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Airbnb Grows to a Million Rooms, and Hotel Rivals Are Quiet, for Now
By any measure, Airbnb’s growth has been stunning since the company was founded in 2008. It now has more than a million rooms available in homes, apartments and even former barns — more places to sleep than hotel giants like Marriott and Hilton.
Despite this growth, though, the big hotel chains, at least outwardly, have yet to take substantial action to counter the potential threat from the upstart lodging service.
One reason is the strength of the travel market over all. Spending on hotels this year is projected to be even higher than last year’s robust outlays, according to Douglas Quinby, an analyst for Phocuswright. Other reasons include the ingrained habits of travelers, particularly older ones and business travelers on expense accounts, who see no reason to change their ways.
Steve Joyce, the chief executive of Choice Hotels International, which serves many bargain-hunting travelers, said recently that his brands, which include Comfort Inn, Sleep Inn and Econolodge, had not seen any effect from Airbnb and all were expecting strong summer sales.
Kerry Ranson, chairman of the InterContinental Hotels Group Owners Association, said he did not see Airbnb as a threat or as a competitor. “It’s a short-term online rental,” he said.
But there are signs that Airbnb is making inroads with business travelers, a critical group of customers to the hotel industry. Last summer, Airbnb entered the corporate market, teaming with Concur, an expense management company, to allow Airbnb charges to appear directly on a traveler’s expense form. Airbnb now reports that just under 10 percent of its guests are traveling on business.
Mike Oshins, a hospitality management professor at Boston University, said that travelers working for themselves or small companies were the most likely professionals to use Airbnb.
“They don’t need the concierge and room service,” he said. “They just want to save money.”
Kisha Mays, the chief executive of Just Fearless, a business development company serving female entrepreneurs, often travels outside the United States and prefers Airbnb to hotels. Along with the lower price, she appreciates being able to wash a few items of clothing or eat dinner without going out to a restaurant. “I want to feel like I am at home instead of in some bleak hotel room,” she said.
Other business travelers use Airbnb to find lodging when big trade shows have filled city hotel rooms.
There is evidence that the greater room supply created by Airbnb has helped restrain prices that traditional hotels can charge in some markets.
In Austin, Tex., each 10 percent increase in Airbnb listings resulted in a 0.35 percent decrease in monthly hotel room revenue, according to a study by Boston University. Less expensive hotels and those focused on leisure travelers were most affected when Airbnb developed in their area, the study found.
And in New York, there is a similar dynamic.
Hotel room price growth in New York has lagged historical levels during the economic upturn, according to research by Sean Hennessey of New York University’s Tisch Center for Hospitality and Tourism. While some of that is because of the increase of hotel construction and number of available rooms, he said, hoteliers also cite the advent of a “shadow inventory” including Airbnb and others as a reason for the price stagnation.
They may not cite Airbnb as a direct competitor, but hotels are taking some actions as the service grows more popular. Hospitality industry representatives are asking for laws requiring Airbnb properties to adhere to the same safety standards that hotels do. Airbnb said it required hosts to follow their local laws and encouraged all hosts to take some basic steps to keep their homes safe.
Some small hotels are joining the service themselves. When the Box House Hotel in Brooklyn opened in 2011, it listed rooms on Airbnb along with booking.com and other websites. “It’s another way for people to find out about us,” said Jenneka Hernandez, the general manager. The 57-room hotel lists only its least expensive rooms on the site, “because that is what Airbnb customers are looking for,” she said.
The eight-room Drift San Jose in Baja California in Mexico books all its reservations through Airbnb, which allows the property to keep its costs down.
“We don’t need a front desk or even a credit card machine,” said Stu Waddell, the owner of the hotel.
Grace Bay Resorts on Turks and Caicos lists luxury beachfront rental homes on Airbnb to “reach a different market than those of the resort’s typical guests,” said Nikheel Advani, its chief operating officer.
Marissa Coughlin, a spokeswoman for Airbnb, said the company had no official partnerships with any hotels, but did not prohibit them from listing rooms on the site.
At the same time, traditional hotels still enjoy the loyalty of older travelers, said Glenn Haussman, editor in chief of Hotel Interactive.
“Older travelers as well as business travelers whose companies are paying for the stay generally want the predictability, the services and the comfort of a hotel,” he said.
Hotels also still offer benefits that Airbnb does not, like loyalty points, and are designed to help guests connect with others at a conference or network in the hotel lobby or bar.
“I do believe people will sample the service,” Mr. Haussman said, “but converting masses of people permanently is a very tough task.”
At least one hotel group sees Airbnb as expanding the market.
“Our belief is that lodging rental websites are stimulating demand, rather than displacing existing demand,” said Ian Carter, the Hilton hotel chain’s president of development, while noting that Hilton Worldwide served a record number of guests, 140 million, last year.
Still, many analysts and industry experts see trouble ahead for established chains if they do not treat Airbnb as a competitor. “They certainly should,” Mr. Quinby said.