Data from vacation rental research firm AirDNA shows the rate of occupancy of listed homes dropped from 35 per cent in December 2021 to 29 per cent in July this year.
Revenue from the hosting business also went down from an average of Sh39, 223 in December to Sh30, 691 this month.
The decline comes weeks after the agency resolved to permanently ban parties at properties listed on its site.
The move, according to Airbnb was aimed at curbing cases of hosts who do not operate responsibly, or guests who try to throw unauthorised parties.
"We know that the overwhelming majority of our hosts share their homes responsibly, just as the overwhelming majority of guests are responsible and treat their listings and neighbourhoods as if they were their own," Airbnb said in a statement in June.
Airbnb host Linet Agutu said she has noted significant reduction in customers since the ban and is now counting loses just two months after starting the venture.
"Most of my clients were young people seeking a place to hold celebration, especially birthday parties. The ban has really impacted business," Agutu told the Star on Wednesday.
Hosts who violate the new policy risk being suspended or removed from the listing platform.
Previous, Airbnb used to leave the decision to throw parties to hosts. Then, in 2019, it banned "open-invite" parties and "chronic party houses."
At the height of the Covid-19 pandemic, which saw bars and clubs closed, revellers began taking their parties to Airbnbs.
The company temporarily banned parties in August 2020 to curb the spread of the virus.
Since then, Airbnb said reports of parties have dropped 44 per cent year-to-year.
Data from AirDNA shows that the average daily cost of leasing has gone down four per cent in the past five months to Sh5, 036. The daily charges declined from Sh5,569 in December 2021.
Airbnb business boomed at the beginning of the year as the number of listings in the platform grew by 23 per cent for the first four months.
AirDNA data shows the number of rentals increased to 10,094 from 8,213 last year translating 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.
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.
Three weeks ago, residents of National Housing apartments in Shauri Moyo, Kisumu, urged the government to eliminate Airbnb businesses in the estate over noise and insecurity.
They said the units are exposing them to insecurity and noisy clients.
There are more than 200 housing units in the estate.
Residents said children are exposed to immoral activities due to bad behaviour of some guests.
They appealed to the Kenya Revenue Authority and Tourism Regulatory Authority, police and the Kisumu government to conduct raids and establish whether the Airbnb are operating legally.
There are about six Airbnbs within the estate. They are in Block C, D, E, G and H.
A resident, who sought anonymity, claimed some of the Airbnbs are hideouts for criminals, thereby exposing them to danger.
