How disruptive is Airbnb to the hotel business? Two studies shed some light.
With more than two million people staying in Airbnbs every night, peer-to-peer vacation rentals “have become a disruptive force the travel industry cannot ignore,” concludes a new study by Clever Real Estate, just in time for the official start of the summer vacation season.
“While zoning legislation and privacy concerns might temporarily slow down the rental behemoth, Airbnb isn’t going away anytime soon, so the hotel industry will need to adapt. After all, there’s a reason it’s called ‘disruption,’” writes Thomas O’Shaughnessy, head of research at Clever Real Estate,an online service connecting agents and home buyers and sellers at a discount rate.
After surveying 1,000 travelers who have used both Airbnh and hotels in the past 12 months, the study found 60 percent of travelers prefer Airbnb over hotels when traveling for vacation. “However, hotels still rule for business travelers: 68 percent of business travelers said they’d rather stay in a hotel than an Airbnb when traveling for work,” the study said. Three additional findings:
-Fifty-four percent of homeowners said they’d consider renting out their homes with Airbnb or a similar vacation rental app, and 82 percent believe Airbnb is a good way to make money from their property
-While public sentiment toward Airbnb remains positive, 58 percent of respondents said they were concerned about hidden cameras, and 7 percent said they’ve stayed in an Airbnb and discovered a hidden camera.
-Marriott’s Homes & Villas luxury rental service “is making a splash among high-end travelers: half of luxury travelers have heard of the Marriott’s new service, and they’re intrigued by the benefits of Marriott’s rewards program,” the study said.
The Wall Street Journal noted Marriott’s new service in an editorial this week, saying it “puts the world’s biggest hotel operator in direct competition with Airbnb, the world’s largest home-rental business…As with any disruptive new competitor, companies such as Airbnb bring out the regulators,” the editorial writers said. “Let the competition continue.”
A separate study of 10 large U.S. cities from 2008 to 2018 said for each one percent increase in Airbnb supply, hotel revenue declined by 0.02 percent. In New York City in 2016, for example, that translates to a loss of up to $365 million for hotels, the WSJ said, citing a study by three professors from Florida State, Boston University and Texas A&M.
Boston University’s Makarand Mody and colleagues studied 10 U.S. cities to see whether Airbnb was having an economic impact on hotels, “and they found a consistent negative impact on key hotel performance metrics. Annual occupancy rates, revenue per available room, and average daily rates were all down, by an average 2 to 2.5 percent, since Airbnb was founded in 2008,” said a Boston University article about the study, released last November.
“Although early studies showed no problem for the Boston market, Mody now estimates that Boston hotels lost approximately $5.8 million in revenue to Airbnb in 2016 alone,” the last full year of available data.