UBS Report Says Regulation Slows Airbnb Growth in Popular Markets

A new report from UBS seems to suggest that stricter regulations on short-term rentals in cities such as New York and Barcelona are, in fact, having a negative impact on Airbnb’s business.

According to a report compiled by the UBS Evidence Lab, Airbnb listings and bookings on a global basis are growing at a considerably slower pace than just one year ago.

Although listings in Airbnb’s seven largest markets grew 40 percent year over year and nights booked grew 60 percent year over year from December 2016 to February 2017, the pace of growth has decelerated. The report’s authors suggest this is the case because there are simply more listings globally, and also because of regulatory action in some of Airbnb’s top markets.

To compile the report, UBS reviewed data on nearly 1 million listings from approximately 127 different Airbnb markets worldwide, 25 of which are in the U.S., over a period of December 2016 to February 2017.

In particular, looking at data for New York City and Barcelona, two cities which have enacted much stricter short-term rental legislation within the past year, researchers noted declines in booked nights and available listings. The number of available listings in both cities was down approximately 10 percent year over year in February 2017.

In New York City, new legislation that heavily fines Airbnb hosts who advertise listings that violate the New York Multiple Dwelling Law became enforceable this January. And in Barcelona, Airbnb and other homesharing platforms have been slapped with heavy fines for advertising illegal room rentals. In November, the city accused Airbnb of posting 3,812 unlicensed rentals.

By contrast, in reviewing data for San Francisco and Berlin, two other cities where Airbnb is also dealing with regulatory issues, UBS researchers suggested the impact of tougher short-term rental regulations did not have as large of an impact.

In San Francisco, declines in booked nights and available listings have only very recently declined after remaining positive for most of the year. In Berlin, researchers suspect the recent terrorist attack at a Berlin Christmas market may have had an impact.

The report’s authors wrote, “Our analysis suggests it is likely that regulation is having a negative impact on the supply and demand growth of Airbnb, especially in New York and Barcelona. Both cities showed Y/Y declines in available listing nights of c10% in Feb ’17. We believe that the findings are less conclusive for San Francisco, London and Paris, although in our view it appears there is a negative impact from regulation on Airbnb listing night growth given the slowdown.”

And what of the impact on hotels now that regulations appear to be having at least some effect on Airbnb’s business? The researchers wrote, “Nevertheless, we believe Airbnb is still likely a threat to hotels, but think the change in regulations has reduced the magnitude of the threat.”

While homesharing remains the core business for Airbnb, which now has a valuation of $31 billion, the company has also shown its ability to diversify its product offerings, as evidenced by its recent introduction of local tours and activities via Airbnb Trips. During a recent interview hosted at the New York Stock Exchange last month, Airbnb CEO Brian Chesky said he hoped homes would account for less than half of the company’s total revenue someday.

Note: Skift reached out to Airbnb for comment regarding the UBS report but Airbnb did not have a response.