New Data Suggests Airbnb’s Impact on Hotels Is Less Than Perceived

STR has published the preliminary findings of a report that uses data supplied by Airbnb to try to answer the question: What kind of an impact is Airbnb having on hotels around the world?

STR used data provided by Airbnb for seven U.S. markets (Boston, Los Angeles, Miami, New Orleans, San Francisco, Seattle, Washington, D.C.) and six international markets (Barcelona, London, Mexico City, Paris, Sydney, and Tokyo) from the period between August 2015 to July 2016. Here’s what they found from the data:

• Airbnb has more listings (2.3 million) worldwide than Marriott and Starwood combined (1.1 million rooms). However, it’s not a fair or direct comparison to equate one Airbnb listing to one hotel room because listings aren’t available year-round and some are for private rooms instead of entire units. Some listings are also for unique accommodations and might be able to accommodate larger groups than a typical hotel room.
• Examining listings from just those seven U.S. markets, STR came up with an estimate that only 981,000 of those 2.3 million Airbnb listings worldwide (43 percent) are “likely competitive with hotels,” meaning they are generally available on a regular basis and are for entire homes, not a private room in a shared space. “We looked at the ratio of entire homes to the total listings for those seven markets and then applied it to the global listings,” explained Jan Freitag, senior VP of lodging insights for STR. “It’s an assumption but we think it’s a good one.” This places Airbnb second behind Marriott/Starwood and ahead of Hilton Worldwide, which has 769,000 rooms globally.
• Airbnb has higher occupancy in the summer, presumably because it caters more to leisure travelers and because this is when some hosts are traveling themselves. Hotels, on the other hand, have higher occupancy levels year-round.
• STR suggests that in markets like Los Angeles, San Francisco, and Tokyo where hotels have very high levels of occupancy Airbnb is “accommodating excess demand.” Those markets where Airbnb sees the highest occupancy levels are also markets where hotels see the highest hotel occupancy.
• With the exception of New Orleans, hotel rate growth was stronger in all U.S. markets. Five of those markets also saw negative average daily rate performance for Airbnb, suggesting, STR said, “Airbnb is not immune to its own supply growth (or that hosts are less versed in revenue management).”
• STR said the U.S. data provided by Airbnb shows hotels haven’t been “significantly impacted” during compression nights or periods of high demand when occupancy levels are at 95 percent or higher. While U.S. cities have seen fewer compression nights than they did in 2014 or 2015, STR said hoteliers are enjoying the highest rate premium for compression nights in the history of recorded data from STR; hotels on average have been able to charge 35 percent more on compression nights than on non-compression nights.

So, where does this leave hoteliers who are wondering about the true impact of Airbnb on their businesses? The data seems to imply that hotels need not be too overly concerned about the threat of Airbnb on their bottom lines.

“I think the overall message is that the U.S. hotels industry continues to break demand records,” said Freitag. “We are selling more rooms than ever before on an annualized basis. In 2014, we had a demand record. We had another demand record in 2015. We expect in 2016 we will also top the number of rooms sold. Room demand has been higher than it has ever been.”

He also said that whatever “softness” we are currently seeing in the hotel industry is not at all related to demand but with “rapid increase in room supply.” He added, “The occupancies on a year-to-date basis are slowing but that’s because the supply growth is faster than demand growth.”

However, according to STR’s report, “Airbnb approved the use and presentation of the data and content in this article,” which could raise some questions about the quality of the source material provided. The report notes that “source data is far more reliable,” which is certainly true, but is that always the case with Airbnb?

As a past example has shown, Airbnb’s data doesn’t always add up. The biggest example of this involved New York City. In November 2015, Airbnb provided a public snapshot of its operations in New York but it was later revealed by Inside Airbnb, an independent, third-party researcher of Airbnb, that the company had scrubbed the released data to remove some 1,500 listings that may have been for illegal hotels or commercial operators.

Since this incident, Airbnb has made strides in attempting to be more “transparent” with its data. In September it debuted a new Airbnb Law Enforcement Transparency Report, for example.

Skift asked Freitag if he was at all concerned about the data STR received from Airbnb and he said, “We have no way to audit Airbnb data, just like we don’t audit hotel data. We have no reason to doubt the truthfulness of the data. The internal checks and balances we have in place for data collection makes us comfortable with all of the data we release publicly.”

But there’s still room for doubt as to whether which data Airbnb shares, even with established and respected hotel industry research firms like STR, is a wholly accurate representation of what’s really happening. And it’s especially difficult to measure the specific impact Airbnb may be having on individual hotels in certain markets, primarily because that data just isn’t available.

“Airbnb is here, and it’s here to stay,” said Freitag. “This is the beginning of a larger discussion about the co-existence between Airbnb and hotels on terms that work for both parties. But this is just the beginning. We finally have data to add to the conversation.”