AirBnb Continues To Disrupt Hotel Industry, But It Has Problems Of Its Own

A Bloomberg report released this week highlighted some of the more expensive cities where rental lodging giant AirBnB has listings. With Miami topping the list at an average at an average $205 USD per night rate, it raises questions as to how the budget-friendly company still manages to take business away from big name hotel conglomerates.

AirBnB began its ascent into the “sharing economy” with a similar platform as Uber in 2008 and is now valued at an estimated $31 billion dollars. AirBnB acts as a broker between tenants and guests looking for short term rentals—a system so simple and popular it now has listings in more than 80,000 cities in over 190 countries.

So how has this affected the hotel industry?

In addition to the benefits guests have in terms of location, price, and accessibility, AirBnB users are given an alternative to over-priced, limited space hotels during peak holiday seasons.

According to a report released by Harvard School of Business professors earlier this year, in the 10 biggest cities with AirBnB market share, the company directly resulted in 1.3% fewer hotel nights booked and a 1.5% loss in revenue. Due to the increasing competition for bookings between hotels and AirBnB users, the study found during peak travel times guests would benefit from an average $57 “consumer surplus”, which did not necessarily translate into extra money in a consumer’s pocket, but rather would be reflected in lower hotel booking accommodations for competitive locations.

The biggest challenge the company faces today is growing regulation and concern from communities over rising rental costs resulting from AirBnB rates. New York City has been one of the more vocal opponents of the marketplace, and just last week the City Council voted overwhelmingly for AirBnB to hand over records including names and addresses of hosts in order to police users not complying with home-sharing laws that many argue drive up rent prices throughout boroughs. The new legislation is expected to significantly impact the revenue from a city that generates over $140 million a year for the company—a number that could potentially decrease by half following the crackdown. With similar regulatory battles between the company and major cities around the world like San Francisco to Amsterdam continuing to shape out, AirBnB continues to prove itself as a profitable outlier in the face of regulation and competition.

Follow us on social media for the latest updates in B2B!

Image

Latest

live events technology
High-Quality Live Events Technology is the Secret Weapon for Unforgettable Experiences
April 18, 2024

The fusion of technology and creativity is setting new standards for audience engagement and event personalization at live events. Live events technology such as augmented and virtual reality are now at the forefront, offering immersive experiences that bridge the gap between the digital and physical worlds. AI and machine learning are also revolutionizing event […]

Read More
Power over Ethernet
Power Over Ethernet Revolutionizes Home Automation by Simplifying Installations and Enhancing Connectivity.
April 18, 2024

Homes become increasingly connected and Power over Ethernet (PoE) emerges as a transformative technology in residential automation and entertainment systems. By allowing electrical power and data signals to travel over a single Ethernet cable, PoE offers a streamlined approach to powering devices like smart speakers, security systems, and lighting, all while reducing cable clutter​. […]

Read More
Stephanie Leger, CEO of First Rate Hospitality, discusses extended stay hotels
A Notable Shift in the Extended Stay Hotels Market is Poised to See More Growth with A Few Key Changes
April 18, 2024

How can hotels adapt to the evolving demands of guests who seek more than just basic amenities during extended stays?  While the hotel industry saw economic downturns in 2020 and 2021, many brands today are adapting to market changes in the extended-stay hotel segment. This segment, which also saw a decline, particularly saw a […]

Read More
proactive security response
Proactive Security Response: How Hexagon Enhances Safety, Cuts Losses & Minimizes Bad Press
April 18, 2024

In a world where every second counts during an incident, the ability to respond swiftly and effectively can make all the difference. A proactive security response is a necessity in high-stakes environments such as airports, where a delayed reaction to a security breach can lead to severe consequences, including substantial financial losses and negative […]

Read More