Industry analysis characterizes website as more like a sophisticated rental operation than a casual business
In its quest to prove Airbnb Inc. is more than a casual home-sharing service, the hotel industry issued a stinging analysis of the website that casts the company more like a professional short-term rental operation.
The report released Thursday found that Airbnb hosts who rent out two or more properties in a single month represent the fastest-growing segment of the company’s revenue in the U.S. The analysis, conducted by real-estate firm CBRE and funded by the American Hotel and Lodging Association, an industry trade group, analyzed two years’ worth of Airbnb listings and revenue generated across the U.S.
The researchers found that revenue from hosts who operated two or more entire properties on the platform in 2016 nearly tripled from a year earlier, growing to more than $1.8 billion from about $611 million. Those multiunit hosts accounted for nearly a third of all U.S. revenue on Airbnb during a one-year period from October 2015 through September 2016, according to the analysis, up from about 25% a year earlier.
The findings come as cities around the world have battled with the short-term rental website, arguing Airbnb provides a platform for illegal hotel operators. Clashes in many cities have centered on the growing number of units that are operated year-round as nightly rentals, often run by investors or sophisticated property managers.
The hotel industry has been at the forefront of lobbying for stricter regulations on Airbnb that it says are needed to put the service on a level playing field with traditional hotels. Airbnb has launched a lobbying offensive of its own in recent years aimed at fighting new regulations or seeking compromises that allow the company to continue operating.
Airbnb often says its service is ideal for middle-class families looking to make ends meet by renting a spare room or their homes for a weekend here or there. But the researchers at CBRE said their analysis runs counter to that assertion.
“Airbnb has been saying they don’t really want that group to be the main driver of their growth, that they want it to be people sharing their own homes,” said Jamie Lane, a senior economist with CBRE Hotels research. “But the data clearly shows the opposite trend: that operators and hosts are taking a more commercial approach.”
Airbnb spokesman Nick Papas called the study a “misleading, inaccurate report” that was “bought and paid for by the big hotels.” He called the effort “the latest example of the industry’s willingness to say and do anything to protect their record profits, preserve their ability to price gouge consumers and squash their competition.”
Mr. Papas also questioned the study’s methodology, pointing to what he said were problems in how it defined metropolitan areas, as well as data on how frequently given listings are booked, which is proprietary. He said the report also failed to account for hoteliers that use the platform to advertise rooms, which he said would add thousands of listings.
Mr. Lane said CBRE’s report didn’t define operators based on how frequently their listings are booked. Rather, he said the report looked at only whether operators were renting out two or more entire homes, and analyzed data indicating whether a unit was booked or empty on any given night.
He added that most hotel rooms advertised on the site would show up as single rooms, not entire homes.
Separately, Airbnb closed a $1 billion funding round that values the company at $31 billion, according to a person familiar with the matter. It has raised more than $3 billion since it was founded in 2008.
The CBRE report used data from Airdna, a company that gathers details on the types of properties and room rates from Airbnb’s web listings. CBRE focused on Airbnb hosts that operate two or more entire properties, not listings such as an individual room in a house.
The researchers said that approach allowed them to zero in on listings that aren’t likely to be owner-occupied units. In the period between October 2015 and September 2016, multiunit Airbnb hosts represented 7% of all hosts, but 20% of all units and 32% of all revenue generated.
“That is not home sharing; that’s a business,” said Katherine Lugar, president and chief executive of the American Hotel and Lodging Association.
The number of units managed by multiunit Airbnb hosts grew in all of the top 13 markets CBRE analyzed from 2015 to 2016, but the growth was particularly notable in Nashville, Oahu and New Orleans, where the number of such units more than doubled.
Many landlords, particularly in tourist destinations such as Los Angeles, Nashville and New Orleans, have discovered that Airbnb and similar companies like
Expedia Inc.’s HomeAway enable them to profit more by keeping dwellings ostensibly unoccupied and renting them by the night rather than offering long-term leases.
That has led to consternation among some neighborhood and tenant associations due to a constant influx of guests, who may have raucous parties or cause damage to buildings’ public areas.
In Nashville, local officials are considering a measure that would phase out short-term rentals that aren’t occupied by owners. The move comes as Nashville gained a reputation as a hotbed for bachelor and bachelorette parties, leading to a proliferation of home rentals in traditional single-family neighborhoods.
John Stern, president of the Nashville Neighborhood Alliance, which supports measures to slow the growth of such rentals, said constant parties have unnerved neighbors.
“It’s the commercialization of residential property, and that doesn’t have a place in our neighborhoods,” he said.
Amy Walters, president and chief executive of Playlist Properties, a Nashville short-term rental operator that lists on Airbnb and other sites, said the biggest problem is that rules on the books aren’t properly enforced. The city already requires companies such as hers to be licensed and meet certain standards, and she said she has always complied.
But Ms. Walters said there are just as many unregulated properties in the city that aren’t shut down.
“I want the bad guys shut down, because they’re making us look bad,” she said. “But instead they’re lumping us all into one big basket and saying ‘Get rid of them all.’ ”
Airbnb has instituted what it calls a “One Host, One Home” policy in some cities such as Portland, Ore., and New York, which bars hosts from having multiple listings on its site simultaneously. But policing the rule can be difficult, with some hosts simply creating multiple accounts to service each of their rentals.
The company faced one of its biggest setbacks last year when legislators in New York voted to increase fines to as much as $7,500 on New York City hosts who advertise rentals of less than 30 days in multiunit buildings, a violation of city codes since 2010. Airbnb has said it hopes to reach a compromise that would free up hosts who occasionally rent their apartments for extra income.
It also yielded to pressure in London and Amsterdam, two of its largest European markets, by placing limits on the number of days hosts can rent out a home each year: 90 days in London and 60 days in Amsterdam.
