A new kind of company town for the 21st century.
The town of Hochatown in southeast Oklahoma, built just a year ago, owes its existence almost entirely to Airbnb, the New York Times reported.
Nestled on the shores of Broken Bow Lake, this tiny town of 219 residents has had a staggering influx of 50,000 weekend visitors, primarily from Dallas.
However, the recent Airbnb boom that transformed Hochatown is now presenting challenges as the platform’s supply of rental homes surpasses demand for the first time since the pandemic recovery.
During the pandemic, the popularity of Airbnb soared in rural areas and small towns as city dwellers sought refuge in the countryside. Simultaneously, urban areas, including New York City, introduced stringent regulations on short-term rentals. Despite predictions of Airbnb’s decline, the company’s recent third-quarter results surprised analysts, boasting better-than-expected performance.
With nearly 1 million active listings added this year, Airbnb saw guests in over 94,000 cities and towns during the first half of 2023.
However, a notable data point revealed a potential threat to Airbnb hosts in Hochatown and similar boom towns: the supply of rental homes has outpaced demand. With a 19 percent year-over-year increase in supply compared to a 14 percent rise in demand, this gap has potential repercussions for hosts, forcing some to sell at a loss. The situation, termed the “Airbnb effect,” has reshaped landscapes and economies in various small towns across the United States.
In Hochatown, where U.S. Highway 259 is the sole entry and exit point, the surge in tourism has strained resources and infrastructure. With a lack of police officers, sewerage systems, and adequate water supply, residents faced challenges in maintaining essential services. The Choctaw Nation is contributing to the town’s development, investing in a $238 million resort and casino, Choctaw Landing, set to open in spring 2023.
The town’s history dates back to 6,000 B.C., and its recent incorporation in 2015 was driven by the desire to manage resources independently. However, the Airbnb boom led to unregulated building, noise complaints, and infrastructural challenges. The slowdown in occupancy rates, dropping to 40 percent in August, and declining property values indicate a shift from the market’s peak.
Despite concerns, the dip in real estate activity is seen by some, including the mayor, Dian Jordan, as a “blessing” for Hochatown, providing an opportunity to reassess and catch up with infrastructure needs. As Airbnb eyes international growth, hosts like Leo Winegar, facing financial challenges, hope for the platform’s support through increased promotion and reduced fees to weather the current real estate downturn.
— Ted Glanzer