February 11, 2016
Hospitality research firm STR released a report this week asserting that Airbnb is having no material impact on hotel room demand in Manhattan, a finding that is being challenged by both national and local hotel industry advocates.
With the average Airbnb nightly rate in the New York borough about $100 less than a typical hotel room, such home-based listings compete with a relatively small percentage of hotels there, according to STR. Specifically, 61% of Airbnb units compete against midscale and economy hotels, which account for just 13% of Manhattan’s hotel-room units, STR found.
In addition, the occupancy rate of Airbnb units is substantially lower than Manhattan’s 87% hotel room occupancy. And while Airbnb’s Manhattan units accounted for about 9% of the borough’s approximately 92,000 lodging spaces (including both hotel rooms and Airbnb units), Airbnb accounted for just 3.5% of Manhattan’s lodging revenue for the year that ended Nov. 30.
Hotel advocates took issue with the conclusions as well as with STR using data directly from Airbnb for the report.
Vijay Dandapani, president of New York-based Apple Core Hotels and chairman of the Hotel Association of New York City, cited Airbnb’s own estimate in mid-December that 47,000 people would be staying with city Airbnb hosts on New Year’s Eve as proof of increased competition.
“That data was cooked up,” Dandapani said about the STR report. “If Airbnb doesn’t have an impact on New York hotels, I’m a monkey’s uncle.”
The STR findings come as many analysts, hotel operators and lodging-industry lobbyists have decried Airbnb as a largely illegal operation because many of its hosts allegedly violate New York’s laws against short-term rentals, citing the city’s recent decline in hotel room rates.
Additionally, while Airbnb has struck agreements to collect occupancy taxes in a few cities such as San Francisco, Chicago and Washington, its relationship with New York, the country’s most lucrative hotel market, has been especially contentious because of the high stakes.
Last year, New York’s room rates fell 1.6% from a year earlier, making it the only U.S. market in the largest 25 to see a price decline. STR analysts are among those who attribute the drop to the 3.2% increase in New York’s room inventory. Others, including Dandapani, have pointed to the fact that New York visitor numbers rose 3.2% last year, to a record 58.3 million, implying that there should have been enough additional demand to prevent a lodging glut.
The STR report is the latest in a series of studies analyzing Airbnb’s impact on the lodging market. Earlier this month, CBRE Hotels (formerly PKF Hospitality) issued a report indicating that Airbnb hosts appear to be adding units at a faster rate than the U.S. hotel sector and that Airbnb accounted for 16% of New York’s lodging units during last September. The CBRE report tracked all five New York boroughs, citing data from STR and from Airdna, a company that provides information to vacation-rental entrepreneurs and investors.
That study followed a report by the American Hotel & Lodging Association (AH&LA) last month alleging rampant illegal activity among Airbnb’s most prolific hosts.
The AH&LA, citing a study it commissioned from Penn State University, estimated that almost 40% of Airbnb’s revenue in the 12 largest U.S. metropolitan areas is being generated by hosts with at least two units and that almost 30% of revenue is generated by so-called “full-time hosts” who rent units at least 360 days per year.
Airbnb called the AH&LA report “deeply flawed” and “misleading.” The AH&LA last week made similar allegations about the STR report, echoing Dandapani’s claim that Airbnb might have excluded some relevant data. And both Dandapani and AH&LA CEO Katherine Lugar emphasized the need to hold Airbnb hosts responsible for the same safety, accessibility and taxation regulations as hotel owners.
“The STR study and the study conducted by Penn State examine two very different sets of data points,” Lugar said in a Feb. 10 statement. “The newest study did not explore whole rental units available full time and those multi-units operated by corporate landlords who are buying up residential properties for the sole purpose of renting them out like a hotel.”