Why Airbnb Won't Be Great at Selling Hotel Rooms

Investors have been consumed with the notion that Airbnb is gunning for the online travel agencies and that it will eventually turn from apartment rentals to hotels and steal those big, fat hotel margins and profits from Expedia and Booking.com. A new analyst report attempts to shoot down that argument. Financial services firm PiperJaffray argues that Airbnb would not be adept at selling hotel rooms over the next five years, likely won't pursue it heavily, and therefore will not have a significant adverse impact on online travel agencies' room-night bookings. In addition, hotel expansion isn't part of Airbnb's core strategy as it focuses instead on expansion in China, business travel and vacation rentals, the report states. The PiperJaffray report, "Airbnb Becoming a Powerful Force in Travel, But Impact to OTAs Minimal," written by Michael Olson and Samuel Kemp, forecasts that while Airbnb will make share gains in vacation rentals, supplementing its foothold in urban, shared-space dwellings, and will expand the travel market with its apartment inventory, but its adverse impact on the hotel bookings of online travel agencies such as Expedia and Priceline will be merely 5.3 percent in the 2016 to 2020 period -- or just 90 basis points per year. "Therefore if Airbnb hits its 2020 targets [$10 billion in 2020 revenue], the impact to global hotel growth will be a headwind of less than 100 bps each year which, we believe, is not me