Consumer pressures temper holiday expectations for Airbnb

Airbnb, which lost 80% of its revenue when Covid-19 hit, says the economic downturn has caused more people to join the gig economy through its platform in SA but consumers are on the hunt for cheaper places to stay.

While the short-term rental company is optimistic about the recovery of travel during the upcoming holidays, it says inflation and a rise in living costs has tempered those expectations.

With pandemic restrictions having virtually disappeared — in SA these were repealed in June

— travel, tourism and accommodation operators had been hoping for a recovery to pre-Covid levels of movement and spending in 2022. However, those hopes and dreams are threatened by a global economy teetering on the brink of recession, characterised by high inflation and rising interest rates.

The sector contributed about 8% of SA’s GDP before Covid.

“We’re optimistic. In the first three quarters of this year we saw a doubling of our nights booked over the previous year. So we do see an increase in travel,” Velma Corcoran, regional lead for Middle East Africa at Airbnb told Business Day. “This time last year, there was the Omicron variant, so the floor fell out of our season then. Without that, we’re pretty confident that we will have a good run.

“The one thing that we are seeing globally, and SA is not exempt, is that people are really feeling the effects of cost of living increases.”

Airbnb, which operates as an online marketplace focused on short-term accommodation, has 4-million hosts on its platform globally with 65,000 listings in SA. In 2019, the company estimated its contribution to the SA economy at roughly $685m (R11.8bn).

The typical host in SA earned more than R25,400 last year, and more than R12,900 on average during this past winter.

As a result of an ailing economy, travel is expected to rise, albeit at a lower rate than had been expected.

According to local short-term lender Wonga, as many as 78% of South Africans plan to stay at home this summer, with 47% citing affordability as a major factor affecting their travel plans.

“The sharp increase in the cost of fuel has no doubt affected festive season travel plans this year,” says James Williams, head of marketing at Wonga. “More people are telling us they will stay at home to enjoy their holiday break due to affordability.”

The lender’s data comes from a survey of more than 8,500 South Africans who shared their holiday travel plans, planned activities, gifting ideas and how much they expected to spend.

Airbnb says more South Africans are becoming hosts because they see it as a way to make ends meet.

Corcoran said half of their hosts say they are continuing to do so because they want to be able to stay in their home and pay their mortgages, while 46% say they are hosting because they need extra income to get by. “Those are some of the trends we’re seeing.

“We’re optimistic but somewhat tempered by what we know about the rising cost of living,” she said.

But even with such pressures on consumers and businesses, it cannot be said travel is not on the rise. Emirates recently said it would be increasing the number of flights to and from SA, as global travel continues to recover in the face of much fewer movement restrictions.

“The reintroduction of the [new] flights between Dubai and the Emirates’ three gateways in SA will enhance our schedule to 42 flights weekly versus 49 prepandemic. We are hopeful that by May we’ll be able to bring these back on track.”

WHAT WE ARE SEEING GLOBALLY, AND SA IS NOT EXEMPT, IS THAT PEOPLE ARE REALLY FEELING THE EFFECTS OF COST OF LIVING INCREASES