Report: Airbnb rentals now 9% of room inventory in major cities

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In the third quarter of 2015, the number of Airbnb accommodations in Los Angeles nearly doubled from a year earlier.
In the third quarter of 2015, the number of Airbnb accommodations in Los Angeles nearly doubled from a year earlier.

Airbnb accommodations now account for 9% of the total lodging units in the 10 largest U.S. markets and appeared to be adding units at a substantially faster clip than the U.S. hotel industry, a new study has revealed.

The data, in a report released by CBRE Hotels (formerly PKF Hospitality), suggests stiffer-than-expected competition for developers of new hotels in major markets such as New York, Los Angeles and San Francisco.

In New York, Airbnb units accounted for almost 23,000, or about 16%, of the 140,000 total lodging units (hotel and Airbnb inventory combined) as of September, the most recent month tracked in the study.

The CBRE study found that Los Angeles’ 13,000 Airbnb accommodations accounted for 12% of that city’s lodging units, while Airbnb units in San Francisco and Miami comprised 11% and 9.2% of those cities’ lodging units, respectively. For the study, CBRE culled data from both STR and Airdna, which provides data to vacation rental entrepreneurs and investors.

Airbnb’s presence was also reflected in revenue numbers. For the 12 months ended September 2015, revenue generated by Airbnb hosts equaled almost 6% of hotel room revenue in Los Angeles, while in New York, Austin, Oakland and San Francisco, Airbnb revenue equaled about 5% of hotel revenue.

Meanwhile, the average number of active U.S. Airbnb units (defined as places that had been available for rent during the previous month) doubled, to about 173,000, between October 2014 and September 2015. The fact that hotel supply increased just 1.1% last year, about 55,000 rooms, suggests that Airbnb is adding units faster than hoteliers, though the number of Airbnb units that enter or exit the market varies from month to month as hosts respond to seasonal activity or look to capitalize on major local events that will draw more overnight visitors.

Airbnb hosts generated $2.4 billion for the year ending last September, according to the study. That’s about 1.6% of the $150 billion U.S. hotels generated last year, according to research firm Phocuswright, and puts Airbnb’s annualized, and rapidly growing, revenue at about half of Hyatt Hotels’ and more than double Choice Hotels International’s.

Granted, Airbnb’s presence is far more prevalent in so-called gateway cities than it is for secondary markets. Airbnb’s 173,000 units last September accounted for about 3.3% of the approximately 5.2 million U.S. lodging units.

Still, while the numbers for secondary markets are far smaller, the number of active Airbnb listings in the third quarter of 2015 almost quadrupled from a year earlier in Richmond and Norfolk, Va., and almost tripled in Cincinnati, Indianapolis, Philadelphia, Denver and Phoenix.

By comparison, the number of units almost doubled in Los Angeles, New York, San Francisco and Washington.

“With the fluid dynamic of Airbnb, where supply can meet added demand for short periods of time, it creates less of a demand for traditional hotels during major events,” said Jamie lane, CBRE Hotels' senior economist and the report’s co-author. “We’re just now getting to levels where we might see Airbnb actually reducing both [average room rates] and new construction going forward.”

CBRE released its report about two weeks after the hotel trade group American Hotel & Lodging Association (AH&LA) released its own study, alleging rampant illegal activity among Airbnb’s most prolific hosts and pushing for more stringent regulations on home rentals. 

Citing a study it commissioned from Penn State University, the AH&LA estimated that almost 40% of Airbnb’s revenue in the 12 largest U.S. metropolitan areas was generated by hosts with at least two units, and that almost 30% of revenue was generated by so-called full-time hosts, who book units at least 360 days per year.

Airbnb, which called the AH&LA report “deeply flawed” and “misleading,” does not disclose its annual revenue figures or growth metrics.

In response to the CBRE findings, Airbnb spokesman Nick Papas said, “Airbnb is succeeding because our people-to-people platform provides transformative experiences by bringing people together to share their lives by allowing everyday people to supplement their incomes by sharing their homes.”

Lane said that the prevalence of hosts managing multiple Airbnb units and the percentage of Airbnb revenue they have generated in cities such as Miami surprised him.

Even so, he said the report’s objective was merely to present data about Airbnb’s presence in the U.S. and its potential impact on the lodging sector, not as a lobbying tool.

“We’re not taking sides, and we will not take sides,” he said.

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