Airbnb revenues have grown faster than those of hotels, and properties have been added at an “exponential” rate in major US cities since 2008, according to a report from Tarik Dogru, an assistant professor of hospitality management at Florida State University.
Writing in the International Business Times, Dogru said that every 1 per cent increase in the number of Airbnb properties decreased hotels’ average revenue per room by 0.02 per cent.
“Although this impact seems small, consider Airbnb’s phenomenal year-over-year growth rate when measuring the company’s impact on hotel room revenues,” he wrote.
“Accordingly, every time Airbnb’s supply doubles – which is its average yearly pace since inception – hotel revenues fall 2 per cent.”
In New York alone, Airbnb potentially decreased hotel revenues by $365 million in 2016, according to Dogru’s analysis.
Room prices fell 0.003 per cent to 0.03 per cent for every 1 per cent increase in Airbnb supply, the report found, while hotel occupancy declined by 0.008 per cent to 0.1 per cent.
The impact of Airbnb was seen in luxury markets as well as lower-end segments of the lodging industry.
“Our findings also showed that midscale and independent hotels were the least hurt by Airbnb’s increasing supply, probably because both have very similar price points,” Dogru said.
“Another possible reason is that people who chose independent hotels perceived those properties to be more authentic compared to chain hotels, and so those consumers were less motivated to switch from independent hotels to Airbnb.”