By Dennis Kaiser
Home sharing is clearly a growing market for people who own their home. Connect Media wanted to find out if the multifamily rental sector is missing an opportunity by not embracing the sharing economy. We sat down with Airbnb’s Jaja Jackson, director of its global multifamily housing partnership team, to find out how the company works with those who rent, as well as those who own and operate multifamily properties.
Interestingly, we found Airbnb does have programs for condominiums, as well as multifamily apartment communities. Jackson explains how the programs work and most importantly, why a property owner or developer should embrace home sharing. Jackson will be speaking at Connect San Francisco on May 9th.
Q: We understand Airbnb has spent time with multifamily property owners to understand the challenges they face regarding home sharing, and have developed a product for them. Why would a company elect to participate in Airbnb’s home sharing program?
A: Owners and operators of multifamily communities are encountering home sharing because residents are home sharing already. It is unlikely if you have a sizable portfolio that home sharing is not happening at your properties. So the question becomes, how to manage this new economy and not create an adversarial relationship with residents? Owners want great relationships, renewals and partnerships with residents. They don’t want to evict or be sending out notices of violations. Our Friendly Buildings program helps them offer home sharing in a way that can benefit everyone.
Owners do recognize home sharing is taking place, as a wave of Millennials and older residents who need income and flexibility participate in this activity. Owners look at our program as a tool to proactively manage properties, or to gain a competitive advantage by offering home sharing at a time when it is not widely available at other properties. That’s important for developers and some of the top apartment REITs with properties in competitive, urban markets. They don’t want to miss the boat with the fastest-growing renter pool.
Q: What do you see on the horizon for this disruptive platform? What will it take for it to achieve greater penetration in the multifamily sector?
A: First, we know amazing occupancy rates and prices will come and go as cycles progress. Home sharing creates opportunities to generate additional income for building owners or investors. Understanding that becomes very important, especially in down cycles. If owners are only relying on increasing rents, that places them in a vulnerable position.
Home sharing is counter-cyclical. When times are tough, residents are inclined to host to earn extra money. With Airbnb, hosts typically earn $6,000 to $7,000 hosting fewer than 60 days per year. As a building owner, you can participate in that new revenue stream by partnering with residents rather than fighting it. That income can benefit the whole community when owners improve the property, or it can be a way to buffer cyclical changes.
Secondly, Millennials are becoming more and more part of the rental consumer base. They are very interested in flexibility now rather than ownership. They desire experiences, and that requires flexibility to see the world. Home sharing allows them to move about the world or engage in non-traditional careers. Their housing expenses can be defrayed when they participate in home sharing.
Q: Why is paying attention to Millennials important to multifamily owners and managers?
A: In order to be competitive, companies need to understand how home sharing fits into what Millennials want. Our research shows that approximately 40% of Millennials want the ability to home share wherever they live in a rental product, and are willing to move to obtain a home sharing opportunity. We expect this to grow over time, so it is important for owners to be aware of this trend and respond to that demand.
Cities and governments around the world also recognize that democratized travel is an economic benefit for the whole city, and home sharing allows people to go places they might not be able to otherwise afford. It also allows people to experience a city beyond what’s in a clustered, tourist heavy district. That’s a reason cities are embracing regulations that allow home sharing rentals. It is important for the multifamily sector to be a part of the changes at a macro trend level. Cities want the additional income generated by travel, via taxes and economic growth.
Editor’s Note: Additional details about Airbnb’s multifamily program
Airbnb Friendly Buildings Program Details
Airbnb has developed a product extension called the Airbnb Friendly Buildings program, which is a property management tool that HOA’s can use to better manage home sharing in their buildings, in the way they see fit. The same tool is available to owners of apartment properties, whether they own 50 or 100 units, there is no cap in size. The program is an important resource for an owner that wants to be able to manage home sharing at a local building or address.
Advantages of the Airbnb Friendly Buildings Program
The Friendly Buildings program was launched about a year ago, and over the course of last year, Airbnb has enrolled approximately 8,000 units allowing individual owners or associations to sign a contract to put a property in the home sharing program.
There are four pillars of the Friendly Buildings Program:
- Transparency: once an owner enrolls, it allows them to get reports from Airbnb that details the activities. It’s the first time owners are able to track home sharing at the address level with the support of data supplied by Airbnb.
- Control: The information Airbnb supplies can ensure the right people who are eligible to participate in home sharing are doing it and the community rules are followed, such as the number of nights, blackout dates, no smoking or no pets. Airbnb is a partner in sharing that information with owners and managers.
- Insurance: Airbnb’s created a product that covers a whole building, even if only one resident participates, which helps reduce risk for an owner.
- Profit Sharing: A building can choose what percentage of profit Airbnb directly deposits into its account. Airbnb recommends 5% to 15%.
For comments, questions or concerns, please contact Dennis Kaiser