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Report: Airbnb Is Keeping L.A.'s Hotel Rates Steady
We've heard a lot about what Airbnb and similar homesharing sites might be doing to the rental market, but a new study indicates the service may also be impacting the hotel industry by keeping room rates steady. A study from CBRE Hotels, a commercial real estate firm, indicates that in areas where Airbnb rooms are plenty, hotel prices rise at a much slower rate than areas where Airbnb options are lacking, The L.A. Times reports. Hotels prices near LAX, where there is about one Airbnb room for every 4.4 hotel rooms, rose about 13% last year, while hotel prices in Santa Monica and Marina Del Rey—where there is one Airbnb room for every two hotel rooms—only increased by about 6.5%, according to CBRE's findings. Plus, those beachside Airbnb hosts are generally undercutting hoteliers by about 30%, compared to LAX hosts whose rates are only 8% cheaper than nearby hotels.
Hotels were not particularly concerned with Airbnb in the beginning, as the majority of Airbnb users were younger travelers on a budget. Business and more affluent travelers seemed to be inclined to stick to hotels. Eight years later, however, Airbnb is raking in the cash, pulling in $2.4 billion in revenue last year. The study, notably, points out that 55% of this revenue came from Airbnb users in five cities: NYC, L.A., San Francisco, Miami and Boston. Airbnb is now worth about $24 billion, compared to Marriott International, which is worth about $21 billion.
While some hotel owners are worried about the impact this supply and demand will have on their businesses, others feel like hotels and Airbnb offerings are still worlds apart.
"Hotels are going to provide a standard hotel experience whereas Airbnb can be an adventure or a nightmare," Ken Pressberg, who owns the Orlando, told the Times.
There are also a lot more Airbnb units available in Los Angeles than there were before. The Times found that Airbnb listings have increased by 42% from May to January. Opponents have argued that they're no longer just spare bedrooms or couches in the living rooms of busy professionals, but oftentimes full units that could otherwise be rented to those trying to find housing in the midst of a rental crisis. Santa Monica banned most Airbnb rentals last year, with Mayor Kevin McKeown saying city officials found over "1,000 dwelling units that should be homes to permanent residents had been converted instead to de facto hotel rooms." Two women who lived in an apartment on Fairfax sued their landlord after they claimed they were kicked out via the Ellis Act in 2013, only to find their former units on Airbnb. Airbnb has denied that it negatively affects the rental market.
[h/t Curbed LA]