Who is Airbnb really hurting?
Whatever you think of Airbnb, it's likely to be a passionate opinion, given the rental service's legions of both supporters and detractors.
Airbnb has just emerged from a brutal fight in San Francisco, where voters this week were asked whether the city should limit the number of nights a homeowner can rent out a house on the service and add reporting requirements. While that proposal was voted down -- giving Airbnb and its hosts some breathing room -- the fight raised questions over how Airbnb affects not only home values but the hotel industry and quality of life within some neighborhoods.
One surprising recent finding is about Airbnb's impact on the hotel industry. Given that the tech company helps homeowners rent their homes or rooms to tourists looking for an alternative to pricey hotels, it's often assumed that the hotel industry has been one of the biggest losers to Airbnb's growing popularity. But the impact might not be as high as some in the hotel industry have suspected.
First, hotel occupancy is on track to reach a record this year, with the national occupancy rate predicted to reach 65 percent in 2015, or the highest since hotel-data provider STR started tracking in 1987.
On top of that, several hotel operators in New York told Hotel News Now that while they are feeling some impact from Airbnb, it's not as drastic as the findings in a report conducted for the Hotel Association of New York City, which found that Airbnb led to losses of $451 million in direct revenue. But that report assumes Airbnb customers would have booked a hotel room, which often aren't in direct competition with the types of rooms and beds offered on Airbnb.
For instance, this $40-per-night listing on Airbnb for a "man cave" in Brooklyn isn't likely to compete for the type of consumer looking for a Manhattan hotel room, which have an average daily cost of $290.
Still, the hotel industry is at risk for feeling the burn from Airbnb if the economy takes a downturn -- forcing more consumers to look for more reasonably priced lodgings than hotels -- or if more hotels are built, creating an inventory glut, the economics blog Calculated Risk points out.
The bigger question, at least for millions of American homeowners and renters, is whether Airbnb is to blame for rising rents in cities such as Los Angeles and San Francisco. Airbnb says no evidence supports the claim that short-term rentals are having an impact on the housing market.
Not everyone agrees. A report published earlier this year by the Los Angeles Alliance for a New Economy said Airbnb creates an incentive to take units off the rental market, given that at least in one apartment building, long-term renters would provide a return on investment of 5.6 percent. With Airbnb's short-term rentals, the return would be 13 percent.
And in San Francisco, where rents reached record levels this year, a report from the city's Budget and Legislative Analyst Office found the service is taking units off the market. That could be affecting rental prices.
But the rise of Airbnb has also coincided with another phenomenon: the surge in newly hired and well-paid tech workers, which is boosting demand for San Francisco rentals. On top of that, the city has a market dominated by rent-controlled units, which limits the availability of market-priced apartments and keeps renters in place.
Until unbiased researchers look into the specifics of how Airbnb's popularity is affecting rental prices in several cities, the debate is unlikely to die down anytime soon.