A recent study made by The Economic Research Institute Foundation (FIPE), in Brazil, has shown that the extra income families get by renting their houses through Airbnb, as well as the travelers’ spendings with tourism, including food, leisure and transportation during their stay, added BRL 2,5 billion (USD 796 million) to the country’s Gross Domestic Product in 2016.
FIPE’s survey showed that people who opt for Airbnb usually spend three times more than the ones who choose hotels or inns as accommodations. To give you an idea, this phenomenon would probably have added R$ 788.2 million (USD 250 million) less to Brazil’s GDP if users had opted for these traditional kinds of lodging instead of Airbnb.
But how did this happen? Allow me to share some facts with you so we can better understand this success case in Brazil.
Airbnb’s steady growth in Brazil
The economic recession has directly impacted the hotel market in Brazil, nevertheless, Airbnb has grown along with Brazil’s economic crisis.
The company started doing business in the country in 2012, aiming the FIFA Worldcup, which would happen in Rio two years later. It was a very assertive move: the platform helped host around 120.000 people in Brazil during the competition, according to Forbes. With that, Airbnb established itself in Brazil and saw a popularity boom.
If during the WorldCup only 6% of people who used Airbnb in the country were Brazilians, in 2016, for the Olympic Games, the number was up to 53%. In the same year, according to FIPE, Airbnb registered more than one million guest arrivals in the country, which already counts with around 90,000 hosts and 143,000 hosting ads.
Airbnb’s sudden growth encouraged more Brazilians to join the platform. By renting without much bureaucracy, hosts saw in it an way to get extra income (if not the only income in a time of high unemployment), since 97% of the Airbnb ad’s price remains directly with the host.
As the FIPE survey revealed, Airbnb hosts’ annual revenue was of around BRL 6,070 (USD 1,933) in 2016. It’s a pretty good incentive for people to share their homes, especially if we take in consideration Brazil’s minimum wage, which stands at USD 299, or USD 3,588 a year. In other words, they can earn more than half what an average Brazilian makes in a year, without having to put in too much effort.
Therefore, with more and more people providing travelers with lower budget and homy accommodations that catch the eyes of those who like to immerse themselves in the culture and experience life as a local, the market has heated up, motivating others to join the collaborative platform hype, forming a truly virtuous cycle.
Add to that the fact that, with the dollar really strong in comparison with the country’s currency (reais), foreigners see in Brazil a good and affordable option for tourism. As Airbnb allows these travelers to lodge for a lower price, they often stay longer and have more budget to perform other activities, a quite positive thing for the tourism sector.
A different kind of tourism
With all these benefits, Airbnb has motivated tourism across the country, even in regions not as much highlighted in foreigners’ tourism maps as Rio or Sao Paulo are, bringing economic benefits to Brazilian communities that have not enjoyed the tourism boom.
Airbnb’s current focus in this matter is on promoting ecological travel, leveraging the country’s natural wonders, such as the world’s largest rainforest in Amazonia and the amazing wetlands of Pantanal, along with other great opportunities in alternative tourism in the more rural areas.
According to Airbnb Citizen data, the number of ads in rural areas in the country triplicated, likewise with guests that stayed on a Airbnb, that passed from 27,800 in 2015 to 94,400 guests in 2016. This leads to a significant financial impact of home sharing in these areas that are not widely known as travel destinies. Proportionally to the number of guests, rural hosts revenues grew threefold from BRL 8,3 million in 2015 to BRL 25,2 million in 2016.
Airbnb’s bet on local payment methods
Airbnb’s success in Brazil is also partly due to its constant investment in better solutions for the user. One of the solutions that worked the best for the company was offering local payment methods, taking into account its consumers preferences and habits.
Since only 19% of Brazilians own an internationally accepted credit card, Airbnb, in partnership with Digital River World Payments and EBANX, started accepting payments via local credit, with installments or not, and Brazil’s favorite cash payment method, boleto bancário, a voucher with a barcode that can be paid in banks and lotteries in Brazil.
All of this undeniably helped leverage Airbnb’s brand among Brazilians, allowing them to travel around the world more easily no matter their budget.