More Airbnb homes, less money? Why Indian hosts are losing their rental premium

Airbnb once offered Indian homeowners an attractive alternative to traditional rentals, where yields typically remain around 2-4%. But the rapid growth in short-term rental listings is changing that equation, with falling nightly rates and rising competition putting pressure on hosts' returns.

Chandigarh-based Harshdeep Kaur experienced the shift after converting her home into an Airbnb in 2021. She initially expected a 25% premium over conventional rent.

“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 told Mint.

Kaur said properties in the Chandigarh Tri-city area have grown from around 300 in 2021 to more than 800. To compete, she reduced her nightly rate to ₹4,000, from ₹5,500-6,000 when she started.

Rising supply puts pressure on rates

AirDNA data shows Airbnb listings increased year-on-year across Indian cities by between 21% in Ahmedabad and 72% in Hyderabad through June 30, 2026. Average daily rates declined by 6.5% in Mumbai and as much as 43% in Jodhpur.

Revenues in Jaipur, Goa, Udaipur, Varanasi and Jodhpur have fallen by 7-14%.

Actress Parul Gulati recently highlighted a similar experience. She said she bought a two-bedroom villa in Nerul, Goa, for ₹3.1 crore in 2021, expecting nightly rates of ₹40,000-45,000. She now charges around ₹11,000 and earns approximately ₹15-16 lakh annually, translating into a 3.3% yield.

“Reality hit me because back then there weren’t so many luxury villas and over 4-5 years there are way more properties,” she said.

“Prime markets are saturated,” said Senthilprabhu Eswarakumar, founder and CEO of Suprhost.

Sharad Sud, a global Airbnb specialist, said the post-pandemic travel boom initially created exceptional demand. “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.”

Longer stays emerge as an alternative

As nightly bookings become less predictable, some hosts are turning towards monthly stays and conventional rentals.

Kaur said longer bookings from working professionals and people visiting their home country can reduce maintenance costs by 10-15%.

In Goa, Sud said monthly deals are increasingly being used to fill inventory and reduce cleaning and turnover costs.

“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, also moved away from the homestay model after facing cancellations and maintenance challenges.

“Renting is a stable, dependable source of income without having to put extra effort to stand-out,” she said.

Prasun Kumar, chief marketing officer at Magicbricks, said Airbnb is increasingly becoming a hospitality business rather than passive income. According to him, short-term rentals can generate around 32.4% higher returns than conventional rentals in Tier 1 cities, but the premium falls to 6.7% in Tier 2 and Tier 3 cities.

“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," he added.

What it means for travellers

For guests, increased competition could mean better deals in markets such as Goa, Jaipur, Udaipur, Varanasi and Jodhpur.

But hosts also face higher platform costs. Since October 2025, Airbnb has used a single-fee model under which hosts pay the entire 15.5% platform fee.

For homeowners, the Airbnb premium is therefore no longer guaranteed. Rising supply, softer rates and operating costs are pushing some towards longer stays or traditional rentals, while travellers could benefit from greater choice and competitive pricing.