Danny King
Danny King

For those of you who can't get enough of Republican presidential candidates Donald Trump, Ted Cruz and Marco Rubio calling each other liars (and we know you're out there), you might want to get a load of the rhetorical sparring between New York's hotel industry and the peer-to-peer accommodations service Airbnb.

A couple of weeks haven't gone by this year without a research firm or hotel-industry advocate attempting to answer "the Airbnb question" about what impact that upstart service is having on the largest U.S. hotel markets. With each report comes a new round of volleys between either lodging-industry or urban-housing advocates accusing Airbnb of playing dirty pool, or of Airbnb championing itself as the defender of urban residents who are just trying to make ends meet.

The rhetoric gained steam late last month after Airbnb said it had scrubbed about 1,500 of its approximately 37,000 listings in November, just before some of its data was made public. In a Feb. 24 letter to members of the New York State Assembly and Senate, Josh Meltzer, Airbnb's public-policy executive, said the company removes listings regularly and that the listings in question "were controlled by commercial operators and did not reflect Airbnb's vision for our community."

Bullpucky, said hotel lobbyists and local watchdog groups. They accused Airbnb of massaging its data to mislead the public by making it look like there were fewer "corporate landlords" managing multiple units as de facto hotels than there actually were.

"Garbage in, garbage out," was the candid assessment of Vijay Dandapani, the president of the New York-based Apple Core Hotels and chairman of the Hotel Association of New York City. The "garbage" he was describing was the data Airbnb had provided to research firm STR when it conducted an early February study, which found that Airbnb hosts were not having a material impact on Manhattan's hotel-room demand.

The issue, as always, is money, with the hotel industry representing the disapproving elders of the lodging industry and Air-bnb acting as the sometimes petulant but high-achieving youth (Hilton Worldwide and Marriott International were founded in 1919 and 1927, respectively; Airbnb started doing business in 2008).

CBRE Hotels (formerly PKF Hospitality) early last month estimated that New York's Airbnb hosts generated $450 million in revenue for the year that ended in September, or about 5% of the approximately $9 billion in lodging revenue generated in the city in that span. As of September, Airbnb units accounted for about 16% of the city's total lodging units (hotel rooms and Airbnb units combined), CBRE said, citing data from STR and Airdna, a company that provides information to vacation-rental entrepreneurs and investors.

CBRE followed up a Penn State report commissioned by the American Hotel & Lodging Association (AH&LA) that was released in late January. The trade group estimated that almost 40% of Airbnb's revenue in the 12 largest U.S. metropolitan areas had been generated by hosts with at least two units.

As a result, hotel advocates say the 1.6% room-rate decline experienced by New York hoteliers last year was no accident, and they fear that the city will become a microcosm for a country where Airbnb listings total about 2 million and growing. Some of the areas where Airbnb unit growth is the fastest are far from New York, San Francisco and Portland, Ore., where home-listing services first made their mark.

Cincinnati; Indianapolis; Omaha, Neb.; and Richmond, Va., are among the cities where the number of Airbnb units more than doubled during the 12 months that ended in September.

And while CBRE has stayed out of the fray when it comes to the legality of Airbnb units -- "We're not taking sides," said CBRE report co-author and Senior Economist Jamie Lane -- it did conclude that some hotel developers might think twice before investing in a lodging market where Airbnb's influence is growing rapidly.

Phocuswright, in its own report released in January, wrote, "Accommodation as a segment is entering a period of upheaval due to new inventory flooding the market from Airbnb and similar sharing-economy players. Hoteliers and OTAs alike are beginning to take seriously the idea that these players may significantly eat into their market share by luring customers away from traditional hotel transactions or even selling hotels themselves."

To its credit, STR defended its use of Airbnb data for its Manhattan conclusions, noting that New York's room supply increased 3.2% last year.

Citing New York's 85% hotel-room occupancy rate last year, Stephen Hennis, the director of STR Analytics and co-author of that firm's report, said, "There's no correlation and no way that we can look at the data and say, 'On these days, Airbnb is clearly taking room reservations away from New York.' You're looking at near-record levels of New York occupancy."

Either way, some hotel operators aren't waiting for lobbyists and public officials to tighten up lodging regulations that apply to home-based accommodations. With Choice Hotels International CEO Stephen Joyce citing the need to "take back control of our distribution and our destiny" in a keynote speech at January's America's Lodging Investment Summit, the midscale and economy hotel franchiser last month launched a vacation-rentals division for Orlando, Phoenix and Aspen, Colo.

AccorHotels appears to be going down the same path.

The Paris-based hotel company last month acquired Miami-based home-rental service Oasis Collections while taking a 49% stake in Paris-based upscale-home lister Squarebreak.

"I'm spending a lot of time with Airbnb," AccorHotels CEO Sebastien Bazin said in an interview last year with Travel Weekly. "I have not only respect for the founders, but I think it's not going to go away. It's going to grow."

Of course, Airbnb continues to downplay its role as the hotel industry's bogeyman, insisting that its hosts pump billions of dollars into the global economy with their additional income.

And in a letter last month to New York legislators, Airbnb wrote that it had the potential to collect $60 million a year in occupancy taxes on behalf of New York should lawmakers give the company the authority to do so.

"In cities where there is a shortage of long-term housing, we are committed to working with our community to prevent short-term rentals from impacting the availability of long-term housing by ensuring hosts agree to a policy of listing only permanent homes on a short-term basis," Airbnb's Meltzer wrote in his letter.

Just don't expect most of the hotel industry to buy that pledge or the argument behind it.

"This is not about home sharing, a practice that has existed for decades as a way for individuals to make a little extra cash by renting out the occasional room or home," AH&LA CEO Katherine Lugar said in a statement after the group's Penn State report was released. "This data tells a very different story than the one told by Airbnb." Dandapani added, "They're in the hospitality business whether they care to admit it or not. And they're in the illegal hotel business."


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