The competitive threat from Airbnb to the hotel sector has been dramatically underestimated, according to new research from Morgan Stanley Research.
The research, entitled Who Will Airbnb Hurt More – Hotels or OTAs (Online Travel Agencies)?…One Year Later, stated that Airbnb has been almost double the threat to hotels in 2016 than previously forecast and is set to increase further.
“Airbnb usage has increased more than we thought it would and cannibalisation of traditional hotels has been higher,” it said.
Penetration rates among leisure travellers increased from 12% in 2015 to 19% last year and are forecast to reach 25% in 2017. Business travellers’ usage has also grown from 12% in 2015 to 18% in 2016 and is predicted to reach 23% this year.
Some 49% of the 4381 UK, US, German and French consumers surveyed said they had swapped a traditional hotel stay for an Airbnb booking in the last 12 months, up from 41% in 2015. Awareness of the peer to peer letting service is growing – up from 50% to 75% – and customer usage satisfaction levels are high and rising (up from 90% to 93% in 2016).
The research pointed to Airbnb having a direct and negative effect on hotels’ ability to maintain occupancy levels and nightly rates. Morgan Stanley estimates that overall occupancy in Europe and the US will fall from 67.6% in 2016 to 66.8% in 2018 and that competition from Airbnb will push down room rates as hoteliers strive to boost those occupancy rates. The Airbnb effect is forecast to depress revenue per available room by 1.8% this year and 2.6% in 2018.
Although Airbnb is a relatively small player in accommodation landscape, accounting for just 4% of the market last year and forecast to rise to 6% by next year, its impact will be significant. “The lodging industry is in a relatively precarious position right now for growth given increasing traditional supply, pricing wars with OTAs, declining negotiated corporate rate growth, greater rate transparency, near peak employment and soft demand,” the report stated.