Memphis Airbnb hosts touched, but optimistic for the future – Memphis Local, Sports, Business & Food News

As COVID-19 keeps leisure travel on hold, South Central Airbnb hosts are collectively losing tens of thousands of dollars in additional income per month.

When tourism came to a screeching halt last month, the nation’s largest shared apartment rental platform abruptly announced that it was providing full refunds to all customers with check-in dates between March 14. and May 31.

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“On March 11, when the World Health Organization declared a pandemic, we were faced with a dilemma. If we allowed customers to cancel and receive a refund, we knew it could have a significant impact on your livelihood, ”Airbnb co-founder and CEO Brian Chesky wrote in a statement. March 30 email to hosts. “But, we couldn’t make the guests and hosts feel compelled to put themselves in dangerous situations and create an additional risk to public health. “

Chesky then apologized to the hosts for not warning them of the new policy, a significant change from the usual guidelines that allow them to set their own cancellation terms and fees.

The surprise announcement was just one of many jolts in what is turning out to be a turbulent year for Airbnb.

According to an April 8 Wall Street Journal report, insiders say the company – which, for now, plans to go public later this year – is expected to lose $ 1 billion by the end of June. Its valuation on the private secondary market fell from $ 150 per share last month to less than $ 90 per share.

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Company executives, however, remain optimistic and continue to assure hosts that “travel will recover,” perhaps to their advantage, as coronavirus travelers may prefer smaller, more private places rather than hotels. overcrowded hotels.

Industry professionals share this optimism.

On April 7, New York developer Kenny Lipschutz filed a $ 2.4 million building permit for his $ 4.8 million South Main Airbnb project at 400 S. Main St. in Memphis, which will include 18 Airbnb rental units and three retail spaces.

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Meanwhile, over 1,000 existing Airbnb properties are now mostly vacant, as some owners suffer financial losses of up to $ 6,000 per month.

This is in stark contrast to the scene last June, when business was booming and CBRE reported that Airbnb’s supply in Memphis had increased by 31.4% and total revenue increased by 39. , 2% in the previous 12 months.

“I’m not in pain, but yes, I lost money. For April and May, I lost $ 12,000. June could cost an additional $ 6,000, ”said Jeff Bennett, a realtor at Hobson Realtors who owns Airbnb rental units in two duplexes in Central Gardens. “These two units that are vacant are expected to earn $ 3,000 per month each.”

Bennett said he mainly used his Airbnb income to offset his children’s education expenses.

Currently, he participates in Airbnb’s Frontline Stays program, offering his rentals at a discounted rate to local healthcare professionals who might want to quarantine themselves away from their families. So far, it has had no takers, despite its Facebook posts announcing the reduction.

Downtown, Bridget Mirza’s vacant Airbnb condo is just steps from Beale Street. Right now, she is preparing normally for her most profitable time of the year, Memphis in May.

“In September 2017, I opened my doors and immediately my place was reserved. However, when the coronavirus hit, I went from being completely booked to empty. It’s definitely a financial blow, ”she said. “Every month we were full. For small independent people like me, it’s a wonderful source of income and a great way to meet people from all over the world.

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Wesley Riddle, a small business attorney at the law firm of Wesley J. Riddle, owns an Airbnb bungalow in the historic Cooper-Young district, as well as an Airbnb studio-cottage behind it.

Like Bennett and Mirza, he and his wife, Mary, lose monthly reservation income, but they also initially invested around $ 12,000 for renovations, redecorations and other projects to make the units more attractive. In previous years, their properties were typically booked about nine months in advance, especially at sporting events or concerts.

Riddle encourages small business owners – including Airbnb hosts – to apply for the SBA’s new economic disaster loan and expanded COVID-19 unemployment to help offset their losses from COVID-19, though it admits that there is some uncertainty as to their eligibility and the amount they would receive.

Current guidelines don’t make those details very clear, he said.

“We fall into a strange category – we’re not really property owners, it’s a lot more like small hotels. Airbnbs, for example, are struggling to get underwritten by banks because they don’t meet federal underwriting guidelines, ”he said. “I have told all of my clients to just ‘apply, apply, apply’. The worst thing that can happen is they say, “No. “

Bennett said he also applied for the loan. And he shares the optimism of those who believe Airbnb will eventually make a comeback.

“I think Airbnb is going to be there for a long time,” he said. “It’s a great way to learn about the communities you travel to. It’s a great way to stay in a wonderful area like Central Gardens, or if I’m traveling to Seattle I can stay somewhere in a cool neighborhood and do the things the locals do. I love it, people love it, and when I do it will be fine.

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