Analysis Shows Hotels Are Not Losing Share to Airbnb
travel.hostfully.com
travel.hostfully.com
* Can hostfully.com identify suspicious data analysis? (no.)
* If given the chance, will Airbnb present misleading data for self-serving ends? (yes.)
* Will an already self-serving study be given an even more self-serving spin when presented by a sympathetic reporter? (yes.)
To understand what I'm talking about, consider the source cited by OP (http://hotelnewsnow.com/Articles/77191/New-Airbnb-data-sheds...). Going by that data we might be tempted to say that Airbnb is being out-competed by the hotel industry.
However, stagnant growth on the part of AirBnb seems like it would have been widely reported. And yet it hasn't. Googling we find a seemingly contradictory datapoint: Airbnb's revenue is up 89% this year (http://www.bizjournals.com/sanfrancisco/news/2016/09/01/airb...).
How can Airbnb's revenue have almost doubled while still losing market share across the board?
Option 1. They didn't lose market share across the board, and instead cherry picked non-representative markets for their 13 region hotel comparison.
Option 2. They lost large numbers of low-margin bookings across the board, while gaining (taking market share from hotels) higher margin bookings. [Note this would contradict OP's article.]
In both cases, Airbnb's data is misleading.
While I know my situation is not a representative sample, I do travel a lot and observed the same thing in various places, including other countries. I discussed it with other travelers, and they reported the same.
So I wouldn't conclude that everything is ok for hotels. The story needs more data.
[1] http://www.wsj.com/articles/terror-attacks-weigh-on-europes-...
Hotels typically have about a 5 year cycle.
Families can get a more memorable experience and usually a more economical one with a home rental. My property has even been getting small corporate retreats.
There's a lot of people that have never tried the hospitality sharing economy. Only 6% have [1]. It's kind of intimidating and unknown the first time but once you do it you realize it's pretty awesome.
Also - hotels will be hurting when businesses adopt home share credit card rewards. You'll see a shift from business travelers. Many have Marriott rewards cards as an example like they used to have Blackberries. They'll demand a more flexible option which will be a game changer.
Example: https://www.americanexpress.com/us/content/airbnb/
Hotels are definitely worried - they're just not putting that out there because most of the large brands are public franchises.
[1] https://www.pwc.com/us/en/technology/publications/assets/pwc...
We'll see. I'm a frequent business traveler who often prefers smaller and more local when I travel on vacation and, indeed, will often favor "boutique hotels" when I'm on business; I keep an eye on hotel rewards but aren't a slave to them. But, when traveling on business, I really do want a predictable experience, 24 hour desk, etc. I'm not looking for travel experiences from the hotel perspective at all.
My place is accessed by touchscreen code and I let visitors check in whenever they want and usually let them check out late at no charge if requested. 50M internet. Killer kitchen, tons of work space, grill, new hot tub.
AirBnB is pushing more hosts toward instant book which will make it easier for business travel. They also prioritize hosts that respond quickly because booking has to be easy to convert, especially for last minute bookings and biz travel.
It may not be for you, but many on business don't necessarily look for an experience - they just want amenities and features they have at home. Younger people are generally more excited about AirBnB too so that will drive more growth and adoption as they become the traveling warriors.
AirBnB and others need not take huge market share from hotels that cater to business travelers to cause them to hurt. Expenses are on the rise for hotels and changes in the minimum wage and labor laws will have a big impact too. The industry pays very little and demands a lot from their employees.
I'm not even necessarily a particularly representative business traveler. I like my points but I don't organize trips around them. I don't need or use a lot of traditional hotel amenities like fitness centers. I don't need concierges. I just don't want complications when my plane is delayed 5 hours that involve calling some guy to coordinate getting a key.
Trivial: Because the market size increases. More people are renting hotels/airbnb + more often + for longer durations.
For starters, I believe that comparisons shouldn't oppose AirBnb and Hotels because they don't appeal to the same demographics (though there is some overlap).
