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No ‘smoking gun’ with Airbnb in NYC: STR

An independent analysis conducted by STR released on Tuesday shows no direct correlation between Airbnb’s presence and hotel performance in Manhattan, New York.

In considering statistics for Airbnb units most comparable with hotel rooms (private rooms and entire homes), STR compared daily hotel data in Manhattan with daily Airbnb data in the market from December 1, 2013, to November 30, 2015. Analysis of the supply, demand and revenue figures revealed the following:

During strong demand nights for Airbnb units, there was no pattern of adverse effects on hotel occupancy or average daily rate. In fact, hotel ADR runs at a significant premium to the average Airbnb rate, particularly during times of peak demand. The report also stated that Airbnb accounts for approximately one-tenth of the number of units as hotel rooms in Manhattan, run about half the occupancy, and charges over US$100 less in average rate.

Airbnb units are primarily lower-end in terms of rate, with 60.7% in the midscale/economy class, based on STR methodology. Conversely, 13% of hotel supply is concentrated in the midscale/economy class.

In looking at compression nights for the hotel market (e.g. 95+% occupancy), hotel rooms were able to achieve strong rate premiums (>25%) over non-compression nights. By contrast, Airbnb achieved minimal rate gains (<4%) for the same time-period comparisons. There is also much less variance in rate of Airbnb units, indicating a lack of revenue management, at least certainly when compared with hotels.

The STR report said there is no evidence that indicates every room occupied by an Airbnb guest is a room subtracted from hotel occupancy, and the report said hotel occupancy rates in Manhattan remain at near-capacity levels. The Manhattan hotel market runs at an 87% occupancy level, with 52 days of the year at 95% occupancy or higher.

Significant occupancy levels for Manhattan hotels indicate the existence of a large amount of unaccommodated demand, some of which could be accommodated by Airbnb units or by new hotel supply as it continues to open in the market. STR said in its executive summary that it is likely some guests actively search both hotel and Airbnb options and choose the latter, but there are no apparent statistical trends to suggest the degree to which this is occurring. Given the differences in facilities, pricing and available supply between hotels and Airbnb units in Manhattan—as well as the existence of large degrees of unaccommodated demand—these occurrences are likely rather low.

At the same time, the majority of Airbnb guest nights are for stays of seven-plus days, which is similar to the stay pattern at extended-stay hotels. Fully 41.4% of Airbnb guest-nights were for trips of seven to 29 nights in length, and 16.7% were for trips of 30-plus nights. In contrast, only 4% (3,742) of hotel rooms are classified as extended-stay.

“The results did not show Airbnb’s growth to have a severe impact on hotel performance, as many in the industry believe,” said Amanda Hite, STR’s president and COO. “Continued analysis to understand the key performance indicators of the hotel industry and other paid accommodations will be crucial to further understand the operating environment.”

The STR project marks the first time Airbnb has released in-depth data to a third party for independent analysis.

For the purpose of the analysis, Airbnb provided STR with internal data on its operations in the Manhattan market. STR requested the data and was not compensated in any way for the analysis. STR’s participation was not contingent on developing or reporting predetermined results.

“We requested the data from Airbnb to examine an important topic being discussed throughout the hotel industry,” Hite said. “We wanted to compare data for both sides to give hoteliers a true picture of Airbnb’s effect on the industry because it is a dominant player in the shared-accommodations space.”

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