A Tale of Two Continents: Airbnb’s Aussie Triumph Vs. American Turbulence

Maria Irene

Airbnb, the global giant in vacation rentals, seems to be experiencing a geographical split in its fortunes. Recent data indicates a strong upsurge in profitability in Australia, contrasting a concerning dip in revenues in cities across North America.

In the “Land Down Under”, Western Australia leads the pack with the suburb of Wanneroo boasting an average profit of $5,885 per month for homeowners renting out their properties on Airbnb, translating into a profit margin of 69%. Victoria’s Mount Martha, South Australia’s Nuriootpa, and New South Wales’ Coffs Harbour also join the list of profitable suburbs for homeowners. However, Tasmania trails behind, with George Town generating an average of just $1,583 per month from Airbnb listings.

On the renters’ front, an 11% increase in median asking rents in February 2023, as compared to the same period last year, correlates with a significant profitability surge for renters subletting on Airbnb. Mount Martha in Victoria, Lyndoch in South Australia, and Mosman in New South Wales emerged as the most profitable suburbs for such renters.

The profitability calculations take into account an assumed occupancy rate of 50%, a 3% hosting fee for Airbnb, and an ongoing homeowner’s mortgage payment at the discounted variable interest rate for investors of 6.95% in May 2023.

On the other side of the Pacific, however, the outlook seems less sunny for Airbnb. The company’s revenues have fallen nearly 50% in American cities like Phoenix and Austin, which might spur a wave of forced selling from Airbnb owners grappling with the revenue collapse. External observers attribute this trend to factors such as reduced disposable income, maxed out credit cards, and the overarching cost of living, including steep prices for groceries and high average monthly car payments and house mortgages.

Despite the turbulence, Airbnb has shown resilience, bouncing back from 2020 losses with a 280.2% increase in net income in 2021. Airbnb’s Q2 2022 corporate revenue was reported to be $2.104 billion, albeit a 34.3% decrease in the company’s value since the start of the year. The average Airbnb host in the U.S. earned $13,800 in 2021, and the average Airbnb rental was booked for 21 nights per month.

Yet, Airbnb has not emerged unscathed from the competition. Rival platforms like Booking Holdings and Expedia Group have surpassed Airbnb’s 2022 Q1 revenue by 78.6% and 49.0% respectively.

As Airbnb navigates the rough waters of the American market and the more welcoming currents in Australia, the company’s future performance will be closely watched by hosts, guests, and investors alike. The contrasting fortunes on both continents highlight the impact of regional economic factors and the need for Airbnb to adapt to the unique challenges in each market.

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Maria Irene
Maria Irenehttp://ledgerlife.io/
Maria Irene is a multi-faceted journalist with a focus on various domains including Cryptocurrency, NFTs, Real Estate, Energy, and Macroeconomics. With over a year of experience, she has produced an array of video content, news stories, and in-depth analyses. Her journalistic endeavours also involve a detailed exploration of the Australia-India partnership, pinpointing avenues for mutual collaboration. In addition to her work in journalism, Maria crafts easily digestible financial content for a specialised platform, demystifying complex economic theories for the layperson. She holds a strong belief that journalism should go beyond mere reporting; it should instigate meaningful discussions and effect change by spotlighting vital global issues. Committed to enriching public discourse, Maria aims to keep her audience not just well-informed, but also actively engaged across various platforms, encouraging them to partake in crucial global conversations.

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