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How hard has Airbnb hit hotels? It’s not as bad as they thought

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Ben Margot / AP

In this Friday, Oct. 16, 2015, photo, Bruce Bennett folds a blanket in a room that he makes available to rent in his home in San Francisco.

Is Airbnb a significant threat to the hotel industry? For the past few years, that question has been a hot topic for hospitality associations, city councils, hoteliers and tourism promoters across the globe.

Now industry-watchers are getting a window into Airbnb's place in the business.

On Thursday, data and analytics firm STR, the leading tracker of hotel performance, released the first independent comparison of Airbnb data and hotel industry performance.

In an analysis that compared daily data directly from Airbnb against STR's own hospitality data over a two-and-a-half-year period, STR confirmed what most suspected: that Airbnb is hitting the industry in its bottom line. But, the study concludes, it is still too early to determine how large that impact may be.

While Airbnb is growing exponentially every year — with some markets seeing triple-digit growth in the number of units — the home-sharing units represent less than 4 percent of room nights sold and less than 3 percent of revenue in the overall industry.

"Where our analysis falls short is to draw a straight line between more Airbnb [units equating to] huge impact on the hotel industry," said Jan Freitag, STR's senior vice president of lodging insights. "There is a lot going on in the U.S. hotel industry today, and Airbnb is certainly one of [those factors] that shakes the hotel industry.

"There is a new competitor in town, and the hotel industry globally has to learn to live with that competitor."

There is a new competitor in town, and the hotel industry globally has to learn to live with that competitor. Jan Freitag, STR's senior vice president of lodging insights.

STR analyzed 13 global markets, including Miami-Dade, from Dec. 1, 2013, to July 31, 2016. But travelers still booked far more hotel rooms than Airbnb units. Predictably, hotels commanded higher average room rates than Airbnb hosts. But Airbnb guests also tended to stay longer than hotel guests, an important finding on a platform that is far more focused on the leisure traveler than the business traveler.

The Miami-Dade Airbnb picture

In Miami-Dade, the fourth-largest Airbnb market in the U.S., many of the global trends play out in extreme ways.

Among the seven U.S. markets analyzed -- Boston, Los Angeles, New Orleans, San Francisco, Seattle and Washington, D.C. -- some of the largest disparities between hotels and Airbnb were in Miami-Dade.

On average, during the 12 months ending in July, 77.5 percent of hotel rooms were booked in Miami-Dade compared with only 30.9 percent of available Airbnb units. That disparity is the largest gap among the U.S. markets in the study.

Hotels also charged $193 a night on average during the same time period, $44 more than the average Airbnb rate of $149. That, too, was the biggest gap among the U.S. regions included in the report and nearly double the next-highest market, San Francisco, where hotels commanded rates $25 higher on average than Airbnb.

$149 Average Airbnb nightly rate in Miami-Dade County from July 2015 to July 2016. It's $44 cheaper than the hotel average hotel rate.

Overall, Airbnb's market share in Miami-Dade continues to be a small slice of the entire industry.

Of all the lodgings available for short-term rental in Miami -- hotels included -- only 8.5 percent were Airbnb units. Airbnb rentals accounted for 3.6 percent of room nights sold in the overall hotel industry from July 2015 and July 2016. And the platform's revenues constituted 2.8 percent of all revenue in Miami-Dade's lodging industry during that time period.

Scott Berman, Miami-based industry leader for hospitality and leisure at PwC, said that hotel managers he's spoken to are still concerned about Airbnb, largely because the platform doesn't pay the 6 percent Miami-Dade resort tax. (Airbnb is expected to reach a tax agreement with the county early this year.)

Airbnb has faced the most fierce opposition in hotel-heavy Miami Beach, where the city has imposed a $20,000 fine on homeowners violating the rental policy. As of this week, the city had fined residents $4.2 million, said Hernan Cardeno, director of Miami Beach's code compliance department.

"In a community where you have vertical structures that go from the lobby to the 60th floor, there are lots of opportunities to become a transient unit, and the Beach recognizes that," Berman said. "So there is no question that enforcing those short-term rental landlords to pay taxes is of significant importance [to them]."

There is no question that enforcing those short-term rental landlords to pay taxes is of significant importance [to Miami Beach]. Scott Berman, Miami-based industry leader for hospitality and leisure at PwC

Detractors also argue that Airbnb stops hotels from charging higher rates when events are in town or during holidays because it floods the market with more unit offerings for visitors looking to stay in the area.

But, according to the STR report, the number of nights when hotels can command higher rates (called "compression nights") has remained fairly consistent in the last three years.

The study looked at New Year's Eve 2015 as a case study and found that in Miami, hotels still charged rates 37 percent higher than average.

In fact, Miami-Dade had the highest rates of the cities studied at $409 a night on average during New Year's Eve in 2015, compared with the average Airbnb rate of $257 during the same time.

It makes sense that it would be a relatively small impact, some compression, but probably not as large as hotels have been squawking about. Mark Lunt, partner in the hospitality and real-estate practice at Ernst & Young

Mark Lunt, partner in the hospitality and real-estate practice at Ernst & Young, said hotels may have been overplaying the effect of Airbnb during high-traffic periods because they had only anecdotal evidence. Prior to Miami's annual Art Basel in December, for instance, the Beach's code compliance department said it had "enhanced scheduling for [Art Basel] to handle an increased caseload across all code violations."

"It makes sense that it would be a relatively small impact, some compression, but probably not as large as hotels have been squawking about," Lunt said.

A growing slice

In ads running in the county, Airbnb has argued that it brings more money into the region by attracting guests to areas of town that don't traditionally have hotels and incentivizes them to frequent local shops and restaurants per the recommendations of their local hosts.

According to an Airbnb report released in December, the platform's guests spent $130 million in the city of Miami last year, including $50 million at local restaurants.

Right now, [Airbnb is] a small piece of the industry, and it's meeting a need that is complimentary to the broader tourism market. Mark Lunt, partner in the hospitality and real-estate practice at Ernst & Young

"[Airbnb] is opening up previously sold-out or too-expensive communities to a broader set of individuals," Lunt said.

And it's growing.

As of November 2016, Airbnb reported more than 3 million listings worldwide, nearly three times the size of the next-biggest lodging company, Marriott International, which acquired Starwood Hotels & Resorts Worldwide in a $13 billion deal in September.

"The hotel industry is still right to be concerned. It is a competitor; there are folks who are still looking for an alternative," Lunt said. "[But] right now, it's a small piece of the industry, and it's meeting a need that is complimentary to the broader tourism market."

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