HOSPITALITY

Nairobi's Airbnb cost drops as units increase

As more investors get into the sector, competition for guests has affected hosting costs.

In Summary

•The number of listings through the short-term house rental platform Airbnb grew 23 per cent for the first three months of the year.

•As more investors get into the sector, competition for guests has affected hosting costs.

A traveller uses the Airbnb app to find a home
A traveller uses the Airbnb app to find a home
Image: PIXABAY

More Nairobi residents are turning their extra bedrooms or houses into Airbnbs to provide lodging and homestay for travellers.

The number of listings through the short-term house rental platform Airbnb grew by 23 per cent for the first four months of the year.

According to data from vacation rental research firm AirDNA, the number of rentals increased to 10,094 from 8,213 last year.

This translates to 1,881 rentals set-up in the first four months to May.

Seventy-five per cent of the Airbnbs in Nairobi are entire-home rentals while a small number are private rooms like servants quarters and shared rooms.

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 has gone down 4 percent in the past five months to Sh5,036.

The daily charges declined from Sh5,569 in December 2021.

Even so, the current charges have increased from Sh4,592 in May last year.

The charges represent the average cost of nightly bookings plus cleaning fees.

The reduction signals reduced travel and spending by Kenyans and foreigners amid global economic recovery and reduced Covid-19 restrictions that slowed movement.

Airbnb is popular among travellers seeking affordable accommodation, convenient location and household amenities.

The concept created in 2008, offer a cheaper alternative to hotels, leading to  increased competition in the hospitality sector.

Most hotels in the city have a daily rate of more than Sh8,000 and the charge can reach Sh30,000 depending on the type of room and the rating of the property, with five-star establishments the most expensive.

According to a survey by the Central Bank of Kenya, hotels in Kenya contracted by 9.3 per cent in the first quarter of 2020 and by 83.3 percent in the second quarter, compared to an expansion of 12.1 per cent in second quarter of 2019.

The average revenue from this investment venture has increased from Sh23,000 a month in May last year to Sh28,000 this year. 

In December 2021, an Airbnb host made an average of Sh35,000  in revenue.

Most of the properties listed on Airbnb are located in middle class locations, like Kileleshwa, Westlands, Lavington, Kilimani, Yaya and Valley Arcade.

Nairobi’s Airbnb occupancy rate has increased from 23 per cent in  October last year to 29 per cent in May.

Occupancy was a high of 35 per cent in December, as more people chose to celebrated the festive season away from their homes.

In 2018, Nairobi was ranked third, amongst cities with the highest number of Airbnb facilities in Africa.

Kenya currently has nearly 20,000 listings on the platform. KRA has approved various taxes and permits to allow one to list their home for travellers accommodation.

Airbnb is a prime example of a company that has effectively leveraged the Internet to grow from small business to industry titan.

The hosts have the discretion to rent on any particular day, giving them the flexibility to respond to changes in demands for accommodation.

Unlike hotels, Airbnbs enable one to  manage and maintain their own listing which reduces their operation costs significantly.

Communication is also made very easy by the platform allowing a high response rate and therefore a consistent rotation of satisfied clients.