AirBnB lowers hotel prices 8-10%, effects low end hotel more


There’s all sorts of fun findings and theories in this study of AirBnB’s effect in the hotel market in Austin and Dallas. The easiest one is that it lowers pricing by 8-10% for the non-business traveler segment:

As Airbnb has its roots in casual stays, including those involving shared accommodations, we expect it to be a more attractive option for travelers on a budget. Conversely, business travelers and vacationers who frequent high-end hotels are two examples of consumers we argue are less likely to substitute a hotel stay with an Airbnb stay.

There’s also some interesting commentary on the very fixed assets of traditional hotel companies verses the agility of AirBnB:
– It’s impossible to rapidly increase the supply of hotel rooms to meet demand: it takes an average of 4 years to build new hotels, so you can’t really meet rising demand even on an annual basis.
– In contrast, the AirBnB supply can expand and contract on a daily basis as people decided to list and delist their rooms and houses.
– Of course, AirBnB demand is cap’ed to the number of fixed houses and apartments in an areas…but companies to hotel rooms, that supply seems infinite. (There’s an interesting analogy to public cloud here.)