Airbnb has given travellers another option for accommodation all around the world!
With Airbnb being a competitor for big hotel companies without even owning any property, what has been the impact of airbnb on the hotel and hospitality industry?
In this article, we’ll go through:
- the profitability of Airbnb
- the impact of covid on the travel industry and Airbnb
- Airbnb’s impact on the hotel industry
What is Airbnb?
Airbnb stands for Air Bed and Breakfast. Airbnb began in 2008 when two designers who had space to share hosted three travellers looking for a place to stay.
Now, millions of hosts and travellers choose to create a free Airbnb account so they can list their space and book unique accommodations anywhere in the world.
Airbnb experiences hosts also share their passions and interests with both travellers and locals. Airbnb makes finding a place to stay while traveling easy, enjoyable, and safe.
According to a study, what started as a single host listing in 2008 has now risen to 2.9 million hosts worldwide in 2021. There are more than 8 million listings of Airbnb’s sites across 220 countries and regions worldwide in 2021.
How profitable is Airbnb?
In 2017, Airbnb generated approximately $93 million in profit out of $2.6 billion in revenue. In 2019 the revenues peaked up to an amount of 4.7 billion, but the company generated around $3.6 billion by the end of 2020. This downfall in revenue was due to the COVID-19 pandemic.
Airbnb makes money by being the middleman between renters and Airbnb guests. Every time an Airbnb guest books the host’s property, the Airbnb host pays Airbnb a fee. Airbnb also adds service fees depending on the total cost of the guest’s stay.
Four factors that affect Airbnb’s value number include:
- The average number of guests per listing each year
- The number of listings
- The average rent per guest
- Airbnb’s share of the profit
How has Covid impacted Airbnb’s around the world?
The tourism industry took a dip in 2020 due to COVID-19 and has been trying to get back up since. Airbnb’s have been impacted too.
From 2019 – 2020 we saw a downfall of 1 billion in revenue in the Airbnb industry. Many hosts didn’t feel safe renting their houses to anyone who was traveling. More than 60% of people canceled their bookings for Airbnb as they didn’t feel safe.
The Airbnb rental industry has been able to start recovering from the initial shock of the Coronavirus pandemic. The recovery in Airbnb occupancy rates, as well as the Airbnb profitability for investors, is expected to continue into 2021.
The revenue generated in 2021 is expected to be more than $4 billion as people demands from 2020 transfers over to 2021 and beyond.
How did Airbnb impact the Hotel Industry?
Let’s look at some statistics as to how Airbnb is becoming more popular than hotels.
Research based on data from 2014 showed that in the ten US cities with the largest Airbnb market share, 1.3% fewer hotels were booked, resulting in a 1.5% loss in hotel revenue. Over the last five years, those losses have continued to add up. By one estimate, Airbnb is capturing 10-12% of travel demand in New York City, Paris, and London.
In addition to access to more rooms, travelers reaped other rewards in places where Airbnb competed with hotels, the study shows. During busy travel times, guests enjoyed an average "consumer surplus" of $57 per night. This surplus didn't necessarily amount to more money in a visitor's pocket, but it did mean better accommodations at more reasonable prices.
What changes is the quality of the listings. You might find an apartment or a place by the beach at a more reasonable price than you would if Airbnb wasn't an option. Or a listing might have additional amenities, like a kitchen. And if you still prefer a hotel room, competition from Airbnb means you'll pay a lower price for it.
So, what are the hotels doing to increase their own income?
Hotels have started to list their properties on Airbnb, this way they were able to increase their short-term bookings.
Several hotels in the Hotel Tech Report community have reported that Airbnb is now delivering up to 15% of bookings. Airbnb gets a very high rating for brand advocacy, an indicator of customer loyalty and repeat customers.
Guests not only return to the Airbnb platform to make another booking – but Airbnb guests will also refer other customers at a higher than market-average rate. Hotels took advantage of high affinity on Airbnb to connect with a broader, more engaged customer base.
All in all, Airbnb is the most hospitable environment for travellers as they get a variety of options and different home-like amenities. An article mentioning how hotels can be better than Airbnb said that, “Customers appreciate the consistency of experience guaranteed by booking a stay at, for example, a Marriott hotel anywhere around the world,” writes Forbes. “But they need to differentiate their offerings.
Not every room should be the same cookie-cutter mould at the same price. They should have a modicum of personality, and a diverse set of amenities, from fully-stocked kitchens to second bathrooms to common spaces and more.”
That concludes the impact airbnb has had on the hotel industry!
Some of the data from this research was done by scraping data using ParseHub, a free web scraping tool.
If you would like to conduct your own research like this, you can get started for free!
Read the other research pieces done using ParseHub:
If you want to learn how to scrape data from Airbnb, you can read here: How to Scrape Airbnb Listing Data: Pricing, Ratings, Amenities, Etc.