Short-term rental platform Airbnb (ABNB -1.55%) has been pulling out all the stops to get more hosts to join the platform. And on Nov. 30, the company aimed to reduce friction further by partnering with select apartment buildings in over 25 U.S. urban markets. 

Here's how Airbnb's new program works and what it could mean for investors.

How Airbnb's new program works

According to The Wall Street Journal, Airbnb has partnered with 12 apartment landlords, including public company Equity Residential (EQR 0.50%), to list apartments on its platform. Anyone looking for an apartment to rent could simply hop onto Airbnb's platform like they would any other real estate listing aggregator.

Why would someone search on Airbnb for an apartment? Well, many apartments don't allow renters to share their space as a short-term rental -- contractually, you're not allowed to list the apartment you're renting on Airbnb. However, if you know you'd like to be an Airbnb host, these apartments are already approved for short-term rentals.

Renters who decide to be hosts will have varying limits on how many nights they're allowed to share their apartments as short-term rentals. And landlords will get a cut of the total booking value -- reportedly 20% in most cases. While these are drawbacks, for someone looking for an easy setup process and the chance to earn extra income, it could make sense.

According to Airbnb's official press release, it will expand its program into more cities and apartment buildings soon.

What could all this mean?

This might sound like a small news update for Airbnb, but I believe there are a wide range of potential implications for hosts, renters, landlords, and the company.

Consider that some travel companies have business models very similar to this new product from Airbnb, including Sonder (SOND 6.71%). For its part, Sonder directly handles bookings and operates its properties. However, it doesn't own its listings. Rather, it signs leases with landlords, often looking for special upfront concessions to help it manage cash flow better.

But it's not just Sonder. According to short-term rental research company AirDNA, there were 660,000 multifamily listings on Airbnb and Expedia Group's Vrbo, as of the end of the third quarter of 2022. Multifamily listings include apartments like what Equity Residential will offer through Airbnb. In other words, this is already a big thing.

The strategy is called rental arbitrage -- renting a property for one price but earning more in revenue as a short-term rental on Airbnb or another platform. However, many rental arbitragers approach it like Sonder -- they look for rent concessions in order to boost cash flow on the front end. And landlords often agree to this to avoid having a vacant space.

Airbnb is always updating its platform. And right now, it's actively trying to increase its number of active hosts so it can grow the business. In the third quarter of 2022, the company noticed a rebound in trips to cities with a 27% year-over-year increase in high-density urban nights booked. Therefore, it needs to drive supply growth where demand is surging. That's why it's launching this apartment platform.

However, Airbnb does run the risk of disrupting existing hosts who are engaging in rental arbitrage. If landlords are already allowing Sonder and others to rent out spaces and offering upfront concessions, it may make more sense for these landlords to join Airbnb's new apartment platform. They'd avoid giving away free rent, and they'd be earning up to 20% of the booking value when spaces are booked.

Therefore, Airbnb's new apartment platform looks like a good value proposition for landlords. But for Airbnb, it could have a somewhat muted benefit for driving supply growth. Yes, it may make it easier to onboard new apartment hosts, but it could upset the applecart for existing rental arbitragers.

Airbnb's new apartment platform looks like a good value proposition for landlords in another way too. The platform is being packaged as a way for renters to earn side income, potentially allowing them to save for a home. However, it seems more like a way to help renters make ends meet amid historically high rental prices.

Bob Faith is the CEO of Greystar Real Estate Partners, and according to The Wall Street Journal, Faith said renters might think its prices were too high. But letting renters share their spaces as short-term rentals will help offset their rent and might make prices easier to accept.

In other words, Airbnb's apartment platform may be better news for landlords than for tenants.

For now, I would say this news doesn't make Airbnb stock more of a buy or more of a sell, because it's still unclear what the exact outcome will be. If Airbnb supply and demand keep growing in urban markets in coming quarters, I would say that would signal this is a good strategy for the company.