The bane of hotels, Airbnb (NASDAQ: ABNB), has become so popular there are supposedly now more guests who want to stay in an Airbnb than there are hosts to accommodate them. Does that mean people won't travel if they have nowhere to stay? Or wait? Will those would-be Airbnb guests slap their palms to their foreheads, realizing there are other options, like say, a hotel room maybe?
With coronavirus lockdowns being mostly over, pent-up demand for travel is in full force this summer. So will overflow Airbnb guests return to the tried-and-true hotel stay? Let's find out whether the hotel business is picking up because of this newest Airbnb development.
The Airbnb situation
Airbnb currently has 4 million hosts, but Airbnb CEO Brian Chesky says his company will need millions more hosts over the coming years. He might be right, but no one can predict the future. In any event, Airbnb wants more hosts and is encouraging people to sign up. How, you might ask. What's the incentive?
It turns out, even though Airbnb says it desperately wants hosts, it's probably not going to offer any sort of incentive for getting them, aside from making it easier to create and manage listings. Airbnb is offering a slick new ad campaign to lure hosts, though, which came on the heels of Airbnb shutting down its highly popular travel affiliate program. That was where influencers and bloggers were earning money by promoting Airbnb hosting.
How Airbnb might be helping hotels
Clever Real Estate surveyed 1,000 Americans and found that 60% of vacationers prefer Airbnb to a hotel but that 68% of business travelers prefer a hotel. The main reasons people choose Airbnb are to stay in a larger space, have a more authentic experience, and to save money.
So what happens when Airbnb is no longer a bargain? MarketWatch reports that's exactly what's happening, as the average daily rate for an Airbnb stay in April was $245.42, which is an increase of 16.6% from April 2020 and a 20.8% increase from April 2019. Plus, that average daily rate doesn't include the extras guests are charged, such as taxes, service fees, and cleaning fees.
Compare the Airbnb rate to the average daily rate for a hotel room in May, which was $113.54, and now the hotel appears to be the bargain option. People have been paying more to stay in an Airbnb mainly to get in a larger facility and to social distance in a home versus staying in a hotel room during COVID-19. But as the pandemic wanes, people probably won't be as concerned about social distancing.
Another problem concerning Airbnb rentals is that some of them have hidden cameras. These are individual homes we're talking about. The Clever survey found that 7% of Airbnb guests found a hidden camera in their rental. Another survey found that 11% of Airbnb guests found a hidden camera in their room. Creepy! And that translates to 58% of survey respondents who are now concerned about hidden cameras in Airbnb rentals. Keep in mind this is a hidden camera we're talking about -- 24% of guests say they're OK with cameras in the kitchen and living room. We can only imagine where the hidden cameras might be.
The Millionacres bottom line
It appears there's room for both Airbnb and traditional hotels, as they serve different markets. Younger vacationers who value an authentic experience or who need extra room for children and pets usually prefer Airbnb, whereas older generations and business travelers tend to prefer hotels. If you're a real estate investor deciding between being an Airbnb host and investing in hotels, you've got some good options either way.