Another Giant Falls: Is Airbnb Rental Arbitrage Officially History?

As we head toward 2026, many people are asking:

Can you still operate an Airbnb?

You may have heard: “The past decade was the golden age of Airbnb in North America.” Thousands of hosts made their first fortune by leasing long-term and renting out short-term. They rented an entire apartment, added some design touches and furniture, and could bring in thousands of US dollars a month on Airbnb.

At the time, almost anyone seemed capable of Airbnb arbitrage. Some used it to buy homes, leave their jobs and achieve financial freedom.

But time flies. A decade later, that model is quietly collapsing. The latest sign is Sonder’s downfall. Once called Airbnb’s successor, the company announced bankruptcy in November 2025.

Its story reflects not only one company’s rise and fall, but a transformation across the short-term rental industry. Let’s look back.

The birth of the Sonder story

The story begins in 2012. In Montreal, Canada, a university student named Francis Davidson wanted to earn extra money. He cleaned up his roommate’s empty room and rented it to travelers. The experiment proved unexpectedly popular. He realized that travelers wanted hotel-level cleanliness combined with the flexibility of a rental home.

He recruited a partner and formally founded Sonder in 2014: a company that sounded like a hotel but was not a traditional one. Their approach was bold: sign long-term leases on entire buildings, renovate and manage every unit consistently, then rent them out for short stays like Airbnb.

Sonder described itself as neither a traditional hotel nor an ordinary rental home, but a next-generation hospitality brand.

Over the next few years, Sonder expanded rapidly:

In 2016, it entered the US market;

In 2018, it raised tens of millions of US dollars;

In 2019, it expanded to more than 30 cities worldwide;

In 2021, its valuation soared to US$2.2 billion;

In 2022, it listed on Nasdaq through a SPAC.

From a university dormitory to Wall Street in just eight years, Francis became a rising star of shared accommodation. At its peak, Sonder operated more than 9000 properties worldwide and partnered with Marriott. The media called it the next miracle after Airbnb.

The collapse of the legend

Business stories do not always move upward. The 2020 pandemic froze tourism almost overnight. Sonder’s long-term-leasing, short-term-rental model stalled during lockdown: rent still had to be paid, but guests disappeared.

Losses surged from millions to tens of millions.

After 2023, the market began recovering, but new problems followed: soaring interest rates, high inflation, sharply rising labor costs and increasingly strict local short-term rental regulation. Sonder’s arbitrage logic was undermined.

In 2024, the company had to begin layoffs and closures. Its long-term leases became the final straw. The larger the company, the larger its losses.

Finally, the situation reached a breaking point in November 2025. Marriott announced that it was terminating the partnership, accusing Sonder of failing to fulfill its contract. Sonder then announced it would immediately begin liquidation and file for Chapter 7 bankruptcy.

It said it had tried every option—selling assets, finding investment and restructuring debt—but liquidation was the last remaining path.

In little more than a decade, a giant once called Airbnb’s successor went from its peak to bankruptcy and disappeared into history.

What does Sonder’s downfall mean for Airbnb hosts?

First, its collapse signals that long-term-leasing, short-term-rental arbitrage has officially entered high-risk territory. Many people made easy money this way over the past decade, but things have changed: high rents, interest costs, cleaning fees and platform commissions, plus inflation-driven maintenance expenses, have squeezed profits almost to zero.

External conditions make matters worse.

For example, President Trump’s policies have created various challenges for tourism. Economic uncertainty from the tariff war encourages households to cut nonessential travel spending first. The government shutdown led to more than 10% of flights being canceled, prompting more people to cancel travel for fear of being stranded at airports.

These factors have dealt a major blow to tourism this year.

Hosts may wonder: if these companies earned money through arbitrage for so many years, why did one or two loss-making years bring them down? A major reason is that corporate arbitrage has two fatal weaknesses.

First, to attract venture capital, they expand aggressively, looking for new cities and buildings to lease. Venture investors prioritize rapid growth rather than early losses. To reach agreements with apartment owners quickly, these companies often offer excessively high rents.

But arbitrage is more like investing than operating a conventional business. If you pay too much rent at the outset, you are likely to lose money. Even subsequent scale and operating efficiencies cannot overcome those high rents.

Second, funding comes mainly from investors, creating another concern. Every business has cycles; good times do not last forever. Investors happily receive distributions during prosperous periods, but in a downturn they are hard to persuade to contribute more to cover losses. Earlier profits have been distributed, nobody funds later losses, and the business must close.

Does that sound just like WeWork’s collapse? Arbitrage should not aim for rapid expansion, but for every project to make reliable money without losses!

Can you still operate an Airbnb in 2026?

If you are still asking that question, my answer is yes—but it is no longer as simple as before.

The era of straightforward short-term rental arbitrage is over. The next phase depends on product, experience, operations and brand. Hosts must become genuine operators rather than simply earning a spread, with distinctive offerings, tasteful design and well-developed systems.

Sonder’s story is more than a giant’s fall. It is a mirror showing the industry’s next era: moving from arbitrage to operations.

If you host on Airbnb or are considering entering the market, start thinking about how to build your own accommodation brand. Share your views and join the discussion!

