Airbnb’s remarkable success and a $25 billion valuation has come at a cost — to competitors. It claimed almost $1 billion in disruption revenue last year, by some estimates.
But now the hotel industry, still reeling from the sudden rise of the upstart lodging company, is fighting back. Among its efforts:
- The hotel industry has funded research that suggests some Airbnb operators are running “illegal” hotels.
- Large hotel chains are launching new chains aimed squarely at Airbnb’s core market: Millennials who are looking for a lodging experience suited to their tastes and budget.
- Hotels and trader organizations have lobbied for laws that would slow or stop the growth of Airbnb by restricting homes and apartments that can be listed on the service.
The hotel industry says these actions are not part of a concerted effort to kill Airbnb. Rather, they are part of an industry-wide initiative to maintain a level and regulated playing field. “The hotel industry embraces competition,” says Vanessa Sinders, the senior vice president of government affairs for the American Hotel & Lodging Association (AH&LA). “It creates a better guest experience, generates jobs and spurs innovation.”
The U.S. lodging industry isn’t exactly suffering. Lodging revenue sales grew from $163 billion to $176 billion in 2015, according to AH&LA. The total number of hotels grew from some 52,000 properties to 53,432 properties and the number of hotel rooms grew from approximately 4.8 million rooms to almost 5 million rooms. Analysts expect 2016 to be even better, with revenues up 6 percent.
The questions is, how much better would it be without Airbnb?
Just fine, say industry representatives. As long as Airbnb plays by the same rules.
“There is increasing concern that some newer players in the short-term rental arena, such as Airbnb, are facilitating an explosion in growth of commercial, unregulated businesses, where hosts rent multiple units for extended periods of time,” says Sinders. “This proliferation of illegal hotels is compromising consumer safety and endangering the character and security of residential neighborhoods, while these entities are also avoiding regulatory and tax obligations.”
To underscore its point, AH&LA funded recent research by Penn State University that found that nearly 30 percent ($378 million) of Airbnb’s revenue in 12 of the nation’s largest metropolitan statistical areas came from “full-time operators,” with rentals available 360 days a year. Each of these operators averaged more than $140,000 in revenue during the period studied. To the hotel industry, these operators are nothing less than “illegal” hotels, operating outside the regulatory framework of normal hotels, and placing traditional hotels at a competitive disadvantage.
Although the hotel industry didn’t fund a 2014 study on Airbnb rentals in New York, it has piggybacked on the findings, citing them frequently as evidence of the site’s unchecked and dangerous growth.
Funding industry studies is a time-honored practice among trade organizations. AH&LA’s research is meant to arm its lobbyists and supporters with facts that can be used to persuade the public — and policymakers — to support new rules favoring hotels.