Lol, yes, this is fair. The hotel market doubling in revenue would be headline news at the WSJ, etc though.
We can actually get a rough sense of what's happened to the market as a whole by looking at the stock prices and cashflows of the major hotel chains. Looks like Mariott has lost a bit of value in the last year[1], same for Hilton[2]. La Quinta holdings went way down[3]. Please check the hotel chain of your choice if you feel I cherry picked these examples (Motel 6 and Best Western were my first choices, but are privately held).
Which is to say it doesn't appear that the market doubled in size.
[1] https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...
[2] https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...
[3] https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...
> Option 1. They didn't lose market share across the board, and instead cherry picked non-representative markets for their 13 region hotel comparison.
(from higher up this comment chain)
In the former case, you're competing with a bunch of alternatives that you're happy to substitute given a better/cheaper option. Maybe you take less public transportation or don't ask for a ride or don't drive yourself and use Uber.
AirBnB, on the other hand... Yes, some people will travel more/stay longer given cheaper lodgings but there are a lot of other costs associated with travel (including, for most, vacation time) so it's harder for me to believe that AirBnB will dramatically increase lodging days to the same degree that Uber could potentially increase taxi or private car-like service miles.
Also, AirBnB doesn't only compete with hotels... a lot of the market share in my country (Uruguay) was actually taken from real estate agencies for short-term vacation rentals, not hotels.
Edit: same in Portugal and Ireland, see https://news.ycombinator.com/item?id=12732874
That's not market elasticity though. That's shifting from one booking agency to another. When my family rented a vacation home we used various small vacation home services. I have no doubt we'd consider using AirBnB today if we still had the place.
I don't doubt that lower prices, where they exist, make a difference at the margins. I'm just skeptical that the effect is big. And, as the business traveler that I am most of the time, I mostly want predictability and a 24-hour desk from a hotel.
First, huge hotel chains are an American thing, the rest of the world (Europe in particular) is managed by many smaller players for which you cannot have numbers.
Second, the American chains are a fairly stable and fixed business limited by physical buildings, AirBnb is worldwide and extending to 100 countries as we speak. The current hotels vs airbnb state in America is already determined BUT only valid for America. What will be the market shares per country and cities... this has yet to be determined. Meanwhile AirBnB starting from 0% everywhere else is enough to justify growing income and revenues.
Third, there could be 10 (or 100?) times money stuck in the black market. (People who pay hand-to-hand, rent to a friend of a friend, gumtree, newspapers listings and the likes). AirBnb can tap into this black market and make it emerge, whereas this space is irrelevant for hotels.
You wanna talk business. Please compare numbers from hotels.com and booking.com and airbnb.com
That's a multi billion dollars audience yet only a small fraction of the global housing and rental markets.
AirBnb is playing in many more markets than just competing with hotels.
added the word 'roughly'
Of course, if that happens, others would be losing "share", albeit not shrinking in absolute terms. But, in fairness, the article seems very wishy washy in its definition of "market share".
If total revenues for the whole market are 100, and AirBnB's share is 1. Then the total revenues only have to go up to 102, for AirBnB to capture all the new revenue and thus double its revenue.
The marketshare isn't based on revenue, but total supply of rooms/listings available, so its possible to lose marketshare and gain revenue.
By whom? I agree it would be big news (and people love negativity) but it's a private company with powerful insiders and investors, and they control the narrative.
I clearly remember the newspaper industry doing a survey in the late nineties showing that the Internet wasn't materially hurting their business. Then sometime after 2003 the industry fell off a cliff.
People also travel a lot more these days thanks to cheap flights (which have just gone through years of low fuel prices) and higher disposable income, so the holiday market as a whole is expanding.
Netflix used to be a unicorn at one time. It didn't primarily expand the rental market to become a unicorn, it rather rapidly destroyed Blockbuster and thousands of other rental stores by providing a better service. If it was primarily expanding that market, Blockbuster would still be around. Today it's not expanding total TV viewing time, it's proceeding to harm cable, tv networks, traditional tv programming, ESPN, HBO, etc etc.
