Airbnb and other roommates worry hotels

Tired of “sterile hotels,” Brooklyn resident Kelly Dwyer turned to roommate site Airbnb three years ago to plan a trip to Southern California and find 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 companies weren’t seen as a threat to the $ 176 billion hotel industry, as they were thought to primarily serve penny-hungry millennials.

But eight years after Airbnb launched with a single air mattress for rent in a San Francisco loft, the hospitality industry is starting to worry that short-term rental sites are a big problem. Not only is the business expanding, but competition from rental sites has been shown to dampen hotel rates in some areas.

Airbnb, the most popular home-sharing site, has around 2 million listings worldwide, with revenue of around $ 2.4 billion in the United States last year. The company was valued at $ 24 billion, more than the $ 21 billion valuation of hotel giant Marriott International.

Even more worrying for hoteliers is Airbnb’s scorching growth. In Los Angeles County, Airbnb listings rose 42% in the seven months ended in 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 big as they are,” said Jamie Lane, senior economist for the hotel research arm of real estate firm CBRE.

The industry recently released a study claiming that a growing number of Airbnb owners are actually running “illegal hotels” in major cities, including Los Angeles, allowing them to avoid the taxes and regulations hoteliers pay.

If Airbnb has an impact on hotels in any way, it’s in its ability to increase rates.

Brandon J. Feighner, Director, CBRE Hotel valuation and Advisory Services

This study, carried out by the Pennsylvania State University School of Hospitality Management, found that nearly 30% of Airbnb’s income in 12 major cities comes from people who rent their properties at least 360 days a year, earning an average of more than 140 $ 000 per year.

Traditional hotels welcome competition, said Vanessa Sinders, spokesperson for the American Hotel & Lodging Assn., The commercial group of the 53,000 hotels nationwide, which commissioned the study. But she added that the growing number of Airbnb properties open year-round are not required to meet the health, safety and cleanliness standards 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 such claims, saying most of their hosts live in the homes they rent.

“In Los Angeles, 82% of Airbnb hosts in LA share the home they live in, and furthermore, 80% of all real estate listings in LA are rented less than 90 days a year,” the door said. word of Airbnb, Alison Schumer.

Nationally, Airbnb lists around 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 started pressuring hotels to keep rates low in a handful of cities where shared accommodation is plentiful, 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 the previous year, while rates in the Santa Monica and Marina del Rey area only rose 5.6%, CBRE found.

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In Santa Monica and Marina del Rey, Airbnb has one room listed for two hotel rooms, according to the report. Around the airport, Airbnb has one room listed for 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 increase rates,” said Brandon J. Feighner, director of hotel rating and advisory services at CBRE.

Another area in Southern California where hotel rates can be controlled by Airbnb is Venice, where the roommate site had 1,741 listings in early January, according to data collected by Inside Airbnb, a site that tracks short-term rentals. of the company.

That figure was 25% higher than the number of registrations in May 2015, according to an analysis by The Times. The tourist area leads all Los Angeles County neighborhoods for Airbnb listings, ahead of Hollywood and Santa Monica.

Mark Sokol, owner of the 120-room Erwin Hotel in Venice, said he felt pressure to keep rates low because too many short-term rentals in Venice have turned into illegal hotels that operate year-round and do not pay the fees. and the wages of workers in traditional hotels.

“When you have that much supply, there is definitely price pressure,” he said.

Some hotel owners say they don’t worry about competition from Airbnb as only hotels can offer their guests the assurance of a clean room, with amenities such as a coffee maker, TV and comfy bed. .

“Hotels are going to provide a standard hotel experience where 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 believes they will eventually abandon Airbnb for traditional hotels.

A survey of 1,650 adults through travel research Hipmunk site found that 74% of millennials stayed in a shared property for a business trip, compared to just 38% for Gen Xers and 20% for Baby Boomers.

To draw young people away from short-term rentals, many hotel owners are investing in their properties, for example by improving Wi-Fi speeds in the lobby, adding tablet computers in rooms, and providing meals and amenities. drinks 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, the quirky extras found at Airbnb properties are what attract them – extras they won’t find in 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 any fruit or vegetable grown on site,” he said. she declared. “I doubt you see that in a hotel.”

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Twitter: @hugomartin

Editor-in-chief Ben Poston contributed to this report.

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