At the time of writing, the coronavirus has killed more than 6,000 people and sickened more than 170,000. International stock markets have witnessed the biggest plunge since 2008, entire cities and countries have been placed on lockdown, and massive international events have been called off. 

Without a doubt, standing at the epicentre of the coronavirus is the travel industry. Airlines, hotels, and a fleet of offshoot industries are now coping with the virus’s severe downstream effects. One property sector that is now suffering from the outbreak of the coronavirus is the short-term rentals market.

A new report from AirDNA looks at the latest changes in Airbnb trends and includes some future projections for cities around the world. 

Supply remains steady
The total supply of vacation rentals around the world hasn’t responded in any major way to Covid-19. There has been no reduction in supply, however there has not been the traditional boost in supply that occurs every year in the run-up to spring.

While expectations for bookings may be low, vacation rental hosts are, for all intents and purposes, still open for business.

Demand has seen significant setbacks
Unsurprisingly, demand for vacation rentals has suffered some significant setbacks. AirDNA has analysed a handful of cities that have been most impacted by Covid-19 due to event cancellations and early outbreaks.

While the virus first emerged in Wuhan, its effects on the short-term rental industry are best seen in highly-travelled coastal strongholds throughout Asia: Shanghai, Beijing, Seoul, and Tokyo. After the onset of Covid-19, future demand throughout the region has retracted. 

Western cities currently facing the same potential for impact include Seattle, Austin, Barcelona, Milan, Rome, and New York. 

Looking forward to the beginning of May, most destinations are averaging about half the bookings that were made back during the preliminary impact period in mid-February. Throughout the first two months of 2020, daily reservations crashed in many Asian cities. The negative trajectory hasn’t been as pronounced in other cities around the world yet, but it is a likely indicator of what is to come for European landlords in the short-term rentals market.

AirDNA looked at total bookings in the first half of January compared to the first half of March across global cities and found that Beijing (-96%) was worst hit, followed by Shanghai (-71%), Seoul (-46%), Rome (-41%), Tokyo (-29%) and Milan (-29%). Obviously the full impact on Italian bookings will be more apparent is April as the surge in coronavirus cases did not occur in Italy until the second half of February.

Urban markets face far higher risk than leisure destinations
When looking at the data, it becomes clear that urban cities seem to be significantly more exposed to fluctuations than their traditional resort-based counterparts. Vacations for leisure travel are often booked well in advance and travellers face far less risk than they do in urban hotbeds. In effect, leisure travel destinations find themselves less affected.

Below is a city-by-city analysis, looking at Airbnb bookings on 9 March 2020 compared to the same date in 2018 and 2019:-

Beijing, China
The Chinese capital has become the poster child of the impacts of the coronavirus. After tremendous triple-digit growth over the last five years and 130% year-on-year growth this past January, Covid-19 has starkly reversed that trend. 

On 7 February, Beijing took a massive hit as fully refundable cancellations went into effect. As a result, revenue declined by 22% compared to Feb 2019, with hosts earning nearly $19m less than the previous month of January. March appears to have a similar trajectory with projected year-on-year losses of nearly 43%. That being said, as of now the losses seem to be short-lived as booking volume in Beijing is expected to increase in the early summer months.

Tokyo, Japan
Tokyo is a unique case study in that 80% of vacation rentals were swiftly removed from the marketplace virtually overnight in 2018. Since then, regulations had been slowly becoming more lenient especially with the 2020 Summer Olympics on the radar. However, in February returns were a far cry from the previous month. In March and April, revenues are poised to head into the red as Covid-19 makes its way across the East China Sea.

Milan, Italy
Milan and the general region of Northern Italy can largely be seen as the virus’s entry point into the European continent. March and April are looking to be severely impacted by the virus, but short-term rental markets will be set for a quick early-summer rebound if containment is successful, according to the report. 

The least affected short-term rental markets
The AirDNA report concludes that short-term rentals are more resistant to the impacts of the coronavirus than hotels, cruises, and airlines. It also highlights that vacation rentals are often in more remote locations with less direct exposure to other travellers and will therefore not suffer as much as city-listings, especially if the location is within driving distance of a large city, therefore not being reliant on air travel.