Tesla - also once a unicorn - isn't expanding the automobile market. They've been directly taking sales from BMW, Mercedes, Porsche, Lexus, Audi, etc. The success of the S sedan is coming out of the high end luxury car sales segment. Their 3 sedan will continue that process. That's why those other companies are so freaked out by Tesla's arrival and relative success. If Tesla were primarily expanding the market and not stealing market share, the competition wouldn't be reacting the way they are.
Just think for a second about countries and cities which did not have taxis.
Which countries and cities didn't have taxis before Uber?
In the 6 months I spent in Lyon (2nd city from France), I only saw a taxi once.
I searched the internet for "taxis in France" and generally get the impression that "Rates in Paris are different from the rest of France. ... There are four main tariffs for taxis outside Paris."[1]
This[2] article claims a "nationwide protest against Uber", which would seem odd for, as you would have us believe, a nation without taxis.
1. http://www.expatfocus.com/expatriate-france-taxis 2. http://www.theverge.com/2015/6/25/8844649/french-taxi-driver...
Uber et al may be harming the taxi business, but my friends and I only took taxis if we had to in our town because they were hard to find, and generally sucked. Now we Uber to go out because it is so convenient. Another friends car broke down and he just never replaced it. He didn't drive that much anyway, and Uber satisfied his need for a car. He would have never done that with the traditional, unreliable taxi in my town.
Uber has definitely expanded the number of people who take a driver service. I wonder if anyone has done any statistical studies around DUIs and Uber coming into a town.
A quick Google search will give you some examples.
so it is more applicable to simply assume it is "blatantly true" until you prove it isn't, as well as find all of the incumbents that were obliterated
In AirBnB's case, the only way it can really grow the market is by providing an efficiency that didn't exist before, and in that respect it clearly has: apartments, houses or spare rooms that used to sit empty when the owner was away can now be put to use through AirBnB. That said, I think it's naive to look at AirBnB's cherry picked data and not think they are having some marketshare impact on hotels, especially on the budget side where AirBnB is clearly a substitute good (think Motel 6 vs AirBnb).
but in any case I am genuinely curious. I can see the conflict of getting data only from AirBnB.
But perhaps prices simply reached an equilibrium. For example, there was a time when I could count on AirBnB being MUCH cheaper than hotels. Now they are about the same in most areas I look in. I can also see some hotels having less variance in their prices during certain time periods.
In Portugal, it seems to be coming from the rental market. In the sense that there's been an increase in tourism and the increased demand for short-term accommodation is being fulfilled with properties which were previously for longer rentals.
This has happened in Ireland, and especially Dublin as well. With rents increasing by 10% per year, AirBnB is blamed by some for reducing the stock of privately rented accomodation.
I'm a fringe point, Ive always preferred saving money for experience. So I'm used to hostels, couch surfing, etc. I would only touch hotels if it was part of a rewards program.
I'm also a host. My rooms are priced at 12 and 25 a night. I've noticed two trends and seen it backed up via host forums.
Firstly travelers are expecting hotel quality at a fraction of the price. They're expecting travel toiletries, clean to the point of shining. I purchased a number of travel size soaps and one customer raided my entire supply. This stuff adds up. I can buy some items in bulk. But not at the discount rate of hotels. I also offer food when I'm making it. Some customers outright asked me where's breakfast. Oddly ive seen this primarily with younger people. Older, 40+, join the household. Cook with us and buy ingredients.
Secondly I'm seeing Airbnb as a short term rental place. After 2 weeks listed I had one room booked for 6 months the other for 4 months. These are largely people who are just moving to the area, and finding their grounding. Or I've seen a lot of visas doing short term contracts.
I can pretty much boil my listing down too. Either a short term rental. Or a stopping point between Philadelphia and Baltimore/DC.
