Airbnb vs Long-Term Rentals: Which is better?

The arrival of Airbnb in 2008 was seen as a disruptor to both the hospitality industry and a boon for homeowners worldwide. Fast forward 14-plus years and the platform has become a staple option for travellers and a source of passive income for more than 4-million 'hosts' worldwide.

But is Airbnb a more stable source of income than long-term rentals?

The answer is not a simple yes or no, with benefits to both. We explore some of the things you should know before making a choice below.

A booming market

With post-pandemic tourism numbers soaring, the most recent report from the booking platform is noting some seriously impressive numbers, both in terms of hosts' earnings and the influx of new properties on the platform.

According to Airbnb's November 2022 report, nights and experiences bookings grew by 20% when compared to the previous quarter. In fact, in South Africa, Airbnb Hosts collectively made over R1 billion from bookings with families last year, said the report.

The report indicated that family travel is up almost 30 percent when compared to pre-pandemic bookings in 2019, with the top booked categories when searching including 'pool', 'near a beach', 'iconic city', 'surf spot' and 'beachfront'.

Sound familiar?

Small wonder that Cape Town sits among the top 10 locations in South Africa being searched for by Airbnb users.

Growing numbers turn to Airbnb

With a tough economy taking its toll on many homeowners, many are turning to Airbnb as a source of relief, with "about 15% of South African hosts that became active last January went on to become 'superhosts' by September", according to the platform.

And the platform sees that upward trend of new hosts continuing in 2023, as the travel resurgence continues and property owners look to take advantage of the ability to earn extra income.

But while Airbnb is providing a very real source of income to homeowners, how does it compare to the relative security of long-term rentals? Is it a replacement, a poor substitution or can both be used across different periods? Take advantage of Airbnb over the summer months and shift to long-term rentals over winter?

As would be expected, a good understanding of the markets will go a long way in helping you make the call, while seasonal, and global crises will certainly have an effect on both long and short-term rental spaces.

Long-term still an attractive option

During Covid, for example, people wanted their long-term rentals locked in, with a ban on all travel leading to an obvious drop in numbers on the platform. And while the numbers surge during the summer months for short-term rentals, they may be leaner in the colder ones.

"We've had a bumper tourism season, so homeowners are seeing great returns on Airbnb, but as we head into winter, we may see those number drop off a bit and that is where we see long-term rentals hold their own," says The Agency's Kyle Leigh.

"We are also seeing a growing demand for 3-6 month rentals in Cape Town over winter, while there are also corporate rental opportunities in the long-term market, which are very attractive options for property owners to take advantage of."

It is also worth noting, cautions Leigh, that certain buildings do not allow Airbnb rentals, while buildings that currently allow it may reconsider this stance in the future. Both give credence to long-term rentals as a more stable option.

Up to the individual

So which is better - Airbnb or long-term rentals?

Ultimately, it comes down to the individual and what they feel comfortable with, says Leigh, because both options offer property owners a viable opportunity to earn a passive income.

"It's really about finding that sweet spot," he says.

"Some people simply prefer the security of a long-term rental and choose to avoid the hassle that comes with the constant coming and going of guests, and the ongoing maintenance required through an Airbnb property.

"There is no reason why a homeowner cannot take advantage of a bumper summer season through Airbnb and lock in mid-term rentals for the winter months as well. But at the same time, demand for long-term rentals remains high, allowing landlords to enjoy strong returns on their investments."