STR: Airbnb’s impact on events, holidays in NYC
 
STR: Airbnb’s impact on events, holidays in NYC
29 FEBRUARY 2016 8:27 AM

STR analysts examined the impact of Airbnb on the New York City hotel market during holidays and popular events, including the New York City Marathon, Super Bowl XLVIII and Pope Francis’ September 2015 visit.

Editor’s note: This is the fourth part of an analysis series conducted by STR on Airbnb data in New York City. Airbnb provided STR with data on its operations in the New York City market—the largest data set Airbnb has provided to a third-party for independent analysis. Airbnb's data included only aggregate daily metrics; no host-level or other individually identifiable information was shared. STR was not remunerated in any way for its analysis, and its participation in this analysis was not contingent upon developing or reporting predetermined results. STR is the parent company of Hotel News Now.

HENDERSONVILLE, Tennessee—For the closing piece of the Airbnb series, STR took a closer look at large events and holidays in the New York City market.

These nights are important for hotels because they lead to high occupancy and drive rate premiums. STR examined the most impactful events in the New York market to determine how Airbnb affected the city’s hotels at the time.

The results reveal a mixed picture, as hotels achieved significant occupancy and rate gains during some events, but recorded slight declines during other events. While it is likely that some demand is moving to Airbnb, the data implies that Airbnb is likely adding demand as well, particularly to the New York boroughs that have a smaller hotel presence. The following sections review the key findings for each event. For an event summary comparison of hotels and Airbnb, see the tables at the end of this article.

This analysis considered only Airbnb's statistics for private rooms and entire homes, as they are assumed to be most comparable to the typical hotel room.

The largest increases in Airbnb supply and demand occur during events. Interestingly, a large increase in supply does not always correspond to an equivalent spike in demand. It would appear that many hosts list their units while they are away during holidays; however, many stay vacant.

Holiday season (Christmas and New Year’s Eve)
As indicated in the first chart, the most noticeable spike in Airbnb supply and demand occurs during the Christmas and New Year holidays.
Hotel and Airbnb occupancy followed a similar pattern over the holiday seasons of 2013 (not shown) and 2014. During both years, hotel occupancy increased during Christmas and the subsequent days, followed by a few days of lower occupancy and then an increase again on New Year’s Eve.

Airbnb occupancy gradually increased from Christmas through New Year’s Eve, with no lag time between the two holidays. This is likely due to Airbnb’s longer length of stay, as discussed in Part One of STR’s analysis.

Hotel occupancy growth was around 1% higher than Airbnb on Christmas Day and New Year’s Eve.
Hotel rate followed demand with higher rates achieved around Christmas, followed by slightly lower rates and then another significant increase around New Year’s Eve. In contrast, Airbnb rates remained more consistent throughout the holiday season.

On Christmas Day 2014, the average hotel rate was $47 higher than Airbnb, which was the smallest variance in pricing of any event examined.

Conversely, the largest average-daily-rate difference between hotels and Airbnb occurred during New Year’s Eve 2014. Hotel ADR was $457, which was $276 higher than Airbnb’s ADR.

Although hotel occupancy increased on Christmas Day and New Year’s Eve, hoteliers might have felt the pressure of additional supply in the market from both hotels and Airbnb, because rates dropped slightly during both holidays.

Thanksgiving
The second largest spike in Airbnb supply occurs during Thanksgiving. In 2015, hotel occupancy over Thanksgiving weekend was down 2% from the previous year, while Airbnb occupancy growth was up 25%. A range of growth was felt across all boroughs, as occupancy grew 16% in Staten Island and 25% in Manhattan.

ADR for both hotels and Airbnb was down more than 3% during Thanksgiving weekend. With a 2015 ADR of $268.88, hotels charged $114 more than Airbnb hosts. Interestingly, Staten Island hotels and Airbnb units both saw robust rate growth of 10% and 6%, respectively.

Over the last couple Thanksgiving holidays, hotel occupancy and rate have been stagnant in the New York City market, which could point to hoteliers reacting to market forces and new supply coming from hotels and Airbnb.

