It is commonly believed that the growth of Airbnb has made a significant negative impact on the hotel business. There are also empirical studies that have documented Airbnb’s negative impacts on hotels.
That makes sense. As a substitute of the traditional lodging products — hotel rooms — every transaction on Airbnb means a loss of revenue for hotels or online travel agents (OTAs), such as Expedia and Priceline, which also sell hotel rooms. Thus, it is not surprising to see hotels, Airbnb and OTAs are firing up for a new war.
Hotels, for example, are finding every possible way to stop the growth of Airbnb, even though hotels’ book-direct strategy might push OTAs to work closely with Airbnb. Meanwhile, Airbnb is aiming big and wants to become a full-service travel company to compete with both OTAs and hotels.
So, it is really not a question of whether Airbnb has become a big threat to local hotels or OTAs. The question is: In what way does Airbnb make a negative impact on the traditional hotel business?
While there are reports that discuss the supply and demand of Airbnb listings, few studies include Airbnb’s price positioning into their analysis. Price is an influential factor when consumers choose between a hotel room and an Airbnb listing. At the same time, price is an important variable in analyzing supplies and demands in economics.
Therefore, Airbnb’s price positioning in a market should not be ignored when we measure Airbnb’s impacts on the hotel industry.
To address this research gap, I worked with Karen Xie, a professor at University of Denver, on an empirical study that was recently published in International Journal of Hospitality Management. In this study, we answered:
3 research questions
- What is the impact of Airbnb supply on the performance of hotel counterparts in a market?
- How would such impact be moderated by Airbnb’s price positioning, in terms of price difference between a hotel property and the nearby Airbnb listings in the same zip code as well as price dispersion among these Airbnb listings?
- How would the impact of Airbnb supply on hotel performance be moderated by such quality attributes as class category (e.g., budget traveler hotels vs. luxury hotels) and average review ratings of the hotel counterparts in the same zip code?
