The airbnb rental arbitrage market - Italy (2023)

1.2 The global market

In ****, the global short-term rental market for tourism purposes reached a total value of $***.** billion. The growing demand toward this type of accommodation leads to forecasting a compound annual growth rate (***) of **.* percent between **** and ****. At the end of the period, the global short-term rental market for tourism purposes is estimated at $***.** billion.

Short-term rental market for tourism purposes World, ****-****, in billions Grandviewresearch

Considering the Airbnb platform, one of the world's leading platforms for the short-term rental market, **.* percent of available accommodations in **** are located in Europe. This is followed by the Asian region with **.*% and North America with **.*%. Finally, Latin America and Africa are concentrated with **.*% and **% of total listings, respectively. Listings present on Airbnb, breakdown by region World, ****, % Searchlogistics Analyzing the trend of bookings made on the Airbnb platform, between **** and **** these grew by ***.* percent, from *** million to *** million. The growth appears to be steady throughout the entire period, with the sole exception of ****, when due to the outbreak of the pandemic, the number of bookings made dropped by **.* percent compared to ****. However, in **** the figure returns to growth, both compared to **** (***). Bookings on Airbnb World, ****-****, in millions Helplama

1.3 The Italian market

In Italy, between **** and ****, total tourist spending on accommodation during the vacation season appears to be slightly decreasing (***) as a result of the outbreak of the pandemic in ****. In contrast, starting in ****, total spending returns to growth: +**.*% between **** and **** and +***.*% between **** and ****. Total tourist spending on accommodation Italy, ****-****, in billions of euros Bancaditalia Considering the market segment occupied by Airbnb, and analyzing the context of the top * cities in Italy by volume of tourism, it is possible to highlight that in **** Rome is the Italian context in which the facilities together generate the highest revenue, amounting to *.** billion euros. This is followed by Milan, with ***.* million euros and Florence with ***.* million euros. In Venice the total gain stands at ***.* million euros while in Naples this drops to ***.* million euros. Overall, in the * cities analyzed, the total gain in **** stands at *.** billion euros.

Total earnings of facilities present on Airbnb, breakdown by city Italy, ****, in millions of euros Airdna

1.4 The consequences of the Russian-Ukrainian conflict

the outbreak of the Russian-Ukrainian conflict in February **** resulted in, among other things, a general increase in the consumer price index. The housing services sector appears to be one of the most affected by the consequences of the conflict. Between January **** and November ****, the consumer price index for housing services rose from ***.* points to ***.* points (***). This means that over a **-month period, average prices for housing services increased by **.* percent. Compared to ****, consumer prices show an increase of **.* percent.

Consumer price index for housing services Italy, ****-****, base ****=*** Istat

As for the accommodation services segment, the increase in consumer prices is merely a reflection of the increase in operating costs. Considering the segment related to private facilities offered for rent, the main costs are related to electricity and gas supply and goods and services for routine house maintenance. Considering the first of the two aspects, between January **** and November ****, the consumer price index increased by **.* points. This translates into increases in supply costs of **.* percent, peaking at up to **.* percent in November ****. Compared to ****, the costs to be incurred for lighting and heating increased by **.*%. Consumer price index for electricity, gas and other fuels Italy, ****-****, base ****=*** Istat Finally, when analyzing ...

2.1 Demand in Italy

In order to analyze the demand for short-term rentals through the Airbnb platform in Italy, the total number of arrivals and attendance in accommodation establishments, the average expenditure of Italians on accommodation services, and the breakdown of foreign tourists' expenditure by type of destination are considered.

Considering the total number of arrivals and presences in Italy, between **** and **** these are down by *.* percent and *.* percent, respectively. The smaller drop recorded in the number of presences indicates an increase in the average number of days spent in Italy. Analyzing the individual annual changes, it is possible to show a sharp decline in arrivals and presences between **** and ***** (***). However, as in the case of total spending on accommodation, a clear growth can be highlighted from **** onwards. As for arrivals, there is an increase of **.*% between **** and **** and **.*% between **** and ****. The number of attendances grew by **.*% between **** and **** and **.*% between **** and ****.

Customer arrivals and presences at accommodation establishments Italy, ****-****, in millions Istat The outbreak of the pandemic in **** and the adoption of restrictive measures to contain the contagion (***), in **** **.* percent, while in **** the values return in line with those recorded in the pre-pandemic period.