Independence Day
There is also a noticeable spike in Airbnb supply during Independence Day weekend. Hotel occupancy for the 2015 holiday was 86.8%, up 3.4% over 2014. During the same time, Airbnb occupancy for Independence Day in 2015 increased 15.4% from the previous year, reaching 45.9% in absolute occupancy. The most notable occupancy growth for Airbnb was again in Staten Island, which had occupancy growth of 36%, while hotel occupancy decreased 15% in that borough.

Hotel rates during Independence Day weekend in 2015 were the lowest of any event analyzed at $209.42, with flat growth year-over-year. Airbnb ADR was up slightly over 2014 to $150.49.

While hotel occupancy during Independence Day remains healthy, there’s no denying that Airbnb occupancy is growing across all boroughs. Because this holiday had the lowest hotel rate of any event analyzed and rate growth has been flat the last couple years, this could indicate that the presence of new hotel and Airbnb supply is making it more difficult to raise rates. Or, it could mean that Independence Day brings a more price-sensitive customer to the market and Airbnb has been able to capitalize on this with its lower rates.

Fashion Week and Valentine’s Day
Fashion Week is held every February and September and brings about 120,000 people to New York City. In February 2015, Fashion Week coincided with Valentine’s Day, resulting in the largest occupancy growth for both hotels and Airbnb of any event examined. Hotel occupancy grew 16% over 2014 to 83.9%. Airbnb realized occupancy growth of 51.9%, as 2015 absolute occupancy climbed to 27.9%.

Hotels in Brooklyn, Manhattan and Queens all experienced occupancy growth between 12% and 17% over the week. Airbnb saw substantial occupancy growth in all five boroughs, led by Manhattan.

As shown in the chart above, occupancy growth was strongest around Valentine’s Day weekend. Absolute occupancy over Valentine’s weekend was 91.5% for hotels and 33.5% for Airbnb, which was the largest difference in occupancy of any event studied.
Rate growth was also the strongest over Valentine’s Day weekend, with hotels charging 28.3% more in 2015 and Airbnb hosts charging 6.3% more than Valentine’s Day 2014. During the full Fashion Week, hotel ADR was up 10.8% to $225.22. Airbnb rate was up 2.4% to $132.40, which was the lowest absolute ADR of any event examined.

The second Fashion Week of the year, which was held in September 2015, didn’t see the same level of occupancy and rate growth as the February event. However, the absolute levels during this event in the prior year were already much higher than February’s Fashion Week, with hotel occupancy at 90.1% and Airbnb occupancy at 67.3%, so the same level of growth would be difficult to achieve because hotels were already pretty full.

While it appears that Airbnb appealed to couples and Fashion Week attendees, hotel performance was still healthy with absolute occupancy, absolute ADR and ADR growth at all-time highs for Valentine’s Day.

Super Bowl
The Super Bowl usually has a substantial impact on hotel performance in the host city. In 2014, the Super Bowl was played in East Rutherford, New Jersey. Occupancy in New York was lower than expected due to demand being spread between New York and New Jersey and group travelers avoiding New York City during that time. As shown in STR’s analysis of the past six Super Bowls, New York had the lowest absolute occupancy and revenue-per-available-room growth of any market that has hosted the Super Bowl over the last six years. That said, hotel occupancy in New York was still up 12.6% from 2013. 

While there was a large spike in Airbnb supply, demand did not show an equal increase. Airbnb absolute occupancy during the Super Bowl was 19% (note: the Airbnb data set starts in December 2013 so STR can’t report growth rates).

While occupancy wasn’t as strong as in other host cities, rate growth was robust. Hotel ADR was $337.09 over Super Bowl weekend, which was up 86.5% from 2013. Airbnb’s rates during that time were almost $200 less than hotels at $144.62.

Papal visit
Pope Francis visited New York 24-26 September 2015. During his three-day trip, hotel occupancy averaged 94.3%, up 1.9% from the prior year. However, the base was already very strong due to September being a month of substantial business and group travel. Airbnb occupancy averaged 74.3% during the same time period, up 11.1% over the previous year. This event had the highest absolute occupancy of any event analyzed for both hotels and Airbnb.

