For years, Airbnb offered Indian homeowners a tempting proposition: turn an empty house into a short-term rental and earn far more than the 2–4% yield typically available from conventional renting.
This made the platform a lucrative option for hosts, but as listings surged across the country, that premium is beginning to disappear.
Take the case of Chandigarh-based Harshdeep Kaur, who converted her home into an Airbnb in 2021, to fetch the 25% premium she had then estimated over renting. “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 said, noting that properties in the Chandigarh Tri-city area have increased from just 300 in 2021 to over 800 now. “To tackle the increasing competition, we had to lower our per night charge to ₹4,000 from ₹5,500- 6,000 when we started,” she added.
Increasing supply
Data from AirDNA, a platform that tracks global short-term rental performance, shows an year-on-year increase in listings across Indian cities between 21% (in Ahmedabad) and 72% (in Hyderabad) till 30 June 2026. The average daily rate or average price paid for all booked rooms during the same period has fallen between 6.5% (in Mumbai) and 43% (in Jodhpur).
Jaipur, Goa, Udaipur, Varanasi, and Jodhpur have seen their revenues fall 7-14%.
Actress Parul Gulati recently said on a podcast that she bought a 2 BHK villa in Nerul, Goa for ₹3.1 crore in 2021, expecting she could charge around ₹40,000- 45,000 a night on Airbnb but she’s actually charging ₹11,000 a night. Her villa generates around ₹15-16 lakh a year, translating into a yield of 3.3%. “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 on the podcast.
“Prime markets are saturated,” said Senthilprabhu Eswarakumar, founder and CEO of Suprhost, an Airbnb consultant.
He started with two properties in Bangalore, both financed, in 2013-14, when the city was emerging as a start-up capital. He was able to build a passive income stream from Airbnb and also pay off the property loan. Between 2020 and 2022, he decided to sell both of them, moved to Coimbatore and constructed another property after researching for seven months, as he saw strong demand and less awareness in Tamil Nadu.
After listing it, within 60 days, he got the ‘super host’ status in 2023 and has been earning around ₹2 lakh monthly since then while also consulting others on how to build and maintain.
Sharad Sud, a global Airbnb specialist said, “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.”
Delhi-based Harsimran Singh, who runs multiple listings across the city agreed that the market has become extremely competitive, with many owners listing their properties at very low prices without fully understanding the actual potential and value of their property.
Longer-term stays and rentals
Increasing Airbnb supply and rising competition are pushing back hosts towards traditional renting and longer term stays for a predictable cash flow with lower operating costs. Kaur said that the premium for listing on Airbnb compared to renting is slowly shrinking as prices have to be competitive and the decor has to be changed periodically just to remain relevant.
She prefers hosting working professionals and people visiting their home country who want to stay for more than a week, as that reduces her maintenance costs by 10-15% compared to short-term rentals.
In Goa, where revenue has fallen, many hosts are giving a monthly deal. Sud calls it a yield management strategy to convert difficult-to-sell inventory into a longer lower-cost booking and to avoid constant cleaning hassles.
“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, had built it as a homestay but found last-minute cancellations, maintenance costs and managing individual room listings difficult despite having a caretaker.
“Renting is a stable, dependable source of income without having to put extra effort to stand-out,” she said.
Airbnb is no longer a passive income stream but has become a hospitality business. Prasun Kumar, chief marketing officer at Magicbricks said that the assumption that Airbnb will always generate superior returns over conventional rentals is increasingly being challenged.
According to him, the advantage remains positive in Tier 1 cities with relatively limited tourism activity, where Airbnb can generate around 32.4% higher returns than conventional rentals but in Tier 2 and Tier 3 cities, the premium narrows considerably to just 6.7%. This variation highlights why the assumption that Airbnb will always generate superior returns is increasingly being challenged, he said, while noting that as short-term rental demand and occupancy potential decline, the additional income over conventional rent gets compressed.
“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.
For those who still prefer chasing the nightly premium, Eswarakumar suggested identifying the target customer and building a customized story and experience based on them.
Sud emphasises identifying multiple demand drivers. Noida, for instance, benefits from business, leisure and medical travel, while places such as Shimla are more dependent on tourism.
What changed for travellers
For travellers, the supply glut could mean better deals in markets such as Goa, Jaipur, Udaipur, Varanasi, and Jodhpur, where hosts are cutting rates to stay booked.
Comparing prices has become extremely important as from October 2025, the platform has mandated a single fee model similar to booking.com, where the host pays the entire 15.5% platform fee.
Airbnb did not respond to a request for a comment.
Earlier, the host had to choose between a single-fee and a split-fee model, in which the host pays 8%, and the guest pays the remainder. Many hosts who earlier adopted this model have started to pass through the increased service fee by raising prices by 10-12%.
For hosts, the Airbnb premium is no longer a given. Rising supply, falling rates and higher operating costs are pushing some towards longer stays or conventional rentals. For guests, however, that same competition could mean lower rates and better negotiating power.