Travel trends

Airbnb is having a real financial impact on the hospitality industry, and it’s time for incumbents to acknowledge and meet the challenge.

Source: www.thestreet.com

According to a recent report from Boston University, a 10% increase in Airbnb supply results in a 0.35% decrease in hotel room revenue, which translates into a 13% impact on revenue in Austin, Texas, which is home to the highest Airbnb supply.

This study also found that lower-priced hotels and hotels that don’t cater to business travel are the most affected by Airbnb. As a result of these impacts, the researchers found, hotels are reducing prices in an effort to stay competitive.

“Our work provides empirical evidence that the sharing economy is making inroads by successfully competing with, and acquiring market share from, incumbent firms,” the report reads.

Airbnb “is going to put out an additional supply of lodging rooms, and anytime you increase supply, holding demand constant, Economics 101 effectively means that prices go down,” Carroll said in a phone interview. “Airbnb is not driving demand, they’re probably shifting demand from some other hotels.”