How Will Stricter Short-Term Rental Laws Impact the Niche Industry?

Short-term rental companies like Airbnb have found massive success over the last 15 years as an alternative to traditional hotels and motels. But the rise of this market has also been met with criticism from hospitality industry trade groups, city leaders, and neighborhoods. Now, in a time when communities are wary of institutional investors buying up single-family homes to rent out, the backlash to short-term rentals (STR) has hit a fever pitch. Cities nationwide are considering or have recently passed stricter laws against short-term rentals. At the same time, the supply of new listings is multiplying, leading to many questions about what will happen with the niche industry in the future.

A lot is going on in the short-term and vacation rental market at the moment. Just last week, news emerged that the STR management company Sonder was in danger of being de-listed from the Nasdaq stock exchange. Shares at the company, which launched in 2014 in Montreal, had dropped to $1.27 at the beginning of this year, a big drop from where it started in 2022 at $9 a share. As of last week, Sonder shares were trading at 41 cents. 

Meanwhile, Airbnb’s fourth-quarter 2022 earnings report showed that the company closed out the year with its highest-ever number of active listings worldwide and a 24 percent jump in fourth-quarter revenue year-over-year. Airbnb leaders said they continue to see strong demand for rentals and expect that trend to continue. Airbnb is by far the largest STR platform but its biggest competitor,

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