Airbnb’s 2016 Growth — and the effect of regulation

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Many people have been asking questions about how fast Airbnb is growing, and whether regulations enacted by cities like San Francisco and New York, which cap the number of nights allowed for rent, are affecting that growth.

We used our data to take a look at 2016 listing growth within mature U.S. markets (defined as having more than 4,000 active listings), with and without strict regulations.

Unsurprisingly, there seems to be a difference in growth for markets with strict regulation – particularly in markets where regulation is strongly enforced.

Here are some mature markets with varying levels of regulation, along with their 2016 growth rate in terms of number of active listings.

 

Active Listing Growth Rate By City (2016)

 

Active Listing Growth Rate By City (2016)

 

While Airbnb is clearly showing significant overall growth, cities with strict regulations are seeing slower growth. In 2016, San Francisco, Los Angeles, and New York City — all cities that limit the number, type or use of Airbnb listings, showed growth under 100%, in terms of the number of active listings. Markets like Nashville, Denver, and Miami, which have lenient or no regulation, all saw growth of 100% or higher.

If you group these two types of cities: those that have strict Airbnb regulation and those that don’t, you’ll see median grown is significantly different between the two groups:

box plot
So it’s clear that legislation designed to curb Airbnb’s growth has — to a degree — worked in cities that have enacted it. But what about the effect on Airbnb host’s revenue — and a city’s tax revenue from that?

We looked at San Francisco, Airbnb’s hometown (and a city with stringent regulation), and compared it to a hypothetical national law.

San Francisco limits hosts to 90 days of short-term rentals, per year. According to our estimates, 40% of the city’s listings rent for more than 90 days, and the proportion is similar nationwide. That 40%, which rents for more than 90 days per year, generates more than 78% of the short-term rental revenue in San Francisco and 70% nationwide. Let that sink in for a minute — Airbnb generates 78% of its San Francisco revenue — and the city generates 78% of its short-term rental tax income — from 40% of the hosts.
To see what increased compliance could look like, we imagined two scenarios based upon revenues from the previous 12 months:

  • If all listings renting for more than the maximum allowed nights heed the 90-day limit:
    • Airbnb’s San Francisco market would see upwards of 42% revenue loss.
    • Nationally, 34% of the gross revenue would be lost for Airbnb and its hosts.
  • If the listings renting for more than 90 nights leave the platform all together:
    • Airbnb would have seen a reduction of 78% of their San Francisco revenues.
    • Nationwide, there would be a 70% reduction in revenues.

Overall, it’s clear regulations have an effect on Airbnb’s growth; but cities, hosts, and the company alike should work toward sensible solutions that competently address the needs of travelers, hosts, and a city’s need for tax revenue.

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