How Has Airbnb Disrupted the Hotel Industry?
How has Airbnb disrupted the hotel industry? In this article, we’ll discuss how the short-term rental website has changed the supply and demand of hotels. We’ll also explore the potential impact of regulations on short-term rentals on hotel supply and demand. What’s next for Airbnb? What can hotel executives do to protect their business? And how can we protect our hotels from the short-term rental website?
Insurance Risk Management is the assessment and quantification of the likelihood and financial impact of events that may occur in the customer’s world that require settlement by the insurer. To know more, contact us today!)
Airbnb disrupted the hotel industry
Airbnb has disrupted the hotel industry by offering a more authentic lodging experience at a lower price. The company’s business model also makes it easier to add new properties than traditional hotels. While it initially threatened smaller, economy hotels, Airbnb has expanded its services to include luxury properties. The disruption has left hoteliers scrambling to catch up to Airbnb and adapt their business models. But what are the consequences of Airbnb’s success?
The biggest effect of Airbnb has been a shift in supply and demand within the hotel industry. The more rooms on the market, the lower the cost per room. Meanwhile, hotel operators are battling it out with Airbnb hosts to draw customers. In a recent report, Post Funnel analyzed the impact of Airbnb on the hotel industry. Several success stories of Airbnb have come from cities experiencing peak season. And while this change has affected hotel operators in some cities, the industry is still thriving.
Regulation of Airbnb means a level playing field for hotels
While a major question for the hotel industry is whether regulation of Airbnb will help protect the traditional hospitality industry, the short-term rental marketplace is growing rapidly. Since its founding, Airbnb has become a $25 billion global corporation and threatens to erode the hotel industry. While Airbnb will always have some customers, including road-trippers, conventioneers, and wedding planners, it also threatens the interests of thrifty and adventuresome travelers.
The short-term rental site has been criticized for not clamping down on illegal rentals. Airbnb filed a lawsuit against New York City in 2018 to prevent the city from sharing data with hoteliers. Eventually, the city settled and agreed to share the data. However, neighborhood and tenant groups pushed back against the new bill. The company argued that the legislation would hurt New York’s tourism industry and undermine its economic health. It also turned to its hosts to justify its business model. Many hosts said their income from the rentals helped them afford sky-high housing costs.
Impact of short-term rentals on supply
Short-term rentals have become an increasingly important part of the hotel industry, with a recent report by CBRE Research highlighting the implications of short-term rentals on hotel supply. While short-term rentals have been growing fast, their high penetration in the hotel industry has been problematic for traditional hotel valuations. Hotels are facing the same problem as other sectors: the short-term rental industry can reduce its margins by limiting its ability to raise rates. Furthermore, short-term rentals can discourage developers from building hotels in certain markets.
The impact of short-term rentals on supply has been widely discussed since OPTECH 2018, and the resulting disruption has generated a plethora of new vendors across the value chain. For instance, an app now makes it simple to rent an apartment, while a platform runs apartment buildings like a hotel. As a result, short-term rentals are reshaping the hotel industry, with new regulations and lower prices.
Impact on demand
There are several issues associated with the question of whether or not Airbnb will have an impact on the housing market. Among them is the effect on rent and prices of properties. While the impact is greater in cities with lower owner-occupant rates, the same cannot be said about long-term residents. The presence of Airbnb could increase rents and prices in a given area if it reduces the supply of housing in that area.
In addition to the issues mentioned above, local governments should consider the fiscal implications of a decision regarding the popularity of Airbnb. For example, lodging taxes in the United States are large, averaging thirteen percent across the largest cities. While local governments might be tempted to raise their rates, the fact is that they still benefit from services funded by the tax. While local governments may face this dilemma, they must remember that while the tax is a monetary burden for tourists, residents in the city pay a portion of the tax.