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Jury Still Out When It Comes To Airbnb's Impact On Hotels

NYC’s hospitality industry has a few problems it’s battling these days, but in terms of prolonged controversy and teeth-gnashing, Airbnb surely takes the cake. To find out just how big the problem is and what the industry can do about it, Bisnow talked with several panelists who’ll be speaking at our upcoming 6th Annual Hotel and Investment Forum on April 21


The first thing that stands out about Airbnb’s impact on NYC hotels is just how difficult that impact has been to measure precisely.

A recent report by HVS Consulting and Valuation—commissioned and paid for by the Hotel Association of New York City—concludes Airbnb caused a direct loss of roughly $450M to NYC hotels last year alone.

Another study by hospitality research firm STR Inc says Airbnb’s impact has been negligible. The report says that’s because most Airbnb listings go to people who’d never consider paying NYC hotel prices in the first place, or stay longer than seven days, a consumer class that’s largely ignored by NYC hotels.

There’s also a recent CBRE report that found “New York to be the market most at risk in the country to competition from Airbnb,” and a Goldman Sachs report concluded once travelers try Airbnb, they don’t go back to hotels, and predicted ongoing disruption to the hospitality industry as a result.

The STR report, on the other hand, found there is little evidence Airbnb is leading to fewer compression nights or reducing pricing power.

The list goes on, but you get the idea.

“The conflicting conclusions and opinions do not surprise me, because the reality is Airbnb has yet to release full booking and financial records,” says LW Hospitality Advisors CEO Dan Lesser (above), who’s studied Airbnb extensively.


Wayne Cook (above), a partner at Windels Marx Lane & Mittendorf, is similarly unsurprised about the lack of consensus on Airbnb’s ultimate impact.

“There’s so many nebulous economic factors in play, it makes it easy to argue both sides of the coin,” he says. Personally, Wayne thinks Airbnb’s impact on New York hotels has been negligible.

“Someone who’s using Airbnb is not necessarily someone who’d go out and book a room in Midtown Manhattan otherwise,” he says.

Noting NYC’s average hotel occupancy rate stood at 87% last year, he says it’s not clear to him how much Airbnb’s absence would really help to fill that last 13%.

In fact, Wayne thinks the biggest threat to NYC’s hospitality industry is the industry itself.

“There’s roughly 13- to 15,000 rooms that’ll be coming online over the next few years,” he says. “That’s an increase of roughly 20%. When that happens, that’ll be the true test” of the industry’s resilience.


Dream Hotel Group CEO Jay Stein (above) begs to differ. Just because Airbnb might not be biting into occupancy rates, doesn’t mean it’s not helping to depress ADR growth, he says.

“To say it’s had no impact at all, just seems like a crazy comment to make,” he says, while acknowledging it’s nearly impossible to prove one way or the other.

Tal Bar-Or, a senior managing director at Meridian Capital Group, is in the same camp.

“While I do not have any empirical data, I do think it’s caused concern in the hospitality space,” he says. “Budget conscious travelers will consider this as a direct option rather than an alternative.”


Mark Gordon (above), a managing partner at Tribeca Associates, is similarly unclear on Airbnb’s overall impact, but says he’s nonetheless disappointed the city hasn’t taken stronger steps to curb “this practice of selling one’s home for commercial purposes.”

“It’s unclear to me why the city allows Airbnb to operate openly,” he says. “It doesn’t seem like having a commercial use in a residence would comply with zoning regulations. It should be fairly easy to monitor, as ‘sellers’ openly advertise the availability of their home in a public fashion.”

Regardless, he thinks NYC’s hotels are here to stay.

“Hotels are more than just beds in someone’s home,” he says. “Hotels provide many additional lifestyle elements including but not limited to social, cultural, entertainment, fitness/wellness and culinary experiences.”

While the battle between the city, the NYC hospitality industry and Airbnb has gone on for years and is even showing signs of heating up recently, it also doesn’t look like it’ll be settled anytime soon.

Dan has an interesting hypothesis for where Airbnb will ultimately end up though.

In the same way that Amazon is rumored to be mulling a purchase of Barnes & Nobles after more or less breaking its onetime rival’s back, Dan thinks Airbnb might consider getting into the hospitality industry proper, down the line.

“I believe it is only a matter of time before Airbnb merges with a hotel company,” he says.

Wayne, on the other hand, thinks NYC hospitality and Airbnb are likely to fight one another to a stalemate, at which point a deal might finally be reached.

“The hospitality lobby is very powerful in New York, so Airbnb has been at a bit of a disadvantage to date,” he says.

As Airbnb continues to add New York lobbyists to its payroll and bumps up spending in the state for ad campaigns and grassroots organizing, Wayne thinks the firm will end up on equal footing with the industry sooner or later.

“I think it’s similar to the fight between Uber and the yellow cab business,” he says. “If the taxi firms had sat down with Uber at the outset, I think they’d be in a much better position than they’re in now. I think the hospitality industry needs to take a lesson from that experience and try to cooperate with Airbnb sooner rather than later.”

To learn more about what's happening in NYC's hospitality sector, check out Bisnow's upcoming 6th Annual Hotel and Investment Forum on April 21. Register here.