TLDR

• Due to short-term rental (STR) laws in NYC and Philadelphia, I have had to switch my Airbnb properties to longer-term hosting.

• Better facilitating longer-term furnished housing will keep hosts in markets with STR bans or restrictions using Airbnb

• Scaling better to facilitate longer-term furnished housing, such as corporate housing, is a market that has increased by 12% between 2014 and 2018 and has grown to a $101 billion market compared to the 3% growth of hotels. Corporate housing is only 13% of the furnished housing market.

• Airbnb can add a growth lever to its revenue by gaining a 10% market share in the furnished longer-term housing market such as corporate housing, which equates to adding up to $10.1 billion to its annual revenue based on the 2018 corporate housing market.

Background

I own two Airbnb properties, and I’ve been a Super Host continually since the second evaluation period in 2014. My family and I live in our two-family townhouse in Brooklyn within the duplex unit, and we rent the one-bedroom rental on the ground floor. After short-term rental laws were enacted in NYC, I reinvested profits into buying a 3-bedroom, 1.5-bath townhouse in South Philadelphia located strategically close to the stadiums, the Children’s Hospital, and Universities such as UPenn. Philadelphia also initiated short-term rental regulations two years after I purchased the property, making it difficult for hosts like myself to get a permit. I’m still trying to get a variance to continue short-term hosting, an ongoing process with a lawyer. Due to the changes in laws and difficulties obtaining permits, I have switched both properties to long-term furnished rentals. This strategy does not require changes to the setup of either property. In both places, I tend to host digital nomads, corporate clients, relocating people, or property owners needing a place to stay during remodeling or repairs. I also tend to get construction workers and families with a patient at a local hospital in the Philadelphia market.

The Market Opportunity

I believe Airbnb can add a significant growth lever to its annual revenue by gaining a 10% market share in the monthly furnished housing market, which can add $10 billion to its annual revenue. From 2014 to 2018 alone, corporate housing experienced a 12% combined annual growth rate from $64 billion to $101 billion compared to the 3% hotels experienced in the same timeframe. Of the furnished housing market, corporate housing makes up 13% of the market. I could not get an overall view of long-term furnished housing related to overall market numbers, so I’m using corporate housing as the baseline.

How Will I Know this Effort is a Viable Opportunity? 

Before implementing new product features, I want to do some initial groundwork to be assured that the opportunity is worthwhile. In this regard, I would create a survey and then invite participants to opt into a follow-up focus group or user testing on design prototypes. I would target hosts in markets that have banned short-term rentals or have significantly restricted them. I would also target users who have had extended stays of longer than 30-days. Part of this process will be designed to validate my initial assumptions. I would limit a focus group to no more than 20 of the most intriguing hosts who left the most detailed, engaging feedback. There would be no limit to surveys as I would be able to capture more overall data. 

Personas

Based on my understanding, this is what I know of the personas of an extended stay guest and a host who can no longer host short-term stays.

Long-Term Guest

• Payment/Budget

  • May have a stipend or a monthly budget. When using Airbnb may need to try to negotiate to get a place within their budget and target area.

  • May be a corporate guest where a broker or company is arranging their stay and paying the host

• Amenities

  • May have preferences in amenities to save money such as a full kitchen and in unit laundry.

  • May be a digital nomad working remotely and may need a dedicated workspace and high-speed internet

• Timeline/Schedule: May not have a set schedule, so may have an open-ended end date for their stay.

Host Impacted by STR Laws

• Impact of Laws: Can no longer host short-term guests who are more lucrative due to a change in laws and being unable to get a license. Must host extended guests for at least 28 days. 

• Pro-Tenant Municipalities: May have concerns about hosting longer-term stays in pro-tenant cities due to the arduous process of evicting a tenant who stays for more than a month and stops paying. Needs to feel comfortable trusting long-term tenants, particularly if they will not be signing a lease.

• Converting STR Setup: Are looking for ways to monetize their property. The easiest way is to keep things the same but switch to extended stays or furnished month-to-month rentals. Hosts who make a more permanent change may opt to sell off items and clear their space for tenants who sign an annual lease.

• Off-Platform Rentals: May rent to long-term monthly tenants off-platform using sites such as FurnishedFinder or TurboTenant that help facilitate longer-term stays with lead capture, leases, maintenance, and payment processing.

Survey

These are the segmentation characteristics that I would target for the survey: hosts impacted by STR Bans, hosts now forced to host for 28 days or longer, impacting their income, and top hosts who are less engaged due to STR Bans.

Host Characteristics for Survey

These three buckets would give me the highest probability that a host was impacted negatively by a STR ban and changed how they use the platform. If feasible, I would focus on segmentation number 3, the hosts who were the top-performing hosts before a STR ban and have lost business afterward since they probably add the most value to Airbnb’s bottom line.

With the survey, I would want to learn the following:

• Why have they stopped STR in their market?

• What does the status of their property and rental business currently look like?

• Have they used Airbnb for long-term stays?

• What their outlook on using Airbnb for long-term stays?

• What other platforms they use for long-term stays, if at all?

• How Airbnb measures up to the other rental platforms that they use for long-term stays?

• What if anything, would make them more likely to use Airbnb for long-term stays?

I will know I’m on the right track if I’m seeing characteristics similar to my journey where I’m hearing other hosts feel that Airbnb is not an ideal platform for longer stays, STR laws have impacted them, and they have been forced to move their business elsewhere such as platforms that are more geared towards long-term furnished housing.

Scaling the Platform

Airbnb can scale its platform for longer-term rentals without much friction, with a limited scope to build off their existing UIs. I have broken the features by use case (host and guest) and the effort it will take to implement by shirt size (S - days, M - weeks, & L - months). In a corporate environment, I would check in with engineers and the design team to confirm how much effort each would take.

Host Product Features

Guest Product Features

The MVP Pilot Features

The goal of the MVP pilot is to launch with as many low-lift, high-impact features as possible without changing the UIs and tech stack too dramatically, so it is not a heavy lift. In that regard, I've included the lowest lift features in the table below.

Pilot Features by Persona and Use Case

I would work with project managers to put a project plan together. I suspect the MVP features could be designed and developed within a quarter of work. I would also scope in testing in the form of user tests on clickable design prototypes and focus groups on the target hosts to gauge if everything is optimal before the pilot launch.

UI Notes

I like to leverage my information architecture and UX design skills to assist design team members with potential options. I have experience in team ideation sessions and running design sprints.

Running the Pilot & Determining Success

Post-launch, I suggest running the pilot for a quarter to determine its success before scaling to add additional features. It makes sense to run the pilot in a few markets where STRs have been impacted, such as New York City, San Francisco, CA, and Miami, FL. Success metrics will center around increases in guests who want to stay long-term, hosts who accommodate long-term stays, and increased revenue from long-term stays to counteract revenue losses from STR bans.

Next Steps

If the pilot succeeds, the features can be rolled out to the entire target market of cities that have banned or curtailed STR, impacting Airbnb’s revenues to gauge if it can succeed in more markets. The Airbnb Early Access program can be utilized to further try the features with additional hosts and guests. If all goes well, the features can be released to the entire user base before scaling to add additional functionality for long-term hosting, such as lease agreements and additional vetting tenants.