Airbnb has underscored its commitment to achieving double-digit annual revenue growth by emphasizing the importance of increasing international revenue. As part of its expansion strategy, the company is focusing on markets like South Africa, where it recently unveiled performance data at an event in Johannesburg.
According to skift.com, people who listed short-term rentals and vacation rentals in South Africa on Airbnb generated revenue of $211 million (4 billion rand) last year. That was a 25% jump over the pre-pandemic year of 2019.
South Africa is the online travel agency’s major foothold in Africa, with nearly half of Airbnb’s listings across the continent being there. Airbnb said on Monday it has about 65,000 listings in South Africa, triple the count it had in October 2017.
Room for Airbnb to Grow
Airbnb has plenty of room to grow in the country, analysts said. South Africa only received 5.8 million inbound international tourists last year. That was down from roughly 10 million a year before the pandemic. As the country fully recovers its tourism sector, Airbnb has room to expand.
Airbnb is already seeing growth in bookings outside of the major cities of Johannesburg and Cape Town, said Velma Corcoran, regional lead for Middle East Africa for Airbnb, during an interview at the Airbnb Africa Travel Summit.
“They’re not necessarily just traveling to Cape Town, Stellenbosch, or Franschhoek,” Corcoran said. “Seven of the ten fastest-growing places visited using Airbnb were outside the Western Cape and Gauteng.”
“Admittedly, these are off a low base and are places many of us haven’t really heard of, like Empendle in KwaZulu-Natal and Nala in the North West,” said Corcoran, “But people are traveling to these places.”
If inflation continues to stay high, that may help encourage people to list properties to make extra money and encourage travelers to seek alternatives to hotels that have high prices because of constrained supply.
Last year, 47% of surveyed guests chose Airbnb over hotels primarily to save money, up from 34% of guests in 2021, according to a Genesis Analytics report commissioned on Airbnb’s operations in South Africa. The same survey found that 53% of hosts reported listing space(s) on Airbnb to cover the rising cost of living.
A Skift back-of-the-envelope calculation estimates that Airbnb had roughly 124,000 bookings in South Africa last year. That estimate is based on the average annual earnings per host in South Africa being $1,691 (or 32,000 rand) last year.
Regulation Pending in South Africa
Airbnb faces competition as an online travel agency, with analysts seeing its core competitors as Booking.com and Lekke Slaap — with few large players in the local short-term rental market. Perhaps the biggest potential headwind for Airbnb’s growth ambitions is regulatory.
While New York City grapples with stringent regulations that severely limit Airbnb hosts, South Africa is preparing to introduce a likely looser Short-Term Rental Registry.
Since August, government officials have been seeking citizen and business input on how to regulate the short-term rental market.
In the interim, South Africa’s tourism ministry has entered into a memorandum of understanding with Airbnb to gain deeper insights into the sector through Airbnb’s data. The call for commentary on short-term regulation is set to close on 31 October.
For context, South Africa has about 73,000 hotel rooms, according to consultancy PwC.
“This is a step in the right direction to address the challenges posed by the rapid growth of Airbnb and other short-term accommodation platforms,” Rosemary Anderson, national chair of FEDHASA (Federated Hospitality Association of South Africa), told Skift on Monday. The hotel lobby has called for regulations to ensure “a level playing field.”
Top Airbnb Destinations Across Africa
According to Airbnb executives on Monday: