Travelers seem to remain in love with Airbnb and its ilk, as the San Francisco-based provider makes further inroads into the hotel industry.
NASHVILLE, Tennessee—The threat of alternative-accommodations providers to traditional hoteliers is a widely discussed subject, with subsections of the debate including whether demand for alterative accommodations is additional hotel demand, what effect markets saturated with such lodgings have on hotel industry average daily rate and if alternative-lodging demand equals unsatisfied hotel demand.
At a Hotel Data Conference session tilted “Alternative accommodations: What they can teach you about your market,” Jessica Haywood, senior research analyst at STR—parent company of Hotel News Now—said the share of the industry enjoyed by alternative accommodations is getting larger and followed the pattern of all other upstart initiatives to traditional hotels: At first, they are disregarded, and then named a threat when they can no longer be ignored.
Haywood, along with Jamie Lane, senior economist for CBRE Hotels’ Americas Research, underlined five developments all hoteliers should keep firmly top of mind about this sector. They noted that when referring to the sector, they were really talking about Airbnb, although firms such as HomeAway are also present.
1. Getting bigger, moving into business travel
Haywood said the huge shift for putting properties online is continuing, with the San Francisco-based firm announcing on 10 August that it had surpassed four million global listings in 191 countries and 200 million guest stays since 2008.
“Now approximately half of Airbnb is available for instant booking,” Haywood said.
“There were as many Airbnb guest arrivals in 2016 as in all its other years combined,” Lane said.
These are not all leisure travelers, Haywood and Lane agreed.
“In 2017, 23% of business travelers stayed in at least one Airbnb property,” Lane said, who added that Airbnb and other alternative-accommodations providers now advertise themselves as “business-travel ready.”
It’s unclear exactly how much impact that has on hotel occupancy, but Lane noted compression nights at U.S. hotels have continued to drop since 2014 in the top 25 CBDs (central business districts).
2. Airbnb making inroads into extended stay
The lack of investment in the hotel industry’s online capabilities is only serving to increase the muscle of alternative-accommodations providers, Haywood and Lane said, but whether that is affecting hotels is, once again, up for debate.
They noted it might be a larger problem for extended-stay properties.
According to Haywood and Lane’s research, travelers typically stayed at Airbnb listings longer than they did at hotels.
“In July 2016 12-month moving average numbers, approximately 53% of Airbnb stays were extended stays. That really surprised us,” Haywood said.
Lane added that spots experiencing heightened growth in Airbnb supply might be suffering from unsatisfied hotel demand.
“In the next 12 months, I’d hope Airbnb will share all its information with us, so we can better make comparisons,” Lane said, although he added this was very wishful thinking.
3. The nature of the bleeding
The argument as to whether alternative-accommodations providers have an unfair advantage continues to rage, considering many might not pay for such hotel requirements as insurance and fire safety.
This naturally leads to a discussion as to what any lost business costs the hotel industry.
Lane said his checks and balances on his research on this question has led him to believe he has come to a believable “bleed” percentage number.
“Every dollar Airbnb gets is not a dollar lost by hotels, but 20% is,” he said. “That is a figure that based on my research seems reasonable to me.”
Haywood added that any impact would most likely be felt in lower-priced hotels, with the brunt materializing through less aggressive ADR.
4. Special events
Special events do lead to a surge in demand for Airbnb, Haywood and Lane said. The South by Southwest film festival in Austin, Texas, for example, has seen a decline in premium ADR increases since a peak in 2014. A possible culprit? Google searches for Airbnb listings in Austin have steadily increased in that time.
Haywood and Lane pointed to the fact that larger groups of friends are more likely to share lodgings at events and festivals. Airbnb’s fluid supply also is a factor during well-publicized events.
“Multiple-room units now comprise a larger percentage of alternative-accommodations supply in the U.S.,” Lane said.
5. Regulation not hampering Airbnb online searches
Despite more cities passing laws restricting the freedom of alternative accommodations, these regulations have not deterred online searches for alternative-accommodations providers, Haywood and Lane said.
“Airbnb is now getting as many searches as Expedia and almost as many as Marriott (International),” Lane said.
Atlanta, Dallas, Denver, Phoenix and San Diego are examples of cities with fewer regulations, while cities like Austin, Chicago, Los Angeles, Miami, New York and San Francisco have stricter laws. An increase in regulations has slowed Airbnb supply growth in those cities, the presenters said.