Study finds no “smoking gun” on Airbnb and hotel revenues

STR research finds no evidence of negative impact on Manhattan hotel market

Airbnb co-founders Joe Gebbi, Nathan Blecharczyk and Brian Chesky
Airbnb co-founders Joe Gebbi, Nathan Blecharczyk and Brian Chesky

A new study suggests the hotel industry and Airbnb maybe be able to “share” the New York hospitality market after all.

Using data provided directly by Airbnb, hospitality research firm STR Inc. found no smoking gun that the $25.5 billion startup was pilfering the pockets of Manhattan hoteliers and shrinking hotel revenues.

The study found that based on pricing, 60.7 percent of the startup’s Manhattan supply is categorized in the midscale-economy class. That puts those units in direct competition with a relatively small slice of the Manhattan hotel market – just 13 percent – that fits into the same category.

Beyond that, 58 percent of Airbnb guests stay for seven days or longer, according to the study, which exclusively measured aggregate daily metrics from Airbnb. That’s a consumer class that the city’s hotel industry has largely ignored. Just 4 percent of the city’s hotel rooms are classified as extended stay, according to STR.

“Overall, in reviewing the Airbnb data for Manhattan, there appears to be no direct, statistical evidence suggesting Airbnb units and hotel rooms compete consistently for the same traveler,” the firm’s researchers concluded.

“That’s not to suggest there isn’t any overlap; it’s highly likely at least some travelers research both hotels and Airbnb units before making a booking decision,” the report stated. “However, given Airbnb hosts’ lower-tier rate structure and propensity for booking long-term (7+-day) stays, it’s likely this overlap is most common with extended-stay and economy hotels in Manhattan.”

STR’s analysis found no evidence that when demand was strong for Airbnb, it negatively impacted hotel occupancy or average daily rate.

When studying “compression nights” – or nights when hotel occupancy is 95 percent or greater – STR researchers found hotel rooms could charge a hefty 25 percent premium over periods of lower demand. Airbnb hosts, by contrast, charged only a 4 percent premium.

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The researchers also concluded that since the Manhattan market overall runs at 87 percent occupancy with 52 peak nights a year, there’s plenty of unaccommodated demand that can spill over to Airbnb or new hotel supply coming to the market.

“There is no evidence that every room occupied by an Airbnb guest is a room taken from a hotel,” the report found.

For its analysis, STR requested data from Airbnb on supply, demand and revenue in Manhattan from December 1, 2013 through the end of November 2015.

The study is unique in that the direct data provides information on when listed units are actually booked as well as aggregate revenue across the listings. That information was not available to several recent studies that relied primarily on data scraped from Airbnb by third-party firm AirDNA.

It also leads to very different conclusions.

A study prepared by HVS Consulting & Valuation in October for the Hotel Association of New York City found a direct loss of $451.4 million last year to Airbnb.

A CBRE report released last week found New York to be the market most at risk in the country to competition from Airbnb, and in December the city’s Independent Budget Office said competition from home-sharing app – along with the rising dollar and increased hotel supply – was partly to blame for a drop of $14 million the city would collect in hotel occupancy tax.

Last year, The Real Deal spoke with a handful of hotel industry players to gauge their reaction to Airbnb’s impact on their industry. TRD also performed its own analysis of scraped Airbnb data and found that the company pushes up rental rates in New York City’s most desired neighborhoods.