Customer arrivals at accommodation establishments, breakdown by citizenship Italy, ...

2.2 Demand drivers

The main drivers driving demand for private accommodation facilities include:

Diversity and uniqueness of accommodations: Airbnb offers a wide range of unique options, from cozy apartments to luxurious villas, allowing for different experiences than standard hotels. Affordability: accommodations on Airbnb are often more affordable, especially for groups or extended stays, due to the ability to split costs. Ease of local integration: Airbnb allows you to live like a local resident, offering a more authentic and personal experience. Home comfort: many Airbnb accommodations offer the comforts of home, such as fully equipped kitchens and living spaces. Flexibility: Airbnb accommodations can offer more flexibility for check-in and check-out and do not have the same restrictions as hotels. Privacy and space: Airbnb often offers more space and privacy than a hotel room. Unique locations: Airbnb allows people to stay in less touristy neighborhoods or in locations where there are no hotels.

Considering the global context, it is possible to identify a strong correlation between the use of the Airbnb platform and the age of the individual. In ****, young people (***). Baby-boomers and over-**s account for ** percent of total bookings while the **-** age group contributes ** percent. Guests at properties available on Airbnb, breakdown by ...

2.3 Geographical distribution of demand

In order to visualize the geographic distribution of demand, a map was created with the number of arrivals in accommodation establishments in Italy in **** for each macro-region.

The Northeast collects the highest number of tourists: there are **.* million arrivals in accommodation facilities in this area in ****, thanks mainly to data recorded in Veneto (***), respectively. In the South there are **.* million arrivals in **** while in the Islands the figure drops to *.* million.

3.1 The market structure

In order to analyze the structure of the short-term rental market realized through the Airbnb platform, the total number of facilities in the top * tourist destinations in Italy, the types of facilities available, and the number of facilities managed by hosts are taken into consideration.

In ****, Rome collects the highest number of facilities available on Airbnb in Italy, with a total of **,*** facilities. It is followed by Milan, with **,*** facilities; Florence, with **,*** facilities; and Naples, with *,*** facilities. Finally, Venice has *,*** facilities.

Number of structures on Airbnb, breakdown by city Italy, ****, in thousands Insideairbnb

Analyzing the different types of facilities made available on the platform, apartments collect in all * cities analyzed the highest share of listings: on average these are **.*% of the total. This is followed by rooms (***) with **.* percent of the total ads on average and hotel rooms, averaging *.* percent of the total. Types of accommodations available on Airbnb, breakdown by city Italy, ****, % Insideairbnb Finally, analyzing the number of facilities managed by different hosts in the * cities, on average **.*% of hosts manage between * and * facilities. **.*% of hosts manage only one facility while **.*% of hosts manage more than ** facilities. The latter category mainly includes property management companies that operate on behalf of ...

3.2 Long-term rentals (LTR)

Analyzing the long-term rental market in Italy, between **** and ****, the total number of homes placed for rent appears to be decreasing. During the period, the total number of housing units rented out for residential purposes decreased from ***,*** to ***,***, marking a decline of *.* percent. As of ****, the decline appears to be steady throughout the entire period, and especially between **** and **** (***)

Rented housing Italy, ****-****, in thousands Agenziadelleentrate Considering the different types of contracts used to lease long-term housing units, in **** the ordinary long-term contract collects more than half of the total number of leases (***). This is followed by the subsidized rent agreement contract with **.* percent of the total contracts and the transitional contract with **.* percent of the total. Finally, the subsidized student contract accounts for *.* percent of total leases. Rented housing, breakdown by contract type Italy, ****, % Agenziadelleentrate Regarding the accommodations available on the Airbnb platform in the * Italian cities analyzed, in ****, long-term rentals represent, on average, *.*% of total bookings. Short-term rentals turn out to be the main proposed solution searched on the platform.

Type of rental offered on Airbnb, breakdown by city Italy, ****, % Insideairbnb

3.3 The main actors

The following is a list of Airbnb hosts with the highest number of managed facilities in each city analyzed:

Rome

IFlat: The company specializes in managing short- and medium-term rentals, mainly for vacation rentals in Rome. They offer comprehensive services to property owners, including reception, housekeeping, **/* assistance, reservations, decorating and home staging, photo shoots, and sales channel management.

