Someone should keep a check on this service. For ex: Allow only single home owners to rent, else this is going to be a huge problem.
The rental that I took was owned by a real estate agency even though the profile showed the foto of a family. I didn't realize that until I thought I will meet with the sweet family, so I called the phone number and it was picked up by receptionist and said there is no family !
So I asked AirBnB about this rental portrayed as a family owned rental, but was really a real estate agency, their reply was "Its legal" and I should have read the fine print before renting.
For instance, "zoning should factor in the average Airbnb rental rates". I am not sure what you mean by this, but presumably the average rates are fluctuating all the time, which means "fluctuation" in the zoning as well. Plus the properties would be properly treated as commercial sites and subject to appropriate taxes.
What I meant was, zoning should ensure that Airbnb will not be a sustainable option for home owners. If there's 10x Airbnb listings for 1x Airbnb guests visiting the area, how long can the remaining 9x sustain empty houses?
Otherwise AirBnB usually drives up prices in highly desirable locations, and for someone renting on the cheap it's a canary in the coal mine - the rental rates in highly desirable locations will go up anyways.
"Menace" is a strong word, suggesting the threat of violence. Further, it sounds like your location is popular. What's a better way for our society to decide who can stay there other than setting a price?
Depending on how you structure the business you have to inspect each home before you put it up for rent and normally you reject 4 out of 5, because of location or other criteria.
Then stuff happens like: heating or A/C doesn't work and somebody has to be sent out to fix it in the middle of the night..
In a normal hotel you can do all of that with less then 10 minutes of work. But in this scenario you need to drive somebody to these homes.
Not a really scalable business.
I would say good luck Airbnb :)
Edit: Disclaimer: I work in this industry
The revenue is exceptional.
Our clients are quite happy I'd say, judging by reviews in tripadvisor, booking etc (9.5 booking, 4.5 tripadvisor).
Even during times that electricity is cut off and there is no water due having an electric pump to bring water up the cliff.
Its a win win scenario. We get a few customers that are on their honeymoon etc, meaning they are paying way above their actual price range, and they are always happy with the things provided.
Even on unfortunate moments like 2013 I think where half of the island was out of power for 4 days so thats 4 days without water, electricity on a 2000+ euros a night trip, I'd say customers were pretty understanding of the situation and also they were glad we did everything we could to accommodate their needs such as giving them ton's of bottled water etc.
The point am trying to make here is that people that are willing to pay for a luxury apartment are usually nice enough and understanding when there is an issue, and the ones that can't really afford it but its their big moment in their lifes, appreciate things like "bed/mattress" etc luxuries that they never had before.
Btw people living on our apartments will pay 100euro taxis and 600 euro boat trips... (way overpriced compared to general market prices) and generally they will spend a lot more money than just accommodation
How much is one apartment worth, and how much yield are you getting from them after deducting all the overhead? It's something that I've looked at though obviously highly location dependent.
We had an offer for 1 of the apartments for 6m euros. (Not selling it)
The lowest rent per day is at 2k euros. 2k euros is a high monthly salary for a worker. So I'd say it makes quite some revenue.
(Note that my sister is running the business so I am not very familiar with the details)
Piketty estimates that the average return to real estate worldwide is a little less than 5%.
In other words, the average property worth $6M would generate 6,000,000 x 0.05 / 12 = $25,000 in rent per month.
If we use the same assumption to calculate the value of your property, assuming an 80% utilization rate - $2000E/day x 365day/yr x 0.8 utilization / 0.05 = $12M.
So given these assumptions your sister was offered half of the value of the property. Of course this simple valuation hasn't been adjusted for taxes, depreciation, cost of maintenance, etc. but I doubt that would bring the value of the property down by 50%, and I'm willing to bet that you generate much higher than a 5% return on your properties if the rental mkt is as good as the OP has described.
Santorini boomed the past 5 years I'd say to the point that this year the Government had to cut down Ships from mainland to Santorini because the Island couldn't afford having that many tourists on it.
Using your calculations yes it would go for more than 6m euros although you have to calculate the fact that Greece is currently in a very unstable economic state, with heavy property taxes etc, and of course being close to the Middle east tourism can be affected heavily by wars etc. Although again I have no idea what the actual price of any of the apartments would be nowadays.
If they were renting out properties long term, the yield would be lower. I have a friend who did something similar in London, and he was renting out apartments for £200-300 a night which would rent out for £3,000-3,500 on a long let lease.
Also, I would assume the average property worth $6m would rent out for a lot less than $25k a mo. Most properties worth $6m can't even be rented out consistently, for years on end unless you're in a prime city such as London or NYC.
Santorini is a great place for wealthy people to spend a week, or even a month, but I don't expect many to have their permanent base there.
You don't need scaling when you work in luxury, anyway :)
I've worked in that industry too. I had stripe processing $10k single payments through credit card. Scaling was the last of my problem, I just wanted everything to work perfectly.
AirBnb has very few properties in the high end price range and people who are willing and able to drop that kind of money on a rental are looking for a very different experience, from booking to the stay. I doubt very much that any AirBnb or VRBO owner is very concerned about either company making a move into luxury rentals.
Amazon does it with both their in house labels (ex: AmazonBasics) and delivery service.
They have a fine line to tread as far as pricing is concerned.
There's no way to share a hotel room with a random and save $100 a night, for example. Or to stay at a hotel room in a pure residentially zoned area and experience life as a local. Etc.
Consider, for instance, the following:
* 3 or more couples wish to travel together. They'll be doing some touristy things during the day, perhaps, but half of the fun of the vacation will be hanging out and bonding in the evenings, having wine in the hot tub, deep personal conversations in the living room, whatever it is they do. A 3+ bedroom vacation rental will accommodate this more economically than any similar hotel situation, even when they do exist.
* A family wishes to travel together. They have an infant, a small child who is a picky eater, a ten year-old boy and a thirteen year-old girl who refuse to share a room, and one of the parent's mother who will take care of the infant at "home" while the rest of the family does some of the more challenging activities. This group probably doesn't want to eat out for every meal and needs a comfortable and pleasing space for the grandmother to stay in for long periods of time during the day.
* Three or four bikers have found a beautiful route in a less-travelled semi-rural area. The nearest hotel is 15 miles away with no bikeable route, but there is a vacation rental just one mile away on rural roads. No need to bring the bikes into the hotel room, no need to rack the bikes on the car to get to the trailhead. Get the bikes from the garage and go.
* A small startup team is attending a conference. They'll be having business meetings all day, so it is important for them to be together to prepare their pitches in the morning and be together in the evening to review the results and strategize. Local hotels and restaurants are full of their competitors, and a private space will help them to focus.
* A couple has always wanted to visit an amazing locale. One of them has a significant food allergy to an ingredient commonly used in local cuisine, and the area is not known for being accommodating in this way. Because of the allergy, they are used to cooking for themselves, and would prefer to do that rather than, say, eat hamburgers every day at the hotel restaurant. Having a well-equipped kitchen is important to them.
I could keep going. The vast majority of my travel is in situations like the above that are more possible, economical, and/or pleasant in vacation rentals than in hotels. I've been using them 3-6 times a year for the past 15 years. (I used VRBO before AirBnB.) I can't imagine going back to staying in hotels for most of my travel.
depends on the city and neighborhood