PHOENIX (3TV/CBS 5) - Owners of short-term rental properties are suffering unprecedented losses, as the flood of tourists that normally descends upon the Phoenix area every spring dried up almost overnight.
"I am actually surprised that this is happening so quickly," said Greg Hague, a real estate broker and attorney, who owns Hague Partners and 72Sold.
Hague says his company has listed many former short-term rentals in the past month, representing sellers who need to unload homes that are no longer producing income.
Airbnb is rolling out recommended cleaning and vacancy procedures for its more than 7 million global rentals as the coronavirus pandemic has made travelers extra-cautious about cleanliness and safety.
Hague says it's going to take some time for the short-term rental market to rebound in the Valley.
"The damage is done because they missed the season by having these bookings cancel immediately. And it's very tough to rent Airbnbs in the summer in Arizona for obvious reasons," said Hague.
Hundreds of homeowners and investors poured millions of dollars into expensive mortgages across the Phoenix area, banking on the idea that these rentals would pay the bills and then some - every month.
But according to the website, airdna.co, 90% of the global short-term rental units that had been reserved for this week, were canceled.
The turn of events has affected investors like Kory Wenzel, who owns three rental properties in the Phoenix area. Two of them are short-term rentals. The third is a traditional long-term rental.
"It should be survivable just being supplemental income. But for those who are doing it as a business, it might not be survivable," said Wenzel.
He is considering opening his short-term rental units to traditional leases, and it appears that the industry may be heading in that direction as well.
Airbnb reports that more of its hosts are opening their properties to longer term stays. The company has pledged to spend $250 million to help its hosts get through the downturn in tourism.
But according to the Wall Street Journal, Airbnb saw $1.5 billion in cancellations this spring.
Greg Hague predicts that the short-term rental industry will face even more challenges, as investors shy away from spending so much money on rental properties, while visitors may favor traditional hotels with deep-cleaning protocols.