Is Airbnb Profitable for Hosts in India: Exploring the Profitability

Is Airbnb profitable for hosts in India? This question is increasingly relevant in today’s shared economy. With the rise of Airbnb, many property owners are considering this lucrative opportunity. But is it really a gold mine or just a mirage in the desert of the real estate market? Let’s embark on a journey to discover the truth.

The Financial Landscape of Airbnb Hosting in India: 

The financial landscape of Airbnb hosting in India presents a significant and growing impact on the economy, marked by increasing profitability for hosts and substantial contributions to the country’s GDP.

From 2019 to 2021, nights booked at unique Airbnb properties in India increased by over 30%, indicating a rising demand for such accommodations. This growth translated into substantial earnings for Airbnb hosts in the country, with unique hosts collectively earning nearly INR 250 million in 2021​​. This surge in unique property bookings highlights the diverse preferences of travellers and the lucrative opportunities for hosts to offer distinctive experiences.

Furthermore, Airbnb’s contribution to the Indian economy is noteworthy. Between 2015 and 2019, Airbnb guest spending in India grew at an annualized rate of 83.4%, with the company’s impact on the Indian economy growing more than tenfold in real terms. In 2019 alone, Airbnb guests spent over USD 249 million (INR 18 billion) in India, including significant expenditures in local shops and restaurants. This spending pattern underscores Airbnb’s role in driving local economic activity and supporting micro-entrepreneurship and small businesses​​.

The GST Puzzle in Airbnb Transactions:

When it comes to taxation, the Goods and Services Tax (GST) plays a pivotal role. Airbnb charges a 12-18% GST for every booking, including a cleaning fee. This tax is an essential consideration for hosts, as it impacts the overall profitability.​

The Demographics Driving Airbnb’s Success in India:

The preferences and behaviours of younger generations largely influence the demographics driving Airbnb’s success in India. 

2021 a significant trend was observed: the inclination towards unique and authentic travel experiences, especially in nature-focused destinations. This trend was particularly prominent among Millennials and GenX, who comprise many travellers. 

These groups strongly preferred to stay in unique accommodations, such as heritage homes, farm stays, and villas. Additionally, the desire for travel that connects people, especially with family and friends, was evident across various age groups, indicating a shift in travel preferences post-pandemic. 

This change reflects a broader trend towards more meaningful, sustainable, and socially connected forms of travel.

The Economic Impact of Airbnb in India:

The economic impact of Airbnb in India has been substantial, especially in the years following the COVID-19 pandemic. In 2019, Airbnb contributed over USD $320 million (INR 22 billion) to India’s Gross Domestic Product (GDP) and supported close to 50,000 local jobs. 

The spending of Airbnb guests in India, particularly on shopping and food, was significant, with INR 6500 out of every INR 10000 spent outside accommodation going towards these sectors. Notably, around 83% of guests in Airbnb’s India listings in 2019 were domestic visitors, reflecting a 34% increase since 2015​​.

A 2022 report from OxfIndia’snomics has further highlighted the role of Airbnb in India’s tourism sector. In that year, Airbnb contributed over USD $920 million (INR 72 billion) to India’s India’s supported over 85,000 jobs. It represented a significant growth compared to 2019, despite the challenges posed by the COVID-19 pandemic. 

The report also noted a shift in travel behaviour, with tourism dispersing away from urban areas to more rural communities and increasing long-term stays facilitated by flexible work arrangements. This trend contributed to a wider dispersion of tourism spending beyond traditional destinations in India. Notably, Airbnb guests spent a total of USD 815 million in India during FY23, more than double the levels of FY20​​​​​​​​.

This impact reflects the growing importance of Airbnb in India’s India’s landscape, driving economic benefits to a broader array of destinations and fostering growth in local businesses, including shops, restaurants, bars, and cafes. 

Airbnb, which promotes unique and localized travel experiences, has been instrumental in supporting the recovery of tourism and the broader Indian economy, creating opportunities for micro-entrepreneurship and small businesses. The company’s contribution to both GDP and job creation has had significant ripple effects across various communities in India.

Frequently Asked Questions:

What is the average income for an Airbnb host in India?

While specific income varies, unique hosts in India collectively earned nearly INR 250 million in 2021.

Are there any specific tax considerations for Airbnb hosts in India?

Yes, hosts need to be mindful of the Goods and Services Tax (GST), which ranges from 12-18% on bookings​.

What type of properties are most popular on Airbnb in India?

Treehouses and unique stays are particularly popular, reflecting a trend towards novel and immersive travel experiences.

Conclusion: Is Airbnb Profitable for Hosts in India

Airbnb hosting in India has proven profitable, with a significant increase in bookings and earnings. Unique hosts in India collectively earned nearly INR 250 million in 2021, driven by a 30% rise in nights booked at unique properties from 2019 to 2021. This growth reflects the popularity of Airbnb’s diverse accommodations and its positive impact on local economies