For many, property ownership is no longer just about having a roof over their heads—it’s about making that roof pay for itself. The rise of Airbnb and similar short-term rental platforms has turned homes into cash-generating assets, with some owners even purchasing properties specifically for hosting travelers. This shift is shaking up real estate, redefining investment strategies, and raising big questions: Is running an Airbnb as lucrative as it seems? How sustainable is this model? And what does it mean for the broader housing market?
India’s short-term rental market was valued at approximately $135 billion in 2024 and is expected to grow at a compound annual growth rate (CAGR) of 10.8% through 2034, as per Future Market Insights. This growth is largely driven by the under-supply of hotels, with India having only 2.6 hotels per 100,000 people, significantly lower than the global average.
Traditional renting vs. short-term stays
The fundamental difference between traditional renting and short-term stays lies in flexibility and earning potential. Long-term rentals offer stability, with fixed monthly income and lower management overhead, whereas short-term rentals generate significantly higher revenue but require active management.
Ankit Lodha, founder, LA Empire, chose Airbnb over long-term rentals for better control over his properties. “Long-term leases limit access, whereas Airbnb allows us to manage our calendar, maintain upkeep, and optimise guest experiences. Within months, we realised Airbnb earnings were up to five times that of traditional long-term rentals,” he said.
Swaroop Murgod, founder and CEO at Salaam Namaste, and an Airbnb host, echoes this sentiment. “In Goa, during peak months like December and January, my earnings can go up to Rs 2 lakh per flat, whereas a long-term lease would yield significantly less,” he said. Similarly, Anirudh Sharma, founder, JP Homestays, and an Airbnb host managing 15 properties in Noida, noted that a studio apartment earning Rs 20,000- Rs 25,000 per month in traditional renting could fetch Rs 50,000- Rs 60,000 on Airbnb, especially during high-demand events.
(Media query sent to Airbnb had not received a response at the time of publishing this article.)
Tourist hotspots driving demand
The Airbnb model thrives in tourist-heavy areas. Popular destinations like Goa, Bangalore, Nainital, and Rishikesh witness strong demand for short-term stays, particularly during peak seasons. In India, the vacation rentals market is projected to reach $2.39 billion by 2025, growing at an annual rate of 7.71% to hit $3.22 billion by 2029, as per market research firm Statista.
“Goa experiences both on-season and off-season demand. Even during off-seasons, tourists still come for the weather and party culture. My network of property owners ensures that if one listing is fully booked, referrals are passed around on a commission basis,” Murgod explained.
The rise of property management models
With growing demand, new business models have emerged. Professional property management services are becoming common, where hosts delegate operations to agencies in exchange for a revenue split. This way, the Airbnb model is giving more employment opportunities for many.
“In Goa, some managers handle up to 40 properties without owning them. However, the typical 60-40 or 70-30 commission splits didn’t seem favorable to me,” Murgod said.
For Lodha, the key to success lies in meticulous upkeep. “We keep a warehouse stocked with spare furniture and appliances near our properties. If a dining table breaks after an 11 a.m. checkout, our team ensures a replacement before the next guest arrives at 4 p.m.”
Celeb BnBs!
Indian celebrities are increasingly entering the short-term rental market through Airbnb, leveraging their properties as commercial assets. Janhvi Kapoor’s property in Chennai, Shah Rukh Khan’s house in South Delhi, Yuvraj Singh’s villa in Goa, and Arjun Mathur’s Airbnb listing in Goa are positioned as high-value rentals. These celebrity-owned properties cater to travelers seeking premium stays, aligning with the growing demand for short-term rentals in India. The trend reflects the broader shift in the hospitality market, where high-profile individuals are monetizing real estate through platforms like Airbnb, contributing to the expansion of the luxury rental segment.
Challenges and regulations
Despite its profitability, Airbnb hosting comes with challenges—high guest expectations, maintenance, legal issues, and community resistance.
“Navigating zoning laws is tricky. Even if a state permits short-term rentals, local regulations may restrict operations. We conduct thorough due diligence before investing,” Lodha explained.
To maintain community relations, hosts are taking proactive measures. “We engage with neighbors before listing, enforce strict noise policies, and have 24/7 security monitoring. If there’s a complaint, we resolve it immediately,” Lodha added.
Additionally, this market boom is bound to hit a saturation point, as Sharma pointed out. If, in a society with 20 properties, 10 are listed on Airbnb, the oversupply will drive down demand and profitability, ultimately stalling growth.
Sustainability of the model in India
While Airbnb has disrupted hospitality globally, its long-term viability in India remains a debated topic. However, hosts see strong growth potential. Airbnb reported a strong Q3 2024, with revenue rising 10% year-over-year to $3.73 billion, driven by improved North American travel trends and strong demand in Asia-Pacific and Latin America. The company posted a net income of $1.37 billion, or $2.13 per share, meeting analyst expectations.
“In India, property values rise faster than in the U.S. The market is shifting towards premium experiences, and demand for high-end vacation rentals is stronger than ever,” Lodha pointed out.
For Sharma, the key lies in strategic expansion. “We are moving into Rishikesh, where tourism is growing rapidly. Short-term rentals will continue to flourish in destinations with strong traveler interest.”
As more investors enter the space, India’s Airbnb boom shows no signs of slowing down. However, evolving regulations—similar to those that affected OYO in India—along with competitive pressures and shifting traveler preferences, will require hosts to stay adaptable to maintain profitability.
