Risks to be aware of before investing in Airbnb business in Kenya

The traditional economy is ever-evolving, and the pace of change is getting faster. Only the clever, and the fastest to adapt to changes will survive the market.

From digital media, autonomous driving, and robotic services to online accommodation, technology has drastically changed the world for the better.

One of the areas that entrepreneurs are heavily investing in is the Airbnb sector owing to the surging demand for short-term rentals.

Airbnb allows individuals to rent out their homes or apartments to travelers on a short-term basis, providing an alternative to traditional hotel accommodations.

The business has high nightly returns compared to traditional hotel accommodation, and any investor looking to earn a passive income in the sector can list their extra idle unit.

While the Airbnb business can be very lucrative with a consistent guest flow, the business has its own downsides that anyone looking to start this business needs to be aware of.

Unruly guest behavior

This a complex challenge that has seen many hosts suffer evictions by landlords due to guests’ misbehaviors such as noise pollution, smoking, etc.

“One of the guests became drunk and invaded a neighbor’s house. The neighbor threatened to sue the management, and that is how I was asked to vacate,” Caroline Kendi, an Airbnb host in Nairobi, recalled.

Some guests also treat the units carelessly, breaking equipment and escaping without paying for the damage. One Airbnb host recently went viral on social media after raising complaints that some guests had booked her unit only to start boiling cereals which is gas-consuming.

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Tales of guests walking away with electronics and other equipment have been told, with the hosts suffering huge losses. This comes to additional expenses that you probably didn’t budget for.

“Some guests can be unreasonable, which can drive you out of business. I once had Sh5,000 worth of electricity tokens depleted within two days because guests were misusing amenities such as AC and electricity.” Claver Juma, a host in Shanzu, disclosed.

Insecurity

You will have a hard time dealing with strangers. Some might be robbers or murderers on a mission, and the mission might be executed inside your unit and be held liable.

Bob Shakwila, an Airbnb investor, disclosed that a guest booked his unit, which she used to commit a robbery that led to Shakwila’s arrest.

According to Shakwila, the lady who booked his unit invited a lady photographer for an indoor shoot and drugged her before stealing all her work equipment.

“The photographer told the police the house’s owners invited her for photography and videography but requested her to join them for breakfast first.

She said after taking the tea, she lost her memory and woke up alone in the room without the equipment. My guests didn’t say it was an Airbnb; they said it was their house, and the photographer believed them because Airbnb looks like a home,” recalled Shakwila.

Competition

As more investors get into the sector, competition for guests has affected hosting costs. Data from AirDNA shows that the average daily cost of leasing went down 4 percent in the past five months of 2022 to Sh5,036 from Sh5,569 in December 2021.

The business is currently facing high competition and may not guarantee enough profits at the end of the month.

Inconsistent guest flow

The Airbnb business is seasonal, and many hosts get good bookings over the weekends or during festive periods when people travel around.

Various hosts say that the business was booming in the past years, but the number of guests checking in has reduced due to the current high unit listings.

Conclusion

Airbnb can be a good business if you have the right conditions for a place and little competition, but it will not guarantee you a lot of money on its own, given the things that happen behind the scenes.