By Astrid Zeppenfeld
The second decade of this millennium brought a tremendous change in the landscape of global traveling options. Once completely unheard of in the United States, but long before the norm in other parts of the world, people started renting out their vacation homes for a fee via a third-party organization designed specifically for such purpose. The practice caught on quickly, simplified by the Internet as short-term rental apps began cropping up. Remember “couch surfing”, which became a concept in the late 1990s? Airbnb replaced the couch with entire luxury homes.
The Beginnings…
Airbnb was founded in 2008 and the by now common household name is actually a short form of its original name – AirBedandBreakfast.com. The company connects travelers and hosts online for a fee. The intended use was to provide an affordable alternative to hotels in a more familial setting.
To be honest, for large families it is often the only option. When large families travel, many find that it is not only cheaper to rent an Airbnb – it is also safer. When kids are young, staying in a hotel often involves breaking up the family into two hotel rooms, with one parent sleeping in each. Many parents wouldn’t leave their kids unsupervised during the entire night, in case of an emergency. In the case of remarried families, though, allowing kids to stay in a hotel room by themselves isn’t an option once again. Especially if their kid and step-kid happen to be a boy and girl.
Airbnb At the Height of Its Time
Ten years after its inception, Airbnb had gained a significant share of the travel industry. A study done in 2018 (Dogru, Mody, and Suess) found that a 1% growth in Airbnb supply across ten key markets in the U.S. made hotel revenue per available room decrease 0.02% across all segments. Given that Airbnb supply grew by over 100% year-on-year over these first ten years means that the “real” decrease in RevPAR was 2%. Therefore, not just the economy but also the luxury hotel segment was hit by Airbnb supply increases, experiencing a combined 4% real decrease in RevPAR.
The hotel industry started getting worried, with good reason, and talk began about occupancy and sales taxes to be imposed upon Airbnb. Then, in 2020, the global pandemic pretty much stopped travel and the entire industry took a hit. It wasn’t until the beginning of 2022 that the hospitality industry had really recovered and started seeing positive trends again.
Hotels Making a Comeback
Luckily for some Airbnb travelers, Airbnb has always come through and they have never had a terrible experience, even though the traveler may prefer a tried-and-true hotel experience when they don’t have all their children in tow. Lately, Airbnbs have not received as much positive feedback as they used to. This is due in part to prices having gone up in recent years, but, at the same time, travelers have noticed that the quality of many Airbnbs has – conversely – gone down.
Quite literally, a run-down shack might rent for $100/night and people pay that amount because the other Airbnbs down the road are renting for $400-$500/night. These are newer and were specifically acquired by their owners as a source of income from Airbnb. While anyone with the income to spare should have the opportunity to purchase what they want, and subsequently lease or rent that purchase to collect money, the practice has driven up prices on Airbnb stays.
A columnist for The Guardian, who detailed her snake-encounter in the “cozy” Airbnb she had rented in the countryside, sums up Airbnb as follows: “Airbnb feels like staying with a cheap, uptight friend – then paying for the privilege.”
TIME Magazine reported in November 2022, “Too Many Rich People Bought Airbnbs. Now They’re Sitting Empty.” The article continues, “Occupancy rates fell in 31 of the top 50 largest U.S. short-term rental markets from July through September, according to AirDNA. In August, AirDNA reported that markets where supply had grown by more than 50% had an average occupancy decline of over 10% and saw revenues drop by 8%.”
These changes have led to the current trend of hotel occupancy rates being higher in markets across the world again than Airbnb occupancy rates. STR analysis data shows that most global regions enjoyed full RevPAR recovery, compared to 2019, as of January 2023.
Statista Research Department’s latest report from October 2022 states that the US hotel occupancy rate in August 2022 was at 67%. According to Statista, “This shows an increase when compared with the previous two years.” Amadeus IT Group echoes Statista’s statement, “For the summer of 2022, global hotel occupancy hit an average of nearly 70%, which is an increase of around 5% over the summer of 2019. Group and business travel segments are showing steady recovery in Q4, with 4.3 million group room nights already booked for H1 2023.” Cheers to 2023 and safe travels, everyone!
MEET
Astrid Zeppenfeld is a contributing writer from St. Louis.
