The Rewards & Risks of Airbnb on Paris Vacation Rental Market

Airbnb on Paris Vacation Rental Market - Guesty

Hot in the news last week and coming into effect in January 2018, has been the rental cap placed on central Paris by Airbnb. The cap limits short-term rentals through the platform to a maximum of 120 days a year. This action follows Airbnb’s more recent initiatives in both London and Amsterdam. This cap is Airbnb’s response to the Paris city council law for short-term rentals to be registered with the town hall. The cap will ensure rentals effectively comply with France’s official limit on short-term rentals of 120 days a year for a primary residence.

Paris currently has 400,000 Airbnb listings, making France the second largest market after the US, and the cap is an attempt to put some limits and constraints on what has been an exploding market.

At Guesty, we work with international clients both in the urban short-term and traditional vacation rentals sector and therefore get the inside track on the challenges facing our industry. This week we’ve had some interesting conversations with some of our Paris based clients.

Short-term and vacation rentals are often criticized for driving up property prices, preventing locals from finding affordable housing. This rental cap is an attempt to put some limits and constraints in place. However, Airbnb’s cap will apply only to the city’s first four districts (“arrondissements”). These districts are buzzing with tourists, including hotspots such as the Marais, and landmarks such as the Louvre and the Place de la Concorde. The more suburban areas of Paris will be exempt from this cap. But what does this initiative mean for property managers, owners and guests?

If you are an owner and you have been renting out your primary residence for some extra income (Airbnb’s original ‘sharing economy’ base) then you will be fine. What the cap will do is restrict the supply of the year-round rentals, decrease your competition and then allow you to raise your rental fee and increase your profits.

If you are a tourist then you have a choice. You can choose to pay higher rates for desirable central Paris, you can travel (slightly) out of the city center and check out an apartment in the 7th, 8th or even 14th Arrondissements. Or you could even book a hotel.

But what about the professional property manager with year-round vacation rentals in the city? It will be interesting to see how things roll-out after the cap comes into play. Maybe by the time we head to the VRMA Europe in March, the short-term rental landscape of Paris will look a lot different. Or maybe not?

The Rewards & Risks of Airbnb on Paris Vacation Rental Market
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