The Bronx and Staten Island had the highest Airbnb occupancy growth of any borough at about 50% over the previous year. Hotel occupancy growth also was led by Staten Island with a 12% year-over-year increase.

Despite modest hotel occupancy growth in New York City, hotels achieved rate growth of 25.9% during the papal visit, led by Manhattan and Queens, which raised rates 35% and 23%, respectively. Airbnb hosts realized rate gains of 2.9%, bringing ADR to $162.78, which was nearly $250 lower than hotels.

While Airbnb did see significant occupancy growth during the papal visit, it was primarily in boroughs with limited hotel supply. Given that hotel occupancy was already at 94%, it is likely that the pope brought substantial new demand to New York City that hotels were unable to accommodate, so travelers stayed in Airbnb units.

Comic Con
Every October, New York Comic Con brings about 135,000 people to the city for a four-day event. In 2015, hotel occupancy was 92.6% compared to 72.4% for Airbnb. This was the smallest difference in occupancy of any event examined as part of this analysis. Again, the Bronx and Staten Island saw the most occupancy growth at 23% and 39%, respectively.

Hotel rate growth was slightly positive while Airbnb was slightly negative, with hotels rates nearly $166 higher than Airbnb. Hotels in all boroughs except Manhattan raised rates between 4% and 8%.

Again, given that hotels were full and much of the new demand came from the Bronx and Staten Island, it would appear that at least some of the Airbnb demand was incremental.

New York City Marathon
Hotel occupancy during the race was 89.3%, up 3.2% from 2014. Brooklyn and Queens hotels saw the most occupancy growth at 6% and 9%, respectively.

Airbnb, a sponsor of the event, reported that 17,000 people were expected to stay in Airbnb units over the weekend of the race. The alternative-accommodations provider experienced occupancy growth of 8.2% over the weekend, bringing absolute occupancy to 58.6%. All boroughs saw double-digit Airbnb occupancy growth except Manhattan.

In terms of rate, hotels and Airbnb ADR dropped 2.5% and 2.7%, respectively, when compared to the 2014 race weekend. However, hotel rates were still about $147 higher than Airbnb. Hotels in all boroughs except Manhattan increased rates.

It appears that Airbnb’s sponsorship of the event helped bring significant new demand to properties listed on the site. However, this was not detrimental to hotels, as evidenced by the 89.3% absolute occupancy, which was the highest occupancy of any NYC Marathon this decade. It appears that any potential impact was on rate.

Conclusion
On average, hotels achieved occupancy of 87% during the examined events, up almost 4% from the previous year, while Airbnb occupancy was 48.7%, up 8.9%. The majority of Airbnb occupancy growth was in the Bronx and Staten Island, which have fewer hotel rooms than the other boroughs. Hotel rate growth during most events was strong, at almost 7%. Conversely, Airbnb dropped rates 1.1% over the observed period, which shows a lack of yield-management knowledge on the part of Airbnb hosts.

Based on Airbnb’s significant occupancy growth during events, it is probable that some demand is moving to Airbnb. However, hotel occupancy is high and Airbnb growth is being led by the Bronx and Staten Island, so it is reasonable to assume that Airbnb hosts are accommodating new demand in their respective areas. Finally, rate growth in hotels continues to be strong during most events, which reveals that hotels can still capitalize on these important nights.
*Pope Francis visit compared to same days in 2014 because no comparable event exists in the previous year.
**Hotel data for the Super Bowl compared to same days in 2013 because no comparable event exists in the previous year. Airbnb data set does not include data for January/February 2013.

About the study
Airbnb provided STR with data on its operations in the Manhattan market—the largest data set Airbnb has provided to a third-party for independent analysis. Airbnb's data included only aggregate daily metrics; no host-level or other individually identifiable information was shared. Metrics requested by STR and utilized for the purpose of the analysis included supply, demand, revenue by borough, class and trip length. STR was not remunerated in any way for its analysis, and its participation in this analysis was not contingent upon developing or reporting predetermined results.

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