The truth about AirBnB competition

I am frequently in contact with hotel owners and I hear too often phrases like:

  • “AirBnB is stealing all our customers! “
  • “It is unfair competition! “
  • “They do not have the same expenses as the hotels! “
  • Etc.

With a few exceptions, hotels are extremely angry about AirBnB.

For those who read me regularly, you know that I love to analyze and get to the bottom of things. Also, I asked myself this question:

Does AirBnB really have a negative impact on hotel sales? And should we really blame it for all the problems which we currently blame it for?

Happy reading!

What is AirBnB?

Let’s first define what AirBnB is. Originally, it was a platform for rental and reservation of housing between individuals.

For years, this system has been used to give the lessee the feeling of being “at home”. The marketing mainly conveyed this message and this image. There was no competition for hotel owners.

But it has quickly changed:

Number of searches for the word AirBnB on Google (https://trends.google.fr/trends/)

By the end of 2014, early in 2015, the platform is democratized and users begin to become addicted. The graph below reflects this state of mind with a multiplication by 4 of the quantity of Internet users searching for the word “AirBnB” on Google. Is this the announcement of a decline in hotel business? From now on will the whole world reserve through AirBnB?

Not at all!

Let’s continue the comparisons and look at Booking and Expedia: the numbers are interesting:

The red line represents Internet users searching for the word “Booking” on Google and the yellow line those who search for the word “Expedia”. The blue line always represents “AirBnB”.

Booking continues to rise and undergoes absolutely no decline in traffic despite the “AirBnB Boom”. Expedia also seems little affected.

First conclusion:

Internet users have not decided to stop using conventional reservation methods in favor of AirBnB.

How many apartments are for rent?

One of the points regularly raised in discussions is the “phenomenal” quantity of rooms and apartments for sale on AirBnB. Using the sitehttp://insideairbnb.com/I investigated.

For this part of the analysis, I concentrated on three destinations:

  • Paris – 55,723 apartments available on AirBnB;
  • Berlin – 20,576 apartments available on AirBnB;
  • London – 49,348 apartments available on AirBnB.

Now let’s look at the number of hotel rooms available in each of the cities:

  • Paris – approximately 115,000 hotel rooms available;
  • Berlin – approximately 108,000 hotel rooms available;
  • London – approximately 110,000 hotel rooms available.

Your real competitors on AirBnB

Although Paris and London seem on the verge of disaster, never one to relying on appearances, I dug a little more. What are these tens of thousands of apartments for rent on the platform and to whom do they belong?

First, let’s remove individuals who sub-rent their living room for very small sums. Also let’s exclude all individuals who offer only a room (as opposed to those offering the whole apartment). Then we have:

  • Paris – 47,769 apartments available on AirBnB;
  • Berlin – 10,285 apartments available on AirBnB;
  • London – 25,285 apartments available on AirBnB.

Now, remove all the apartments with no significant activity in the last 6 months:

  • Paris – 15,368 apartments available on AirBnB;
  • Berlin – 3,930 apartments available on AirBnB;
  • London – 10,396 apartments available on AirBnB.

Then, let’s count only the apartments frequently posting availability on the platform. As the purpose of this analysis is to compare the AirBnB competition with your hotel, I will not retain the apartments available only a few months of the year.

My objective is to assess the competition as precisely as possible:

  • Paris – 9,387 apartments available on AirBnB;
  • Berlin – 2,277 apartments available on AirBnB;
  • London – 6,995 apartments available on AirBnB.

Finally, as I look at essentially the “professionals” of tourism having created a business for apartments to rent in the short term via AirBnB, I will select only users having put at least 2 apartments for rent on the site:

  • Paris – 2,534 apartments available on AirBnB;
  • Berlin – 931 apartments available on AirBnB;
  • London – 3,573 apartments available on AirBnB.

These few filters show clearly that the AirBnB tourism professionals represent a small quantity of the offers made on the platform. The percentages are the following:

  • Paris – 4.54% Professionals on AirBnB;
  • Berlin – 4.52% Professionals on AirBnB;
  • London – 7.24% Professionals on AirBnB.

Here is a chart showing the number of rooms sold by hotels compared to the number of rooms sold by professionals on AirBnB:

Second conclusion:

Even if there are apartments which are in competition with hotels, there are far fewer “Tourism Professionals” present on AirBnB than what the media would lead us to believe.

Global travelers

Let’s revisit the previous graph of the quantities of searches on Google (AirBnb in blue, Booking.com in red and Expedia in yellow): AirBnB is definitely a growing platform, but its curve corresponds strangely to that of Booking.com.

A question therefore arises: is AirBnB in the process of stealing hotel customers or does it simply enable a new type of customer to travel?

By going to https://www.statista.com/I came upon on a very interesting statistic which estimates the number of tourists traveling globally. Here is the chart:

Even if it ends at 2015, the trend since 2009 allows us to issue a hypothesis (reasonably solid): this curve will continue to rise in 2016 and 2017.

Third conclusion:

By comparing the last two graphics, we can see that the rise in international tourism seems to correspond to the increase in the use of sites like Booking.com and AirBnB. But it does not appear that the one is stealing the customers of the other.

Conclusion

The figures that I mention are different from those given in the media. Consider this observation: it is in fact very easy for them to communicate: “55,000 apartments are for rent in Paris via AirBnb! Hotels are in danger!” What a “good” hook! But it is much more complicated (and especially less marketable) to dig for the truth, to find the real figures and the true information.

Following this analysis, my point of view is simple and factual:

Yes, the government and certain powers constantly impose new constraints on hotels, without the imposing them on AirBnB professionals. Yes, the AirBnB professionals do not have the same expenses nor the same staffing costs. And yes, the current situation reveals a form of unfair competition.

But this does not mean the end of hotels or of your profits. By quickly putting solutions in place – and they do exist – you can surf this wave without drowning, quite the contrary.

Make your own conclusions from these figures and do not hesitate to share them.

Best wishes,

Tony LOEB