Airbnb is coming for our rural communities. Is that a good thing?

​​Airbnb has broken a new record: In 2023, guests stayed in 100,000 cities and towns worldwide, more than ever before. That includes 4,000 locales that welcomed guests for the first time ever, leaving increasingly few communities that have been untouched by the booking platform. Most were in non-urban places, including the historical town of Huépac in Sonora, Mexico, and Nakatonbetsu, a town on the Japanese island of Hokkaido with fewer than 2,000 residents. 

Of course, Airbnb is celebrating, calling it a win for travelers and communities alike. “Dispersed travel on Airbnb isn’t just affordable, it also boosts local economies and jobs, and immerses people in these communities,” Airbnb said in a press release about the new record. 

But is it such a good thing?

The net impact of Airbnb is a tricky one for both travelers and communities worldwide to square. On paper, it can simultaneously be both an incredible asset and a scourge. It can make some kinds of travel more affordable while also generating much-needed income for hosts—up to USD$24 billion last year, according to an Airbnb report published this week—but it can also squeeze local populations by wreaking havoc on housing markets. While many hosts are families or single people who want some extra income from a spare room or a part-time vacation property, many others have found business opportunities in kicking out tenants in favor of guests paying a higher nightly rate.

Mountain towns across the United States have been particularly shaken up by an influx of Airbnb hosts and guests. After a 1995 law banning all short-term rentals in Sedona, Arizona, was overturned in 2017, many families were displaced by landlords looking to make extra money. In 2021, about 17 percent of the available housing in Sedona and nearby Village of Oak Creek was listed on short-term rental sites, according to a study about short-term rentals by local real estate consulting firm Elliott D. Pollack & Co. The study also found that the average home price in Sedona increased by 45 percent from 2015 to 2019. 

“The decline in the supply of long-term rental units has torn at the fabric of the community,” the study says. “In 2019, the school district closed one of three elementary schools. The high school graduating class is down to about 50 students, about one-half of what it was five or six years ago. The district has now added 7th and 8th grades to the high school so the building can be fully utilized. Little league baseball and football programs are no longer organized because young families are leaving the city.”

Prices spiked again during the pandemic real estate boom: the median price of a single-family home in Sedona rose 64 percent between October 2020 and 2022, according to Wired.

In response, Sedona and other mountain towns have tried incentivizing property owners to put their housing back in the long-term market, to varying degrees of success. Last summer, short-term rentals were starting to decrease in Sedona, according to Red Rock News, which published an optimistic editorial that the light was “at the end of the hallway” for the town’s Airbnb plague.

“In some cases [residents] would be so uncomfortable they’d feel forced to leave.”

- Murray Cox

Summit County, Colorado, launched the Lease to Locals program to convert short-term rentals to long-term homes. As of last year, owners could get up to $22,000 per year to subsidize rent capped at $1,000 to $1,500 per bedroom per month. But ultimately, this, too, was short-term—the program was expensive, and as new workforce housing has become available, it’s ending this year. This fall, the county hopes to incentivize employers to subsidize their employees’ housing instead.

That’s another tricky issue—while more tourists can mean more jobs, the squeeze that short-term rentals have had on affordable housing means there’s often nowhere for those people to live.“Airbnb allowed the amount of tourism here [in Sedona] to double, which means there’s more workforce needed, and at the same time decreased the housing available,” Shannon Boone, housing manager for the City of Sedona, told Wired.

The influx of tourists into otherwise residential neighborhoods has also proven to be a serious nuisance for many urban communities.“You would see tourists on the streets in neighborhoods where there weren’t any hotels,” and the sounds of suitcase wheels could be heard at all hours,” New Yorker Murray Cox told the magazine Reasons to Be Cheerful. As tourists took over residential buildings, they made residents feel like they had accidentally moved into a hotel. “In some cases they would be so uncomfortable they’d feel forced to leave,” he said.

New York responded last year by making it all but impossible to host legally via the platform. New Orleans has suffered as well. By arriving in droves, tourists are demolishing the very local culture that drew them to the city in the first place.  

“We were one of the earlier cities to experience the growth in short-term rentals,” Jeff Goodman, an urban planner and consultant who specializes in STRs, told the magazine. “And we’re in a unique place because so much of what we sell is culture. It’s art. It’s food. But the people who make the art and cook the food and play the trumpets have a hard time living here.” So, if the locals who make New Orleans special are forced to move away, what’s left?

Residents are left asking themselves whether they’re “just Disneyland” now, he added.

But the amount of revenue that’s being funneled through listings and even into the hands of local governments presents another side of the equation. Airbnb said its guests spent $80 billion during their trips last year, and that about 40 percent of that stayed within the neighborhood of the booking. Airbnb also estimated this spending resulted in $24 billion in taxes worldwide.

In an article about its 2023 expansion, Airbnb cited average prices in December 2023 to show that their listings were more affordable for travelers than hotels. An average one-bedroom listing cost USD$114 per night—a decrease from the previous year—while a hotel room cost an average $149 in the same period—an increase. Airbnb also touted a boost to local economies and jobs, saying that conventional travel “often tends to concentrate tourism economically and geographically, causing overcrowding, congestion, and tensions between people and the places they’re visiting.”

Many of Airbnb’s new listings are in Latin America and the Asia Pacific region, according to Skift. Chinese travelers also particularly fueled growth, as they went abroad twice as much in the third quarter of 2023 as they did the previous year. And regardless of bad press about the platform losing its way, or what people think about having these micro hotels in their neighborhoods, it’s showing no signs of slowing down. To manage its impact, one 2021 study published in Management Science proposes a different solution for communities to manage its impact: A convex tax. 

“Policy makers need to strike a balance between local renters’ affordable housing concerns and local hosts’ income source needs,” the researchers said. So far, limiting the number of days a unit can be rented out, or imposing a one-size-fits-all tax, doesn’t seem to be working. “We propose a new convex tax that imposes a higher tax on expensive units and show that it can outperform existing policies in terms of reducing cannibalization and alleviating social inequality.”

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