Parisian Airbnb hosts are raking it in this summer as hotels suffer

That surge in the supply of short-term rentals has brought down accommodation costs for everyone, said Blake Reiter, director of research at Lighthouse.

“The rate discounting that’s happened, the occupancy levels, they’re definitely being suppressed and compressed by the short-term rental market, without question,” Reiter told Business Insider.

While hotel room prices in the City of Light are much higher than they were last year at the same time, they’re not nearly as pricey as they would be without so much short-term rental availability, he argued.

Average hotel rates in Paris for the weeks of the Olympics peaked about 335 days before the Games, according to Lighthouse data. In just the past three months, prices for hotel stays during the Games have fallen about 30% as of July 16. That’s a relatively bleak position for hoteliers to be in. Weeks before an event like the Olympics, they hope to be jacking prices up as room availability falls, Reiter said.

“Hoteliers are being forced to discount rate in order to actually get their hotels full,” Reiter said. “which is interesting considering the breadth and magnitude and grandeur of an event like the Olympics.”

Paris is facing a housing crisis

The availability of short-term rentals has made attending the Olympics more affordable for visitors and is helping some Parisians make extra cash. But the surge in new short-term rentals could further restrict the city’s housing supply. The future of short-term renting in France is unclear as lawmakers impose new restrictions on Airbnb and its competitor platforms in an effort to boost the housing supply and bring down prices.

Anne Hidalgo, the mayor of Paris since 2014, has made boosting housing affordability a top priority. Her administration has spent billions of Euros on the construction of new affordable housing, with ambitious goals of making 40% of the city’s housing affordable for people with lower incomes by 2035.

As part of this effort, Hidalgo has overseen new restrictions on short-term renting. She called Airbnb a “powerful” opponent in the fight to keep housing costs down in an interview with Time in May.

“It’s a daily struggle to ensure that this is not a city of the very, very rich,” she added.

In recent years, France passed a law allowing homeowners to rent only their primary residences on platforms like Airbnb for a maximum of 120 days a year. Paris has enforced the law, suing Airbnb for allowing illegal rentals on its platform and fining thousands for violating the rules. And Paris is considering joining several other French cities in banning the public placement of lockboxes hosts use to store their keys for guests.

National lawmakers are also poised to raise taxes on income from short-term rentals as a way to encourage homeowners to rent out their properties long-term.

Airbnb, which dominates the short-term rental market in France, has leveraged the Olympics to expand its roster of hosts and guests in France. In 2019, the company announced a $500 million sponsorship of all of the Olympic Games through 2028 — a move Hidalgo opposed. It has also urged athletes to sell experiences on Airbnb, including opportunities to go on runs with them or workshops on how to quell nervousness while competing.

The effort might have lasting effects on the tourist accommodation market. Because so much of the recent growth in the short-term rental market was a function of the Olympics, it’s unclear whether Airbnb will maintain its expanded presence in the city going forward. Reiter said he wouldn’t be surprised to see a contraction in the short-term rental market, but it’s unlikely the city will go back to last year’s numbers.

“I don’t think it’s going to shrink back to what it was last year,” Reiter said.