If you:

Hope to increase rental income through short-term rentals;

Cannot spare a great deal of time to handle the small details;

Occasionally need to use the home yourself, making it unsuitable to empty out the furniture for a long-term rental;

Then:

Snowball Rentals’ management team is your best choice.

From pre-launch vacation-rental styling, big-data analysis and online marketing to tenant screening, dynamic pricing, customer service and sales, cleaning and repairs, Snowball Rentals provides everything as one complete service for your home.

This Week’s Booking Results

Through long-standing relationships with insurers, assignment companies and technology companies, Snowball Rentals rents homes for medium- and long-term durations at short-term rates, then gives owners a rebate of 5% in management fees to maximize their income.

November is here, the weather is cooling, and Seattle’s short-term rental slow season is approaching. Are you ready?

Short-term rentals in peak season; mid-term rentals in low season.

Looking back at earlier large bookings, this strategy has achieved some results, allowing us to retain confidence even in a cold winter!

Although peak season has arrived, we still cannot let our guard down. Policies and broader conditions are full of changes and challenges. Making steady progress will remain the main theme going forward.

For the detached house in Bellevue below, Redfin shows an estimated long-term monthly rent of approximately $8433.

It took us approximately two or three months to rent this home out.

We initially had high expectations for its rental performance, but the market declined surprisingly quickly over those two months. Even midterm rents fell approximately 10%–20% compared with the same period last year.

Fortunately, after two to three months of continued work and adjustments, we found the ideal tenant.

As shown in the booking screenshot below, this home recently received a large booking:

November 29 to January 14 next year, a total of 46 nights, equivalent to an average monthly rent of $12254.

In summary, under Snowball Rentals’ management, this home’s monthly rental income rose from $8433 to $12254, an increase of more than 45%.

More importantly, this 46-night booking from November 29 to January 14 next year covers more than a month of the short-term rental slow season (September through March of the following year). We expect even better performance when peak season arrives!

For homeowners, combining short- and mid-term rentals in this way can earn more in peak season and help them get through low season smoothly. Even if the low-season rental figures look less dramatic, they still outperform long-term rentals and give homeowners a strong sense of financial security.

More importantly, the owner does not have to worry about maintenance or cleaning. When something needs to be discussed with guests, we also help with communication and oversight.

Here, we again thank the owner for placing trust in the Snowball Rentals team!

After nearly two years of Airbnb’s downturn, we at Snowball Rentals hope to help owners make steady progress in low season, navigate the challenges safely and lay a better foundation for next year’s peak season.

Once again, heartfelt thanks to our homeowners for their trust and support. Whether the market is strong or weak, Snowball Rentals will stand with you and look for ways to increase your income!

Some homeowners will surely ask the hard question: was a large booking like this just a stroke of luck? What if the home does not rent? A long-term rental is more stable—even earning less is better than earning nothing!

Our answer is: the outcome depends on what we do.

Vacation-Rental Styling

Competition on Airbnb is becoming increasingly intense. The days of piecing together secondhand furniture, taking phone photos and earning easy money on Airbnb are over. Airbnb hosts have moved toward professional operations.

Careful design and furnishing before launch, followed by professional short-term rental operations, will be the only choice for a rental that continues to generate high income.

Here is another of Snowball Rentals’ core services: vacation-rental styling!

Here is what the detached home described above looks like after our careful furnishing:

When choosing a short-term rental on Airbnb, would this home’s appearance attract you?

If you would also like to make your home more attractive and earn more rent, please contact us at any time!

We also share practical vacation-rental styling plans and creative ideas to help you achieve more with less spending and keep rental income growing!

Referral Rewards

If you are already a Snowball Rentals homeowner, you receive a US$500 referral fee for each referral.

If you are not yet a Snowball Rentals homeowner, you receive a US$250 shopping voucher for each referral.

Snowball Rentals Management

1. Full service — We provide pre-launch rental design, furniture procurement, furnishing, professional photography, online marketing, copywriting, tenant service and sales, cleaning, supply purchasing and property repairs. You only need to be a hands-off owner; we handle the rest.

2. Multi-platform promotion — We promote the home on Airbnb, VRBO, HomeAway and other mainstream platforms for maximum exposure.

3. Dynamic pricing — Using big data, we adjust prices every day according to seasonal demand, holidays, last-minute vacancy offers, weekends and local activities, maximizing the owner’s income.

4. Income-improvement SOP — We follow 44 secrets for maximizing short-term rental income, optimizing each property’s online marketing, on-site operations and other aspects to work toward maximum income.

5. Flexible owner stays — Owners can flexibly choose when to stay themselves. This is especially suitable for owners with multiple residences around the world.

6. Terminate at any time — Management does not require an annual commitment. The owner can end the agreement with one month’s advance notice.

7. Corporate housing — In addition to nightly rentals, we work with insurers and assignment companies to provide executives with hotel-style managed accommodation for stays 30 days or more.

8. Transparent fees — For rentals 30 days or more, we charge 15% of accommodation revenue. For nightly rentals 30 days or less, we charge 20% of accommodation revenue.