Welcome to Our Holiday Homes: is a collection of boutique hotels, B&Bs, villas, beach houses, and luxury vacation homes, carefully chosen for their unique design and interesting architecture. The company highlights properties in different destinations around the world, offering a variety of options ranging from modern vacation homes and boutique accommodations to villas and private islands. Each property is selected for its distinctive design and quality, with the goal of providing memorable and authentic experiences for travelers.

Halldis: is a company specializing in property management, offering rental services for vacation homes and short- and medium-term housing solutions. Since ****, the company has been providing complete property management, from registration with local authorities to hosting guests.

WonderWhere to Stay: is a portal dedicated to short- and medium-term housing rentals, mainly in Rome. They offer a variety of properties, such as apartments and villas, in ...

4.1 The offer

Short-term rentals

Short-term renting or temporary renting is defined as a mode of house management opposed to traditional rentals, which have rather strict time constraints on landlords. This mode of management allows the home (***) to be given for use for limited periods, shorter than the minimum four years of the rent-free lease, by selling individual nights instead of entire months. The Internal Revenue Service states that "a short lease is defined as a lease of no more than ** days' duration, of property for residential use, which is entered into by individuals. "Given the Internal Revenue Service's definition of short leases, we can then divide short leases into two categories:

Short rentals ofa tourist nature:of a duration of less than ** days. For these contracts there is no obligation to register with the Internal Revenue Service, there are no obligations regarding the payment of stamps for registration, but it is sufficient to follow the rules dictated by the Agency. Short-term rentals of a transitory nature: for leases longer than ** days up to ** months. In these cases, there is an obligation to register with the Internal Revenue Service, the payment of a stamp duty (***).

(***)

Short-term rentals are much more affordable than traditional ...

4.2 The prices

Short-term rentals

Analyzing the average price per night within the properties on Airbnb in the top * Italian tourist destinations, Venice comes out as the most expensive destination for tourists, with an average of ***.* euros per night. This is followed by Florence and Rome, where people pay an average of ***.* euros and ***.* euros per night. Finally, in Milan and Naples, overnight stays cost an average of ***.* euros and ***.* euros.

Average daily price per facility, breakdown by city Italy, ****, in euros Airdna

Long-term rental

Then analyzing the price trend for long-term rentals in Italy, between **** and **** these grew by **.* percent, from *.** euros per m* to **.** euros per m*. The growth appears to be constant throughout the entire period, with the exception of the first few months of ****, when due to the outbreak of the pandemic average prices dropped by * percent.

Average rental price Italy, ****-****, in euros/m* Real Estate

Looking again at the context of the * cities analyzed so far, in **** Milan is the city where rents show the highest value, amounting to **.* euros per m* (***).

Average price of long-term rents, breakdown by municipality Italy, ****-****, in euros/m* Real Estate

4.3 New supply trends: entering the long-term rental market

From ****, the company specializing in short-term rentals plans to expand its experiences and services. In particular, through the words of Brian Chesky, Airbnb's CEO, the company's intention to expand into the long-term rental market is clear.(***)

5.1 The legislation

Short-term rentals

Decree Law of **/**/****, No. **: Article * of the Decree Law regulates the tax regime of short leases. Law of Dec. **, ****, No. ***: filled a legislative loophole by providing that the tax regime of short leases, effective from the tax period relating to the year ****, is recognized only in the case of allocation to this type of rental of no more than * apartments in each tax period. In other cases, the rental activity is presumed to be carried out as an entrepreneurial activity pursuant to Article **** of the Civil Code. Directive (***) ****/***: stipulates that as of January *, ****, intermediary platforms through which short-term rental contracts are concluded must, in fact, report to the tax authorities:the data of landlords on a quarterly basis to the Internal Revenue Service, the fees received and the number of transactions carried out.

In cases where a region does not have specific legislation, regulations on vacation rentals refer to the Civil Code, Articles **** et seq.

Long-term rentals

Law of December *, ****, No. ***: Regulation of leases and release of properties used for residential purposes. Law of July **, ****, No. ***: regulation of leases of urban real estate.

6.1 Segmentation