Airbnb glut hits host revenues, pushes some back to renting

For years, Airbnb offered Indian homeowners a tempting proposition: turn an empty house into a short-term rental and earn far more than the 2–4% yield typical of conventional renting. That premium is disappearing.

Data from AirDNA shows listings across Indian cities rose 21–72% year-on-year through June 30, 2026, while average daily rates fell 6.5–43%. Jaipur, Goa, Udaipur, Varanasi and Jodhpur saw revenues drop 7–14% over the same period.

Chandigarh-based Harshdeep Kaur converted her home into an Airbnb in 2021, expecting a 25% premium over renting. “There was a lot of growth in the first 1.5 years, but then the response weakened as more people came to know about it,” she said. Properties in the Chandigarh Tri-city area have grown from 300 in 2021 to over 800 now. “To tackle the increasing competition, we had to lower our per night charge to ₹4,000 from ₹5,500–6,000 when we started.”

Actress Parul Gulati recently said on a podcast she bought a 2 BHK villa in Nerul, Goa for ₹3.1 crore in 2021, expecting to charge ₹40,000–45,000 a night. She is actually charging ₹11,000. Her villa generates around ₹15–16 lakh a year, a yield of 3.3%. “Reality hit me because back then there weren’t so many luxury villas and over 4–5 years there are way more properties.”

“Prime markets are saturated,” said Senthilprabhu Eswarakumar, founder and CEO of Suprhost, an Airbnb consultant. He started with two financed properties in Bangalore in 2013–14, built passive income from Airbnb and paid off the loan. Between 2020 and 2022 he sold both, moved to Coimbatore and built another property. He got ‘super host’ status within 60 days in 2023 and earns around ₹2 lakh monthly.

Sharad Sud, a global Airbnb specialist, said: “If you started in 2022, you could have made a lot of money because demand was exploding due to revenge travel post-covid but over a duration of time, competition has increased and differentiation has gone down.”

Delhi-based Harsimran Singh, who runs multiple listings across the city, agreed the market has become extremely competitive, with many owners listing at very low prices without understanding their property’s potential.

The supply glut is pushing hosts back toward traditional renting and longer-term stays for predictable cash flow with lower operating costs. Kaur prefers hosting working professionals and people visiting their home country who want to stay more than a week, as that cuts her maintenance costs by 10–15% versus short-term rentals.

In Goa, many hosts now offer monthly deals. Sud calls it a yield-management strategy to convert difficult-to-sell inventory into longer, lower-cost bookings. “Essentially, they are doing a rental. For an owner, ₹1.2 lakh guaranteed for a month can sometimes be more attractive than a theoretical ₹1.5 lakh from nightly bookings, because the vacation rental business comes with vacancy, commissions, cleaning, cancellations and much higher operating effort.”

Bengaluru-based Shilpa Ralhi, who owns a six-bedroom property in Dehradun, built it as a homestay but found last-minute cancellations, maintenance costs and managing individual room listings difficult despite having a caretaker. “Renting is a stable, dependable source of income without having to put extra effort to stand-out.”

Prasun Kumar, chief marketing officer at Magicbricks, said the assumption that Airbnb will always generate superior returns is being challenged. In Tier 1 cities with limited tourism activity, Airbnb can generate around 32.4% higher returns than conventional rentals. In Tier 2 and Tier 3 cities, that premium narrows to just 6.7%. “While these rentals can command higher nightly rates, people today are focusing on risk-adjusted returns accounting for occupancy volatility, operating expenses, regulatory risks, and management effort.”

For hosts still chasing the nightly premium, Eswarakumar suggested identifying the target customer and building a customized experience. Sud emphasised identifying multiple demand drivers: Noida benefits from business, leisure and medical travel, while Shimla depends more on tourism.

For travellers, the supply glut could mean better deals in markets where hosts are cutting rates to stay booked. From October 2025, Airbnb mandated a single-fee model similar to Booking.com, where the host pays the entire 15.5% platform fee. Earlier, hosts could choose a split-fee model where the host paid 8% and the guest the remainder. Many hosts who adopted that model have started passing through the increased service fee by raising prices 10–12%.

Airbnb did not respond to a request for comment.