The hotel industry has been turning up the volume on its opposition to Airbnb in recent weeks. But it’s not clear that the hotels themselves are getting more worried about the threat Airbnb poses to their business — judging from what they tell investors, at least.
A couple weeks ago, a large industry trade group called the American Hotel and Lodging Association put out a paper commissioned from Penn State’s Center for Hospitality Real Estate Strategy showing that 40 percent of Airbnb’s revenue comes from people operating multiple units. The main message: Airbnb isn’t just a platform for people to rent out their spare rooms.
“I think more recently we have wanted to have a data driven discussion,” says AHLA spokeswoman Rosanna Maietta. The group’s PR team went into overdrive again this week, after Airbnb admitted it had removed hundreds of listings from operators engaging in “unwelcome commercial activity” in New York before a data release. “A company that talks about transparency isn’t necessarily being transparent,” said AHLA’s head of government affairs, Vanessa Sinders.
Airbnb disputed the Penn State study’s findings. “This study shows that the hotel industry gets what it pays for, which in this case is a specious study intended to mislead and manipulate,” said spokesman Nick Papas. “Airbnb is succeeding for the very simple reason that our hosts — the vast majority of whom are middle class people sharing their homes in order to create supplemental income — provide guests authentic, transformative experiences.”
Nevertheless, the AHLA is funding a second batch of research from Penn State that will provide more granular information on different markets to make its case in cities and states across the country, as they consider how to regulate the hotel industry’s biggest new competitor.
So does that mean that large hospitality companies are actually getting more worried about the threat Airbnb poses to their business model?
Well, judging from what companies say to their investors, they don’t seem too concerned. Although Airbnb barely came up on earnings calls in 2014, executives faced so many questions about the upstart in 2015 that some of them started preemptively addressing the issue in their opening remarks. Most of them said that while it’s possible Airbnb is affecting their ability to increase prices at times of peak demand in markets like New York and San Francisco — a phenomenon known as “compression” — they’re not losing sleep over it.
That confident talk, however, comes with an asterisk: Things should be fine, as long as localities subject Airbnb to the same regulations traditional hotels have to deal with. Which explains why hospitality trade associations continue to wage political battles, sometimes overtly and sometimes under the radar, to make sure Airbnb stays in its lane: Leisure trips by people looking for something funkier than the sterile hotel experience. Already, Airbnb is marketing itself to business travelers, and there are even reports that large residential landlords may be interested in renting their excess inventory on the platform — which could pose a more substantial threat.
So here’s what executives have been telling Wall Street during conference calls to discuss their financial results. (Many of these companies hold large portfolios of hotels that operate under brand names like Hyatt, Marriott, and Hilton, which actually don’t own most of the hotels that bear their logos.)
Pebblebrook Hotels CEO Jon E. Bortz, second quarter of 2015:
“So if you look at business around marathons as an example, where we used to have really intense compression and an ability to price that maybe what the customer would describe as sort of gouging rates. I’d say we’ve lost a lot of that ability at this point within the major markets where these events take place. … I think that will change over time…as the industry becomes regulated. And when there is enforcement of the laws that take place, but that’s still going to take several years.”
Hyatt Hotels CEO Mark S. Hoplamazian, second quarter of 2015:
“Airbnb is focusing their attention on how they could be effective on the business travel front. But there are just some inherent differences in what they can offer and what hotels offer. And I think those differences are really, really material and substantive in terms of stay experience for business travelers. So, do I think that there will be incremental penetration, over time, for business travel? Sure. But it’s not anywhere near the incidence of leisure travel and that purpose of stay.”
Marriott International CEO Arne M. Sorensen, second quarter of 2015: