NEW YORK — With one off-script question on a panel at the Boutique & Lifestyle Lodging Association’s (BLLA) Hotel Investment Conference here last week, panelist and PKF Hospitality Research President Mark Woodworth shifted the discourse from the usual chatter about the positive state of the hotel industry to one that spanned politics, hospitality innovation and the law.

The question was about Airbnb, and while Woodworth apologized for, as he put it, “hijacking” the discussion, everyone seemed to understand that the peer-to-peer accommodations-listing service was the proverbial elephant in the room. That was true not just at the BLLA event but also at the 37th Annual NYU Hospitality Industry Investment Conference, also held in New York last week.

While conference panelists celebrated 57 consecutive months of year-over-year hotel-revenue increases, many bemoaned Airbnb’s impact on hotel-room demand and what they asserted were illegal advantages (via lower costs) that Airbnb unit owners had over hotel owners. Some panelists said many Airbnb hosts were operating illegally because of laws prohibiting short-term rentals in many cities. They also decried what they said was an uneven playing field because most Airbnb unit owners don’t comply with the insurance, fire-safety and disability-access mandates that apply to hotels.

“We’re not going to stop them, but they have to be regulated,” said Interstate Hotels CEO and American Hotel & Lodging Association Chair Jim Abrahamson on an NYU conference panel. “Half the inventory of Airbnb is illegal in New York.”

Airbnb has even snatched the proverbial black hat from OTAs, long a sore spot to hoteliers because of their relatively high distribution costs (though Abrahamson still got a shot in by equating Expedia’s pending acquisition of Orbitz to Star Trek’s “Klingons and Romulans teaming up”).

Airbnb says it brings extra funds to cities via guests who wouldn’t otherwise travel. The closely held company in May said that the 760,000 people who stayed in Airbnb’s New York properties last year generated $1.15 billion in economic activity in New York.

The company has gained some political goodwill in cities such as Chicago and Washington by collecting occupancy taxes on their behalf and has worked with cities like San Francisco and Portland, Ore., at “legalizing” rental-by-owner units.

But the situation has been more contentious in New York City, whose laws require 30-day rental minimums and where hotel room rates remain the country’s highest.

“[Airbnb’s] touchy-feely, ‘share a room’ thing, that’s all bull,” said BLLA panelist Jan Freitag, senior vice president at STR. “The reality is that these are full units.

The Airbnb issue was one of the few negatives in a U.S. hotel industry that continues to benefit from higher domestic and inbound demand, and minimal increases in room supply in most cities.

U.S. hotels boosted first-quarter revenue per available room (RevPAR) 8% from a year earlier, mostly on more profitable room-rate increases, according to STR.

And much of that increase has been spurred by growth in a group-bookings sector that had lagged transient demand. “In case you missed it, group travel is back,” Hyatt Hotels CEO Mark Hoplamazian said on an NYU panel.
Meanwhile, U.S. room supply continues to grow at less than 2% a year as banks remain somewhat cautious about preventing a repeat of the lending spree that led to the prerecession hotel-building boom.

Against that backdrop, NYU panelist Mark Brugger, CEO of DiamondRock Hospitality Co., suggested that the current upcycle could span a decade, including another five years of room-revenue increases.

“We’re in a Goldilocks economy,” Starwood Capital Group CEO Barry Sternlicht said on a separate NYU panel. “Not too hot, not too soft.”

Granted, the concerns over Airbnb reflected a perfect storm of sorts, because the conference took place in a city where the battle between hotel advocates and Airbnb has been most contentious and where fears of potential overbuilding are the greatest.

Through April, New York was the only city out of the largest 25 U.S. hotel markets that experienced an average room-rate decline. Additionally, the city has about 13,000 rooms under construction, which accounts for about 12% of the current supply, STR President Amanda Hite said.

Jason Pomeranc, whose New York-based family founded and has since sold the Thompson Hotels lifestyle chainlet, said on a BLLA panel, “There are a lot of new hotels coming on line with high expectations. It’s a real issue with New York.”

Geography and legality notwithstanding, some panelists and even some attendees highlighted the company’s technological innovations. One BLLA conference audience member classified the guest-booking process on Airbnb as “a joy” while characterizing the typical hotel-room booking experience as “horrible."

And Freitag relayed a story about how a hotelier asked him for mapping information about nearby Airbnb units so that he could pitch the unit owners on providing cleaning and food-delivery service.

“What they’re doing at Airbnb, we should’ve been there three years ago,” declared Commune Hotels & Resorts CEO Niki Leondakis. “They are here to stay.”

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