “death phase,” in specific destinations unless it can find fresh culture media (or, in this case, continued demand, infrastructure changes and political support.).
What next: adaptation or extinction?
Viruses and bacteria are essential to our ecosystem; they keep things healthy, defensive and evolving. However, when they become pathogenic and spread uncontrolled, chaos ensues. COVID-19 taught us that the key is to immunise against the dangers while harnessing the benefits of good microorganisms.
While not solely responsible for this market upheaval, Airbnb has undeniably played a role in altering the industry’s genetic makeup. Now, like a virus that’s learned a bit of humility or is less infectious or virulent, it appears to be cleaning up its act – promising improved quality, better host connectivity, and safeguards to ensure it doesn't kill off its own host.
As we look to 2025, it feels like the market is stabilising, with determined policymakers eager to stamp their mark on this viral trend. Many properties will drop off, unable to survive the new regulations, higher interest rates and loss of tax benefits. However, just as cultural media can be refreshed for renewed growth, this industry will also find new sources of demand and control.
Ultimately, it’s a lesson in adaptation: evolve or face extinction. And who better to understand that than a former microbiologist?
Richard Vaughton from Yes Consulting is a Holiday Cottage Handbook Columnist.
Richard founded rental technology business Rentivo, which was acquired by Situ. He also exited two property management companies with close to 1,000 rentals. Richard currently works as an advisor for a host of businesses in the short-term rentals world, helping them focus on expansion, mergers and acquisitions, and technology efficiencies.
Now based in the UK, Richard has worked in the Middle East, Italy, and Switzerland during his career, encompassing several industries. He was previously the CEO of a Finnish biotech, service, and diagnostic supply company.
Contact Richard via email: richard@yes.consulting.
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