By STR Global
Hotel performance continued to show strength while more hosts than ever were renting their residences on Airbnb, according to STR and Airbnb data. Performance data through July 2016 indicated hotels were following their normal cyclical trajectory, hovering at or just below the peak at a time when Airbnb listings outnumbered the world’s largest hotel company by nearly three units to one. As of July, the U.S. hotel industry had recorded its 77th consecutive month of revenue-per-available-room growth. During that same month, hoteliers sold more roomnights (117 million) than ever before.
Those same dynamics largely held true in the following 13 global markets analyzed in this report: Barcelona, Boston, London, Los Angeles, Mexico City, Miami, New Orleans, Paris, San Francisco, Seattle, Sydney, Tokyo and Washington, D.C. Airbnb provided more than two-and-a-half years of daily data for each market, which STR analyzed and then compared to its hotel performance data.
Among the most compelling findings:
- Airbnb occupancy generally was the highest in markets where hotels had high occupancy.
- Hotel occupancy was significantly higher than Airbnb occupancy.
- While Airbnb’s share of total accommodation supply (i.e. Airbnb units and hotel rooms) was growing, its share of market demand and revenues still was generally below 4% and 3%, respectively.
- Airbnb guests typically stayed longer than the average hotel guest, with roughly half of Airbnb roomnights coming from trips of seven days or longer.
- Airbnb’s share of business travel was substantially smaller than its share of leisure travel.
- Hotel average daily rates generally were higher than Airbnb rates (e.g. $16 higher on average in our seven U.S. markets).
- Hotel ADR increased in all but one market (Paris) in the year ending July 2016. Airbnb rates decreased in eight markets and increased in five.
Supply might have been a contributing factor in that latter point, as the majority of the markets analyzed in this report saw available Airbnb units increase by more than 40%—and in some cases north of 100% . When analyzing growth rates, however, it’s important to acknowledge the baseline. Airbnb is a relatively new presence in many markets, and growth rates often are commensurate with untapped potential. In other words, Airbnb has more room to grow in most markets, whereas hotels have carved out an established presence over decades.
The Airbnb demand story followed a similar narrative, with growth rates that generally were above 60%. Harder to assess was the nature of this demand— whether it was mostly incremental, as many of Airbnb’s most ardent defenders have argued, or whether it represented a roomnight that otherwise would have been spent in a hotel, as many critics have alleged. While competitive pressures exist across the lodging landscape, it is difficult to assess the interplay between different accommodation types with different operating models. Hotel inventory is fixed; a hotel room tonight is a hotel room tomorrow. Airbnb inventory can flex, as hosts take supply on and off the market based on their willingness to make privately owned units available to the public for rent. This analysis represents our attempt to normalize the data set, but it should not be interpreted as a true “apples-to-apples” comparison.
That said, one can still glean meaningful insight and information from the data. A review of compression nights, for instance, showed no noticeable impact of Airbnb within the seven U.S. markets included in this report (Figure 1). The number of nights in which occupancy exceeded 95% had increased steadily since the Great Recession, reaching its peak of 76 during year-to-date July 2015. That number dipped slightly to 71 through July 2016, which followed a softening of several other macroeconomic indicators. Also at play was the 1.6% uptick in hotel supply in those seven markets, which should not be underestimated. This looks to be a small percentage increase on the surface given the high base of hotel supply (92,871,685), but the total number of new supply added (1,487,458) to these markets was actually substantial.
What’s more, U.S. hoteliers in those seven markets saw no degradation of their rate premiums during that same period. ADRs on compression nights during 2016 were 35% higher than on non-compression nights, which represents a record high.
Compression night performance in the six international markets followed a similar track, although more volatility was observed in the aggregate given the disparate economic and political factors at play. With this analysis, it is our intent to provide the most comprehensive comparison of Airbnb and hotel performance data ever reported to better inform the conversations in this “street corner” business. It is not our intent to draw correlation or causation. We will share more findings as we continue to examine the available information and as new data becomes available.
For the full report: http://www.str.com/research1
STR provides clients from multiple market sectors with premium, global data benchmarking, analytics and marketplace insights. Founded in 1985, STR maintains a presence in 10 countries around the world with a corporate North American headquarters in Hendersonville, Tennessee, and an international headquarters in London, England. For more information, please visit str.com.