Is Airbnb Worth It In South Africa? Our Review
Is it not interesting that Covid turned the taps off on tourism. During the first lockdown, women could not buy fancy shoes, and Airbnbs were out of bounds.
In the Tourism 2020 report by Statistics South Africa, the number of travellers (arrivals and departures) decreased dramatically between 2019 and 2020; 71%.
Travellers decreased by 50.7% over a 15-year period, with 24.6 million travelling in 2006, to 12.1 million in 2020.
But Airbnbs did well. Very well.
Experiencing the Covid devastation most people would not have expected South Africa’s Airbnbs to be down to only 27% during 2020 when compared to 2019.
How Does Airbnb Contribute To South Africa’s Economy?
Since Airbnb was first founded, 2 million guests arrived at South African listings and 3.5 million across Africa as a whole. Roughly half arriving within 2019!
In 2019, Airbnb contributed almost R11 billion to the gross domestic product. In 2020, in a crisis year for the tourism sector, Airbnb still contributed more than R8 billion to GDP–22 000 economy-wide jobs supported.
What About The Secondary Impact Of Airbnb on The South African Economy?
Airbnb has been a game-changer for the hospitality industry. As you know, they provide affordable accommodation to travellers, and have an impact on city economies by giving residents more spending money!
Airbnb guests stay 2-4 times longer than typical tourists do
In fact, it’s estimated that Airbnb guests stay 2-4 times longer than typical tourists do. This means they spend much of their time exploring new areas.
This provides local businesses with increased foot traffic as well due to these visitors’ repeated visits over time.
Airbnb’s South African domestic travel grew almost six-fold
Airbnb’s South African domestic travel grew almost six-fold from 2016 to 2019. In the meantime, South African Tourism estimated domestic tourism fell by 9%. The Airbnb industry has seen an increase in business and we expect this trend will continue over time.
The fastest growth was seen outside the typical tourist destinations. The North West, for example, where Airbnb guest travel grew by 130% annually between 2016 and 2019. This implies that travellers are seeking undiscovered unique experiences.
The evidence adds up to answering: Is Airbnb Worth It In South Africa?
Airbnb Is Creating More ‘Local Is Lekker’
Airbnb guests are creating significant economic benefits for the community of ‘local is lekker’ hosts.
Consider mass travel, corporate and less sustainable travel. They stay central and channel their money in set tourist ways. However, travelling on Airbnb enables tourists to discover new destinations and helps to ensure that local residents directly benefit from tourism’s economic growth.
Give Them Local Is Lekker While Caring
Guests want tourism that is local, authentic, diverse, inclusive, and sustainable.
Let’s continue with the survey findings:
The majority of guests to South Africa chose to travel using Airbnb in part so they could live like a local and explore specific neighbourhoods. Simple. And this is what Airbnb provides.
What About Governmental Threats On Regulating Airbnbs?
Not so long ago Minister Hanekom, tourism minister at the time, decided to regulate Airbnbs. Adding more red tape to reduce our SA economy further. His efforts were culled but the threat exists. How do we fix it?
Politically. Get more people involved who, traditionally are not hosts in the Airbnb hosting market. Women and people of colour.
The good news; Soweto hosts more than double
The report states that townships are not only popular with international travellers. No. These areas like Soweto and Tembisa became popular domestic tourism destinations. These areas are also seeing positive growth in the number of Hosts on Airbnb, with figures in Soweto more than doubling from 2016 to 2019.
And regulation is not always bad. But how do you make it better? You pre-empt the effort. And reading the Genesis report it says, “agile regulation which addresses the societal risks of digital
platforms without stifling business innovation”.
This leads to…
Why Is Airbnb Focusing On Creating Inclusive Growth
We spoke about Tembisa, Soweto, and women; slice the cake and spread the opportunity; by making it accessible.
