July 23, 2018

Airbnb: What hotels need to know to stay competitive


In a recent research publication by the International Journal of Hospitality Management, titled “Airbnb’s Effects on Hotel Sales Growth,” the authors explored Airbnb’s impact on hotel performance in the San Francisco market.

Here are a few key takeaways from this research.

1. Total Airbnb inventory does not impact the growth trajectory of RevPar: However, the article does point out that even though total inventory might not have an impact, it could pose some threat to properties that have lower rates or are better rated. We definitely agree that this hypothesis could depend on several different factors such as quality of inventory, market conditions, and rate variances as you’ll see in the following points. This potential overlap could happen in any given market and therefore, this particular proposal is possibly nuanced.

How can you take advantage of this potential upside? Since it has been proposed that Airbnb could be a supplemental product offering, we could potentially be looking at a growing audience and a larger market. This means that there could be an incremental opportunity for us to target that expanding consumer base and gain market share.

2. The average price that an Airbnb listing offers is positively associated with RevPar and overall hotel performance: In other words, if an Airbnb listing has a higher than average price, the hotels in that market will also likely be displaying a higher price and/or will have higher occupancy.

So if pricing is affected, how can we stay prepared? Knowing that there is a positive correlation between Airbnb and hotel product pricing, it’s important to monitor your property’s rates and ensure that these rates are in line with the marketplace. For instance, luxury brands will need to maintain competitiveness with other luxury brand properties in their niche market to capitalize on the higher rates.

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