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LJ Research’s market research investigates if residential sharing services pose threats to the hotel industry.
In the first part of our series, published here, we found that under 40% of travellers are aware of the home share service Airbnb. And that those who do know of the platform are younger segments and often with higher household incomes. In the second part of our series we look a little deeper into who may be prepared to use Airbnb – and why.
In our online survey we asked travellers to rate, on a ten-point scale, how strongly they agreed with certain statements on Airbnb.
The charts below contrast those who strongly disagreed with the statement (by giving 1 or 2 points) with those who strongly agreed with the statement (by giving 9 or 10 points). Those who previously indicated that they were not aware of Airbnb were briefly explained how the platform works before being asked to agree or disagree with the statements.
The chart illustrates that – given the choice – more travellers would prefer a hotel than a stranger’s flat or a room therein. However, the difference is perhaps not as pronounced as one might expect. Put differently, the proportion of travellers who strongly disagree with the statement “I’d much rather stay in a hotel than at somebody’s flat” is probably surprisingly high. Similarly surprisingly, there are no stark differences to the average across gender, age and household income groups.
Airbnb promotes their platform as a community of like-minded people that offer travellers a more authentic holiday experience. (“Welcome Home” is the tagline you’ll read first on Airbnb’s website.) But only 16% of those who took part in our market research agreed that they would try Airbnb for a more authentic holiday experience. Indeed, to save money is a stronger incentive than authenticity for most travellers.
“To save money” was also given as the number one reason by those who indicated the platform appeals to them or those who had previously used it, a group that could be defined as “warm users”. Here again, “meeting new people”, “being part of a community”, or “an authentic holiday experience” were significantly less frequently cited as reasons to use Airbnb.
This view was well described in the words of some of our respondents:
“Airbnb is a great way to save money on accommodation. It also gives a good feel of how it would be if you actually lived there. Not only that it’s a great way to meet the locals of the country you are visiting. They can give you advice on where to go and see and where you should avoid.”
“I don’t think I would rent a room from a homeowner, but might consider a whole flat in someplace like London or Edinburgh where accommodation is terribly expensive.”
Should Airbnb be regulated?
The British Hospitality Association, which represents over 40,000 hotels, restaurants and attractions, accused the Westminster Government of “looking towards very prominent, sweeping deregulation, across various industries for the benefit of a few companies, at the cost of consumer safety, job growth, market stability and community interests”.
In their view, Airbnb is a barrier to growth as the platform doesn’t pay the same taxes and private landlords-turned-hosts are unlikely to follow, say, the same health & safety and other regulatory practices. This is an element we are looking more closely into in our last part of this series. For now, however, we see that better regulation may be in Airbnb’s interest as 35% said they would only use Airbnb if it were better regulated (for example, in terms of health and safety).
Again, does Airbnb pose a threat to the hotel industry?
Even as lobby groups (like NYC-based hoteliers or the BHA in the UK) try to crack down on residential sharing services, our findings suggest that hoteliers have reasons to play down the threat Airbnb & Co. pose to their industry. Taken as a whole, travellers prefer hotels over private lets; only a minority buy into the “authenticity” claim or community spirit that the San Francisco-based start up preaches. And those who do may not be keen users of hotels in the first place?
In fact, Airbnb itself actually agrees that it does not displace existing lodging but is creating new demand. “I’m optimistic that there isn’t going to be a war with hotels”, said Brian Chesky, its boss, in January 2014. The Tourism Office in Barcelona also recognised this and has recently promoted the fact that the Airbnb community contributes $175m to its local economy as guests spend more time and money in the city’s diverse neighbourhoods.
However, a Boston University study that looked into hotel revenues in Texas, where the platform has grown much faster in some places (like hip Austin) than others (like cowboy town Fort Worth). The researchers could not find a significant influence from Airbnb on business and luxury hotels. But in places where it has established a presence, it cut the revenues of budget hotels by 5%. This is not surprising given that – by quite a margin – our study found that “saving money” was the most frequently cited reason to use Airbnb by those the platform appealed to.
Links to previous Airbnb Market Research
Our previous blogposts about Airbnb are published on our website. For an analysis on…
who is aware of Airbnb and who is more likely to use it, click here.
if travellers think that governments should regulate Airbnb, click here.