Even five years ago, it would be impossible to imagine a real estate broker like JLL putting out a press release saying it was launching a new platform to compete with Airbnb in the short-term rental market.
But such has been the growth in short-term rentals that JLL and its clients want a piece of the pie. It is a sector where digitisation is both fuelling the creation of new physical real estate assets, and offering a new way of making money out of those that already exist.
Sites like Airbnb and online travel agents, like booking.com have revolutionised the worlds of both business and leisure travel in the past decade, in one fell swoop decentralising how we book travel and offering the potential for anywhere with a bed to become a rival to a traditional hotel.
Airbnb is seen to have weathered the coronavirus pandemic better than traditional hotel firms since it can pivot the types of lodging it offers according to demand — in 2020 and 2021 more of its revenues came from staycations rather than international travellers. Its 2020 revenue was down 20% year-on-year, compared to a 50% drop at Hilton, for example.
Asset owners and traditional real estate service firms have responded to that. For its offering, JLL has teamed up with proptech firm Lavanda to create JLL Short Stays, a platform that offers units from its real estate-owning clients for short-term rent, with stays ranging from three days to 12 months.
The platform is launching in the UK first with about 1,000 units available to rent, a figure which could grow to 35,000 when the platform is rolled out globally in 2022. That is only a tiny fraction of the 5.6 million listings on Airbnb, but it offers asset owners and service providers a different type of income stream than traditional longer-term lettings.
Florida-based firm Dart Interests is building a development of 1,500 homes in Orlando that will be managed and operated as short-term vacation rentals at a cost of up to $1B. It is building a scheme featuring houses and apartments rather than hotel rooms, but with the amenities that a hotel or resort would offer, betting that travellers want the feel of an Airbnb-style rental from a professionally managed hospitality company.
Airbnb even moved into the brick-and-mortar space, partnering with Newgard Development Group to build up to 14 schemes that would offer short-term rentals on its digital platform. Brookfield agreed to invest $200M in one of the first two schemes, in Florida, but the venture did not run smoothly: In 2020 Airbnb sued its partner alleging misappropriation of funds, a claim which was strongly denied.