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Airbnb's growth driving down lodging prices: Study
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IANS | 20 Apr, 2019
Global hospitality services provider Airbnb is shaking up the hotel
industry by driving down the lodging prices and revenues for traditional
hotels, a new study suggests.
The Florida State University
researchers suggest that Airbnb's exponential growth worldwide is
devouring an increasing share of hotel revenues and also driving down
room prices and occupancy rates.
"This is the first study
confirming the negative impact on those three key metrics in the hotel
industry," said co-author Tarik Dogru, Assistant Professor at the
varsity.
"Increased competition from Airbnb is mainly affecting
hotel prices and revenues but occupancy rates are also down slightly,"
Dogru added.
For the study, published in the journal Tourism
Management, the researchers examined the effects of Airbnb in 10 major
US cities between 2008 and 2017.
They found one per cent increase
in Airbnb's supply lowered hotel revenues between 0.02 and 0.04 per
cent, which he estimated in New York City alone would have amounted to a
loss ranging between $91 million and $365 million in 2016.
The lost revenues came mainly from economy and luxury hotel listings, the study noted.
It
also found Airbnb negatively affecting mid-scale hotels and suggests an
increasing demand for authenticity in lodging. Travellers felt Airbnb
properties were more authentic than franchised hotels, the study noted.
According
to the researchers, Airbnb's business model has flourished for many
reasons. Customers like having access to an enormous supply of
properties and rooms at a wide variety of prices, often more competitive
than hotels, and Airbnb collects commissions on every booking.
In addition, the company does not follow conventional rules, the researchers pointed out.
"Airbnb
does not ensure the security of guests, it's not taxed in some
jurisdictions, and it has flexibility to add new supply because of a
lack of regulation," Dogru said.
"Those are some reasons why
Airbnb has a significant competitive advantage against the hotel
industry because adding a new hotel to the market can take several
years," Dogru added.
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