In other words; focus the tourism growth in a way that spreads benefits more widely. The biggest beneficiaries of this inclusion are non-traditional tourism provinces, smaller towns, and female entrepreneurs, while the growth in township hosting is also encouraging.
Demand for domestic tourism
And never underestimate the unlocking new demand for domestic tourism. The report found Airbnb enabled more South Africans to see their own country.
Every sector of society should work together to ensure the promising foundational principles are fully realized.
What does all this mean?
The Airbnb platform is something for all. It’s not yet there. Government is a controlling beast. But making it an income generator for all is the way to see it. But income is not the only issue. The world is changing and people are more conscious. They tend to care about sustainability. The footprint.
What Are The Risks of Hosting on Airbnb?
Is Airbnb worth it in South Africa is a definite yes. But remember, Airbnb is the dominant force. With such a force hosts are at their mercy. They try and be fair but it’s never a good idea….
….to have all your eggs in one basket.
The unfortunate issue is, at least in South Africa, no other platform comes close to Airbnb. The best alternative is the highly risky Booking.com. They brought us less than 10% of all our reservations. And these guests, not all, were the worst. Why? Hosts review Airbnb guests publicly. But guests are not reviewed on Booking.com. This gives them carte blanche to abuse the situation. We rather do less business than accommodate risky guests.
We can write pages on the subject but that’s not the intention of this article.
How much can you earn with an Airbnb rental property in Cape Town, South Africa?
The Genisis report states that,
Half of the new listings that were both activated and booked in early 2021 got a reservation request within seven days, with the average annual earnings per host who had welcomed at least one guest reaching R55 800.
2021 Hosts Are Getting On Board
In South Africa, hosts who welcomed their first guests in the first six months of 2021 and have only one listing, earned more than R1.8 billion by hosting on Airbnb.
Although, R55 800 means this is what the average host earned it does not imply they maximised their potential. No. You can read more on income here. Cape Town long term rental yields range from 5% to 8.3%. What about short-term rentals?
What Are The Airbnb Property Yields In South Africa?
From experience, we know you should easily achieve a 5% yield at 35% occupancy with Airbnb with a well-located, pristine and exceptionally well-managed place.
This means that R55 800 is really low. This low figure is indicative that most hosts are not professional; they are happy to be making something. And Airbnb is achieving its objective to share the cake; grow it and we all benefit.
So! Is Airbnb Worth It In South Africa?
As a host, an owner or potential owner would you Airbnb your home in South Africa. Therefore, is Airbnb worth it in South Africa?
Reading the above you may think all is rosy and easy. No. Airbnb does very well.
In a war, it’s the luck of the draw or is it karma?
With Airbnb, the host will come out of it with at least R55 000. This may be good enough for some. But to be professional and generate yields of 10% and more only the best will really exceed/succeed.
You should not only survive but you can really win the Airbnb game in South Africa.
LearnAirbnb.com did research on millions of Airbnbs. And found similar results. Here are a few key insights. Read the third point on the left:
The Top 1% Of Airbnb Hosts Out-Perform The Bottom 99%.
This is a sad state of affairs. But I am biased. Being part of the top 1% is our goal but most hosts do not care or are oblivious to the potential. The other side of the coin is that it’s not difficult to succeed with a great tool like Airbnb but it needs streetwise wisdom to play the top 1% game.
Airbnb Is Not Only Worth It To Host But All Concerned in South Africa
The only ones who are upset are poorly hotels and guests houses that expect the status quo, or regulators who are concerned with excessive tourism or pressure on housing for the workforce.
The new age is looking for responsible tourism, unique local experiences. A democratic choice to stay where these opportunities exist.
Even with Airbnb’s dominance, we must say that they have designed a millennium tool with excellent potential. And to answer the question: Is Airbnb worth it in South Africa? The answer is yes. But don’t be naive.
What is your opinion on the question: Is Airbnb Worth It In South Africa?
An ebook for owners and hosts. Written by Johan Horak with 12 years short term rental experience.