Airbnb and other home-sharing companies worry hotels
Tired of ‘sterile hotels’, Brooklyn resident Kelly Dwyer turned to home-sharing site Airbnb three years ago when planning a trip to Southern California, finding an apartment in Silver Lake with two roommates: a dog and a cat.
“It was such a good experience that it kind of drew me in,” said Duncan, 40, a pet owner and musician. “I can’t remember the last time I stayed in a hotel.”
Hotel executives have long ignored Airbnb and other short-term rental sites. Home-sharing businesses weren’t seen as a threat to the $176 billion hospitality industry, as they were thought to primarily serve millennials looking for a dime.
But eight years after Airbnb launched with a single air mattress for rent in a San Francisco loft, the hospitality industry is beginning to fear that short-term rental sites pose a serious problem. Not only is the business growing, but competition from rental sites is proven to hold back hotel rates in some areas.
Airbnb, the most popular home-sharing site, has about 2 million listings globally, with revenue of about $2.4 billion in the United States last year. The company was valued at $24 billion, more than hotel giant Marriott International’s $21 billion valuation.
The meteoric growth of Airbnb is even more worrying for hoteliers. In Los Angeles County, Airbnb listings rose 42% in the seven months to January, according to a Times review. In some neighborhoods, the increase was much greater.
“Hotel companies are going to start paying a lot more attention to Airbnb now that their numbers are as large as they are,” said Jamie Lane, senior economist for the hotel research arm of real estate firm CBRE.
The industry recently launched a study claiming that a growing number of Airbnb owners are actually operating “illegal hotels” in major cities, including Los Angeles, allowing them to avoid the taxes and regulations that hoteliers pay.
If Airbnb has an impact on hotels in any way, it’s in its ability to raise rates.
— Brandon J. Feighner, Director, CBRE Hotel Valuation and Advisory Services
The study, by the Pennsylvania State University School of Hospitality Management, found that nearly 30% of Airbnb revenue in 12 major cities comes from people who rent out their properties at least 360 days a year, attracting an average of more than 140 $000 per year.
Traditional hotels welcome competition, said Vanessa Sinders, spokeswoman for American Hotel & Lodging Assn., the trade group for the nation’s 53,000 hotels, which commissioned the study. But she added that the growing number of Airbnb properties operating year-round are not required to meet the health, safety and cleanliness standards that hotels must maintain.
“Competition in our industry thrives because everyone follows the same set of rules designed to protect owners, guests and communities,” she said.
Airbnb rejects these claims, saying most of their hosts live in the homes they rent.
“In Los Angeles, 82% of Airbnb hosts in Los Angeles share the home they live in, and furthermore, 80% of entire home listings in Los Angeles are rented less than 90 days a year,” the door-to-door said. Word from Airbnb, Alison Schumer.
Nationally, Airbnb lists about 173,000 units, or about 3.5% of the more than 5 million rooms rented by traditional hotels — not enough to pose a serious threat to the hospitality industry, according to a study by the hotel research arm of CBRE. The study analyzed Airbnb’s operations from October 2014 to September 2015.
The study goes on to say that Airbnb properties have begun pressuring hotels to keep rates low in a handful of cities with high share rental units, including Los Angeles, San Francisco and New York.
In Southern California, Airbnb could prevent hotel rates from skyrocketing in areas such as Santa Monica, Hollywood, Beverly Hills and Marina del Rey, according to CBRE.
For example, hotel room rates around Los Angeles International Airport increased nearly 13% in 2015 from a year earlier, while rates in the Santa Monica and Marina del Rey area rose only 5.6%, CBRE found.
In Santa Monica and Marina del Rey, Airbnb has one room listed for every two hotel rooms, according to the report. Around the airport, Airbnb has one room listed for every 4.4 hotel rooms.
Additionally, Airbnb rates around Santa Monica and Marina del Rey are nearly 30% lower than hotel rates in the same area, according to the CBRE report. Around LAX, Airbnb rates are 8% cheaper than hotel rates.
“If Airbnb has an impact on hotels in any way, it’s in its ability to raise rates,” said Brandon J. Feighner, director of CBRE’s hotel rating and advisory services.
Another area in Southern California where hotel rates may be vetted by Airbnb is Venice, where the home-sharing site had 1,741 listings in early January, according to data collected by Inside Airbnb, a site that tracks short-term rentals. business term.
This figure was 25% higher than the number of registrations in May 2015, according to a Times analysis. The tourist area leads all neighborhoods in Los Angeles County for Airbnb listings, ahead of Hollywood and Santa Monica.
Mark Sokol, owner of the 120-room Hotel Erwin in Venice, said he felt compelled to keep rates low because too many short-term rentals in Venice had turned into illegal hotels that operated year-round and do not pay the fees. and the salaries of traditional hotel workers.
“When you have that much supply, there’s definitely price pressure,” he said.
Some hotel owners say they don’t worry about competition from Airbnb because only hotels can offer guests the assurance of a clean room, with amenities like a coffee maker, TV, and a comfortable bed.
“Hotels are going to offer a standard hotel experience whereas Airbnb can be an adventure or a nightmare,” said Ken Pressberg, owner of the Orlando, a 95-room boutique hotel near the Beverly Center.
As young travelers advance in their careers and earn more money, he said he thinks they will eventually ditch Airbnb for traditional hotels.
A survey of 1,650 adults through travel research hipmunk website found that 74% of millennials stayed in a roommate for a business trip, compared to just 38% for Gen Xers and 20% for baby boomers.
To steer young people away from short-term rentals, many hotel owners are investing in their properties, such as upgrading Wi-Fi speeds in the lobby, adding tablet computers to rooms and offering meals and beverages unique to their hotels.
“Airbnb is just another competitor you need to keep an eye out for,” said Phil Anderson, general manager of the DusitD2 Constance Hotel in Pasadena.
But for many young travelers, it’s the quirky extras found at Airbnb properties that appeal to them — extras they won’t find at traditional hotels.
Tasmin Lofthouse, a 22-year-old marketing assistant from Blackpool, England, said she booked an Airbnb property for her trip to Los Angeles in June because she wanted to avoid the “commercialized and touristy” setting of a hotel. .
“From what I’ve seen so far, Airbnb hosts are willing to go the extra mile, and some even allow you to help yourself to homegrown vegetables or fruit,” she said. . “I doubt you would see this in a hotel.”
Writer Ben Poston contributed to this report.