Airbnb is in trouble, is it the end for the company?

Airbnb has had a tough 2023, with claims of slowdowns in bookings, city-wide bans, and competitor growth. The company has had to look at the base of its model to find the cracks.

The first blow of the year came as early as March when the hashtag "Airbnbust" went viral on Twitter, now known as X, as users claimed the platform was losing bookings.

Most posts came from unhappy hosts who claimed they were starting to lose money on their listings as expenses surpassed earnings due to a low booking rate.

Some of the most vocal hosts told Insider that one of the main problems was an excessive supply. Too many options meant they were forced to lower their prices or lose bookings.

But that was not the only issue that the company faced. The hosts' issue piled upon problems with city administrations that saw how the incursion of short-term rentals affected their local real estate markets.

New York was the most prominent case. The city placed strict registration, zoning, and maintenance requirements for short-term rentals, making it hard for hosts to legalise their activities.

Still, other cities have even been more head-on with their restrictions. In Europe, Paris limited the number of days for short-term rental, and Italian cities banned it in certain areas.

On a third front, competitor Vrbo beat Airbnb in developing a feature that users have requested for years: a rewards-based fidelity program.

In a rare course of action, Airbnb CEO Brian Chesky dissected the cracks in their business model during an interview with Bloomberg. He claims that the platform is broken at its foundation.

Chesky told the magazine that fast growth is the main reason behind the problems the company is showing today. He said that their model was conceived for much smaller operations.

That is why the company announced some changes, from showing consumers total prices with fee transparency to cracking down on false or illegal listings and improving searches.

The CEO admitted that those changes were patches. However, he also said they know the three core pillars they must fix: affordable prices, reliability, and customer support.

Chesky explained that the company will start to use AI to its advantage, especially for identifying illegal and false listings, as well as misuse of the platform.

He also told Bloomberg that the company will offer "experiences" in New York to work around the ban on short-term rentals. Airbnb has done something similar before, organizing a "slumber party" on the last working day at Blockbuster.

The CEO finally said that users and hosts should expect more changes to the platform's business model and operations before the end of 2023.

Despite understanding its internal problems, the company faces a complex context as offices reopen, decreasing demand, and its value in the stock market plummets every week.