How to Understand Airbnb in Your Market

I recently started a discussion with a group of hotel and motel owners online and asked them this:

I'm wondering if anyone is experiencing an unexpected slow-down in room night demand. There are lots of articles and podcasts coming out right now about a forthcoming recession for hotels, but I want to hear it from the horse's mouth. What are you seeing in your hotels?

The responses were mixed, but the majority of owners who responded said that they are either feeling a slow-down now or anticipating one in the coming months. 

That didn't surprise me. 

The person who accused me of treason for asking the question was a little shocking, but the answers from hoteliers experiencing or expecting a dip in demand weren't.

What did come as a bit of a surprise were the number of property owners who mentioned Airbnb as a key contributor to declining occupancy.

If you've been here with me for a while, you know I've been interested -- some would say obsessed -- with how Airbnb impacts hotels for a long time. When I work with hotels on growing their top line revenue, one of the first things I do is look at how many Airbnb units make up the supply in their subject markets.

I don't agree with the folks who say that Airbnb has no impact on the hotel business. 

It just doesn't pass the smell test to say that hundreds, or even thousands, of available overnight accommodations don't steal market share from traditional lodging. 

Sure, some users may not ever use hotels, but it's impossible to believe that at least some Airbnb guests wouldn't stay at hotels if they couldn't find an Airbnb. 

Meanwhile, what can you do? You can't get rid of Airbnb, at least not as an individual hotelier, but you can arm yourself with Airbnb data that will help you figure out what's going on.

There are two ways to do this. 

First, you can search Airbnb on a regular basis and track how many units are available for rent in your market or even your immediate area (i.e., downtown, waterfront, etc.). 

This is a great way to watch how rental unit supply ebbs and flows. When your market is busy, you'll see more inventory available on Airbnb. When it's slow, that inventory shrinks. I call this Silly Putty Supply.

If you track this every week or so, you can start to see the patterns and get a sense of how many rooms you are competing with. (Remember, OTAs include this inventory, so you really are competing for the same rate-sensitive or unmanaged transient guest.)

The second place to look is AirDNA. Set up as a revenue management and business intelligence tool for Airbnb hosts, hoteliers can get a lot of intel from this site. 

AirDNA screenshot.jpg

The free portion gives you a map and numbers of total active rentals, rental types (i.e., number of bedrooms), cancellation policy and minimum length of stay data. If you pay for a subscription for your market, you can see several months' worth of ADR and occupancy data, booking lead time, lots more information.

You can cancel your subscription at any time, so you should at least buy a one-month subscription during budget season to get a good feel for how the Airbnb inventory in your market is performing, and then cancel the subscription after a month. Of course, if you are feeling a lot of pain from Airbnb, you may want to stay subscribed so that you can monitor pricing and occupancy in relationship to your hotel.

If you have questions about this or want help analyzing the data, let me know. If you think I'm crazy, let me know that, too - I've already been accused of treason this week, so I'm growing a thick skin. :)

Want to find out if your hotel is in good shape to face an economic downturn? Take our Stress Test! Ten questions, ten minutes, and tons of insight.

AirbnbSusan Barry