Airbnb catching chains in bookings
Airbnb has already overtaken major hotel companies in terms of its valuation by investors, but its growth could have it outpacing them in more concrete terms – actual guest bookings – in a few years, according to a Barclays research report.
During the past year, the number of rooms available through Airbnb has grown from about 300,000 to about 1 million, according to Barclays European leisure analyst Vicki Stern. By comparison, as of the 2014 BTN Business Travel Survey, the largest hotel company measured by rooms, InterContinental Hotels Group, had a portfolio of about 687,000 rooms. Airbnb offers more rooms than many of the largest hotel groups in the world – Hilton, InterContinental and Marriott – which each maintain just under 700,000 rooms. (Marriott said today at the World Economic Forum that it expects its portfolio of hotels to surpass 1 million rooms by the end of 2015.)
Even so, it will remain mostly a leisure player during that time, with only about 10 per cent of Airbnb bookings currently used for business travel, she added.
There is currently no regulation applied to Airbnb hosts regarding fire safety, food hygiene and insurance,” Stern wrote. “This is a key difference to hotels, which are required to adopt strict health and safety regulations, and this is one key reason why we believe the majority of business[es] would be reluctant to send employees to Airbnb accommodation instead of a hotel.”
The size comparison isn’t a direct one, since Airbnb doesn’t own the rooms booked on its site, and many listings aren’t available year-round. And when it comes to guest bookings, Airbnb still has a long way to go: Barclay’s report estimates that Airbnb’s current bookings are about 37 million room-nights per year, which is only around 20 per cent of IHG’s 177 million last year.
Still, the Barclay’s report, titled Hotels: Is Airbnb a game-changer?, predicts that Airbnb’s growth in bookings could treble in size in the next year, putting the company on track to outpace the largest hotel companies within a few years. It projects that by the end of 2016, the room-sharing platform could boast 129 million room-nights per year. Airbnb currently represents as much as 17.2 per cent of hotel room supply in New York, 11.9 per cent in Paris, and 10.4 per cent in London, according to Barclays’ estimates, and those percentages are projected to increase.
Amid its optimism about Airbnb, the report also noted that increasing regulatory pressures around the legality of Airbnb’s listings could slow this growth. Airbnb also poses a greater threat to the midscale segment of the hotel industry than to luxury categories, and hotels have a leg up with it comes to business travel, the report said.
Despite the Airbnb’s efforts to target more business travellers, the report says that just 10 per cent of Airbnb bookings are currently used for business travel.