I'll blame that on the AirBnB name itself. BnB implies Bed and Breakfast, so people might rightly expect that breakfast would be served.
I think it'd be better if both sides---consumer/suppliers---looked at AirBnB offerings as a bed and breakfast or a vacation rental, but never as a straight up hotel or couchsurfing replacement.
Thats why you booked 6 months so quickly
Some of which will give you better ranking on their site if you pony up more percentage.
If you are looking to book a hotel I would find what the price is on one of these sites and then call the hotel to negotiate a lower price. You get a better price and the hotel gets more money.
[1] https://www.quora.com/How-much-commission-is-booking-com-cha...
Lesson learned.
to sum it up, I do believe and hope booking.com will slowly die, since other services are just better in every single aspect.
Maybe I'm just blind because I have a good income and can afford it, but I much prefer the experience of bnb's and hotels. Airbnb is fine if you're with a group and partying, but is a sub par way to stay in a city imo. Also, in Paris, e.g., the airbnbs tend to be booked out way in advance and often much more expensive than hotels.
My comment was from the point of host (sorry if not clarified before) - dealing with booking.com is ridiculous, their charges are way above any other service, yet you have to do the payment yourself for example (major hassle).
If hosts have to pay up to 30% booking fee for sub-par services (just because, you know, we are booking.com, so f__k you), guess who ends up paying for it? Not the owners, that's for sure...
I agree that airbnb may end up being more pain in some places, if hosts are too restrictive (ie requiring passport scans, 24h pre-approvals etc.) - but this is optional, non-default setup that they chose for whatever reason. I don't do this for my place, instant booking without prejudice :)
Meaning: no need to have a local number, usually have a reception to avoid needing to agree on an exact time beforehand, hosts are actually on time (I hate when I agree on a time and there's nobody around), hosts are actually reachable, etc.
I don't find AirBnb cheaper or anything, you still pay a pretty big service fee. It's just less hidden.
Off the top of my head, a short list of advantages I like:
- someone that will take my side in disputes
- being able to book multiple hotels on one account, in the same place
- cards in wallet in my iphone
- knowing exactly what I'll get
- avoiding misunderstandings that might arise when having to book orally (i.e. wrong number of rooms, wrong number of people, ...)
And that's beyond the superpowerful search, which is kind of immoral to use without giving them the referral fee.
I recently booked a room in stockholm that looked nice on booking.com. It was only after I booked that I was contacted by the owner and told how to meet up and get the key etc . I was pretty upset it wasn't an actual hotel but it was arguably too late to change things. It turned out to just be someone's apartment.
I have no idea if booking.com knew that. I do know I would not have booked if I had know for this particular trip.
Unlike Airbnb the apartment did want me to pay the tourist tax. Strangely, I paid a bit less than what booking.com said I should've. I mentioned it but the guy ignored it (oh well).
Usually I do check around (see if I can find a cheaper rate by booking directly).
After booking, my wife noted that the email they sent referenced an apartment instead of the hotel. Sure enough, it was different... It was across the street!
I got instructions to go to the other side of Akihabara, up a few floors, and get a key from some office there.
In the end, we chose to pay for the first day of the "hotel room" and cancel the booking, going to a real hotel instead.
I was on a recent trip to Poland.
Accommodations for one city was on Airbnn(zealously over-finished apartment but nice), one city was on booking.com.
Turns out booking.com accommodations were just an unsold apartment in a half sold building being used as a half hotel in the middle of an unfinished development.
It was a hotel like experience (hotel tax included) but I would have been upset to actually buy an apartment in this building.
To be honest, I can't say that I have a compelling interest in protecting hotel market share. As a resident of NYC, however, I do have an interest in protecting my relatively cheap (but in-the-real-world-expensive-as-hell) rent. I see more and more people with suitcases leaving and entering buildings in the neighborhood, and I have to wonder what that is doing to rent prices.
It's still a gut thing right now, but the case feels like it's getting more compelling.
What is "group"?