CEO Brian Chesky forgot something important when he built Airbnb’s forever home — laying the foundation. Fifteen years after its founding, Airbnb (NASDAQ:ABNB) still lacks the “pillars” the founder says are necessary for growth.

Despite an anticipated 17% sales increase in 2023, the platform grapples with a slowdown and dwindling travel spending, making it harder to keep both hosts and renters happy.

Collapsing house: Chesky admitted to Bloomberg that the company is broken, comparing it to having “never fully built the foundation.” He hopes to fix that with affordable prices and reliable services. However, this approach risks alienating hosts, whose profit margins have declined and who now have alternative platforms for property listings. Cracks in other parts of the foundation have also begun to form…

• AirDNA’s forecast predicts a second year of declining Airbnb occupancy rates, dropping to 56.4% for 2023 — still above the pre-pandemic average.
• Hosts face growing rental competition, with Reventure Consulting’s CEO citing rental revenue in some major cities dropping as much as 50%.

DespiteABNB

’s almost 50% surge this year, analysts are skeptical that Chesky’s turnaround plan will work for everyone — sell ratings for the company hit an all-time high in late October.

Short-term rentals vs. the Machine

Airbnb’s success and largely unregulated growth have attracted attention, with 26 local governments regulating or prohibiting short-term rentals in an effort to address housing shortages. In September, New York City became the largest US metro to ban most short-term rentals:

• The National Bureau of Economic Research says Airbnb was responsible for ~20% of residential rent increases between 2012 and 2016.
• NYC hopes to reverse that by taking after Berlin’s short-term rental ban in 2020 — which reduced long-term rents by 3% after two years, per Real Estate Economics.

The big (housing) shortage: Airbnb holds that banning short-term rentals won’t solve housing’s core problem — a severe housing shortage. According to Freddie Mac, the country’s 3.8M unit housing defecit keeps home prices high, a problem that won’t be resolved until America builds substantially or interest rates fall, freeing homeowners from their golden handcuffs.