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Airbnb takes a bite out of the hotel market

Profile Photo By: H L
January 15, 2014

Airbnb takes a bite out of the hotel market

AirBnB ScreenshotCraigslist sunk the classified business and Amazon has put bookstores into bankruptcy. Now a trio of researchers at Boston University?wants to know- is Airbnb going to make Marriott and Sheraton go the way of Borders and Blockbuster?

Airbnb is a pillar of the so-called “sharing economy”, and it facilitates short-term rentals between home owners with a guest room (or a whole house or apartment) to spare and travelers looking for less expensive or homier alternatives to hotels. Since it began operating in 2008, Airbnb has processed more than 10 million bookings. In order to figure out what effect, if any, all those peer-to-peer transactions have had on the hotel industry, Georgios Zervas, Davide Proserpio, and John W. Byers analyzed hotel revenue data in Texas from 2008-2013: They compared revenue data from Texas cities where Airbnb operates to cities where it does not (or had not yet started operating), and also compared revenue totals from different segments, like business, luxury, and budget hotels. All told, they found that for every 1 percent increase in the number of Airbnb bookings, there is a .05 percent decrease in hotel revenue. They found that low-end hotels are especially vulnerable to being replaced by Airbnb accommodations, while hotels that cater to business and luxury travelers have less to worry about. And, if the hotel lobby decides to mount an offensive against Airbnb, the BU researchers have a recommendation: Push for laws that prohibit people from renting out houses they don’t actually live in.

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