NEW YORK CITY—A recent report prepared for the Hotel Association of New York City stated Airbnb had a negative impact on New York City’s hotel revenue. However, several hoteliers operating in the city say that while they’re seeing some effect, it’s not as drastic as outlined in the report.
The report, titled “Airbnb and impacts on the New York City lodging market and economy” and conducted by HVS Consulting and Valuation for the Hotel Association of New York City, breaks down losses to the New York City hotel industry and local economy attributable to Airbnb specifically. The study results showed losses of $451 million in direct revenue; $136 million in ancillary losses, such as food and beverage; construction losses of $1 billion; indirect effects of $102 million; induced effects of $115 million and $227 million in taxes.
The $451 million in lost hotel revenue assumes all Airbnb customers would have otherwise booked a hotel room. It is inclusive of all Airbnb inventory, including “non-real beds” (e.g. air mattresses, couches) as well as shared rooms and residences, which the report later acknowledges do not directly compete with hotel demand.
Hotel News Now requested the revenue figure for only those Airbnb listings (e.g. private rooms, entire residences) that more directly compete with hotel rooms. The data was not made available by press time.
When reached for comment, Nick Papas, director of public affairs at Airbnb, provided a statement from the company:
“When guests stay in Airbnb, 97% of the money they spend on lodging stays with real New Yorkers who share their homes and use the money they earn to pay the bills,” he said in the statement.” While the big hotels have been clear that they are concerned about losing the opportunity to price ‘gouge’ consumers, we hope they will disclose the percent of their profits that stay in New York City and the percent they send to corporate headquarters outside of New York and, even, outside of the country.”
Lisa Linden, spokeswoman for Hotel Association of New York City, said, "We stand by the study. We engaged an esteemed firm to conduct it."
Hoteliers interviewed by HNN for this article did not comment directly on HVS’ findings. But by and large, hoteliers agreed they aren’t necessarily feeling the same effects as outlined in the HVS analysis when it comes to loss of rate and occupancy.
- Read also: “Airbnb and London's competitive landscape”
A modest impact
For Real Hospitality Group’s managed hotels, demand in New York City drives the ability to sell out, said Rick Day, VP of marketing. Occupancy-wise, he said his company’s hotels are “definitely fine” and holding according to demand. There’s some slowing of rate growth because Airbnb puts more options out there that might not be at traditional prices, he said.
“I feel some of that may have more an impact on the market’s ability to drive rate when that much more inventory technically between Airbnb and hotels is floating out there,” Day said.
For the past five years, M&R Management’s hotels in New York City have seen better than 85% occupancy consistently amid increases in Airbnb inventory, said COO Brian McSherry.
“The only thing that changes is the rate and the market that the rate is in,” he said.
M&R Management continues to have better year-over-year results in its New York City portfolio, McSherry said.
“This year is up 12% in revenue in our entire portfolio, which is material,” he said. “The industry average is 5% to 6%.”
According to STR, the parent company of HNN, hotel occupancy in the New York City market has grown from 77.1% year-to-date 2009 to 84.7% in 2014. Occupancy year-to-date September was 84.3%.
Average daily rate in New York City year-to-date September is $248.70, according to STR. The city’s ADR totaled $263.49 in 2014, an increase from $216.40 in 2009.
Different customers
Airbnb clearly has had an impact on the New York City market, McSherry said, but from his perspective Airbnb and hotels court different types of customers.
Customers at his company’s hotels know they’re guaranteed certain things, he said. They get private guestrooms and private bathrooms, as well as high-speed Internet. And most brands have a different breakfast program.
“Our customers come to branded hotels because they know what to expect,” McSherry said.
With Airbnb stays, he said, there are more unknowns.
“It’s a different customer,” McSherry said. “(Airbnb) customers may not have come to the city for a price point, and they found a better one where they could afford it.”
Many of the guests at M&R Management-managed properties are corporate guests who stay for a few nights at a time, he said. Airbnb guests are looking for longer stays of five to 10 nights where they can find value that they might not find in hotels, he said.
“They’re different customers with different expectations,” he said.
Brendan McNamara, senior VP of marketing, communications and product development for Debut Hotel Group, agreed that the customer bases are different.
“While Airbnb is now part of the mix of accommodations available to travelers visiting gateway and destination leisure markets, we believe that much of our customer base is looking for an experience beyond the basics,” he said in an e-mail. “Our hotels provide a robust experience that goes far beyond typical accommodations, with activated restaurants, nightlife and highly curated spaces and experiences that can’t be replaced with an apartment stay.”