Many Airbnb hosts in Vietnam who rushed to rent properties only to list them on the peer-to-peer lodging marketplace have had to swallow a bitter pill as they prove less competitive than those who do so with their own houses.
Airbnb, founded in 2008, is an American home rental platform based in San Francisco that lets people list, find, and rent short-term lodging in 65,000 cities and more than 191 countries across the globe.
The company does not own any properties. It acts as an intermediary between those who want to rent out space and those who are looking for space to rent.
As Airbnb continues to revolutionize in the accommodation-sharing market, many Vietnamese have attempted to join the competition in the Southeast Asian country.
According to incomplete data, about 35 percent of the accommodation-sharing hosts in Vietnam manage over two listings, or properties available for rent, a high rate compared to other foreign countries.
Some win, others suffer
But unlike the foreign markets where most of the listed places on Airbnb are legally possessed by the hosts, a large number of Vietnamese have cashed in on the service with properties they rent, not own.
Thuy, a resident in Ho Chi Minh City’s District 2, partnered with friends to rent and refurbish several apartments on Pasteur Street in District 1, and listed them on Airbnb.
“My initial investment of about VND800 million [US$35,200] did not get bigger but smaller after one year, which effectively means I incurred losses,” Thuy told Tuoi Tre (Youth) newspaper.
Thuy said that she would stop listing on Airbnb to retain the remaining capital.
Tinh, a host with two accommodations located on District 1’s Pham Ngu Lao Street, shared with Tuoi Tre that he has just transferred his properties and completely withdrawn from Airbnb to focus on his main job at an international bank.
“Initially, when my intention was to make better use of my spare rooms, everything was easy to manage but when I started renting another apartment [to list on Airbnb], things got complicated, costing me a lot of time for management,” Tinh said.
The situation is similar to when Vietnamese people took out bank loans to buy cars to drive for Uber or Grab, only to suffer losses as the competition became more intense.
Meanwhile, those who simply rent out space available in their houses still enjoy good business results from the tech-based lodging marketplace.
Hien, an Airbnb host in District 7, said that her tenants often prefer long-term booking.
“My guests are mainly Japanese. We usually hold cultural exchange activities on weekends,” Hien said.
According to Kenneth Atkinson, chairman of the advisory firm Grant Thornton, the use of vacant space for rent on Airbnb used to be seen as a profit-making model thanks to the eagerness of individuals.
They managed to handle many problems, from finding new customers to replying to tenants’ messages, to maintain high customer ratings.
However, as the competition in Vietnam is getting fiercer, Airbnb hosts must exert more efforts to keep their business running, even though it can bring in only a few million dong of profit per month, Atkinson underlined. (VND1 million = $48)
In 2017, the total number of three- and five-star hotel rooms in Vietnam rose to 101,400, up ten percent from the previous year, while more than 10,000 rooms in Hanoi and Ho Chi Minh City were made available on Airbnb in the same year.
Hosts who jumped into the Airbnb game without paying much attention to such factors as occupancy rates or rental rates could be the first to face consequences, according to the Grant Thornton chairman.
In the meantime, Michael Robinson, general manager of Caravelle Saigon Hotel, assessed that online travel agents would have to ‘keep an eye’ on the development of Airbnb in Vietnam.
People who plan their trips online may prefer Airbnb to an online travel agent when it comes to hotel booking, as the former, which allows people to rent an apartment or only a spare room, is more suitable for families, especially those with children, Robinson said.
“This is not to mention the quality of Airbnb services in Vietnam has been quite good," Robinson said.