Published on : Thursday, January 21, 2016
The American Hotel & Lodging Association (AH&LA) released a new study conducted by researchers at Penn State University’s School of Hospitality Management offering the first, comprehensive national look at the rise of commercial activity on Airbnb, one of the most trafficked short-term rental platforms. The analysis tracks data collected during a 13-month period (September 2014-September 2015) in 12 of the nation’s largest metropolitan statistical areas (MSAs): New York, Chicago, Los Angeles, Philadelphia, Miami, Houston, Dallas, Phoenix, San Antonio, San Diego, San Francisco, and Washington, D.C.
The study: “From Air Mattresses to Unregulated Business: An Analysis of the Other Side of Airbnb” focuses on “hosts” in these top markets who rent multiple units and the length of time they are renting their units. It tells a very different story about who is driving revenue on the site.
Among the key findings in the report:
– Nearly 30 percent ($378 million) of Airbnb’s revenue in these markets came from “full-time operators,” with rentals available 360 days a year. Each of these operators averaged more than $140,000 in revenue during the period studied.
– The cities with the largest number of full-time operators include New York and Miami on the East Coast and Los Angeles and San Francisco on the West Coast.
– Individuals or entities renting out two or more residential properties on Airbnb account for 17 percent of hosts in the twelve cities studied, and this rapidly growing segment of “multi-unit operators” drives nearly 40 percent of the revenue in those markets, which equates to more than half a billion dollars a year.
“The study shows an explosion in activity among multi-unit hosts and the rise of full-time operators in each of the 12 markets we analyzed. Further, operators renting out three or more units represent a disproportionate share of revenue with only 7 percent driving more than $325 million in the period studied,” said Dr. John O’Neill, Professor and Director of the Center for Hospitality Real Estate Strategy at Pennsylvania State University, who directed the research.
“Our industry thrives on competition each and every day, operating on a level and legal playing field. And we believe new entrants to the market like Airbnb and the commercial businesses they facilitate have those same obligations,” said AH&LA President and Chief Executive Officer Katherine Lugar. “Unfortunately, this report shows a troubling trend as a growing number of residential properties are being rented out on a full-time, commercial basis, in what amounts to an illegal hotel, and using Airbnb as a platform for dodging taxes, skirting the law and flouting health and safety standards.
“This is not about ‘home sharing,’ a practice that has existed for decades as a way for individuals to make a little extra cash by renting out the occasional room or home. But this data tells a very different story than the one told by Airbnb, who wants the face of Main Street but the wallet of Wall Street. As a corporation valued at more than $25 billion, they have a responsibility to protect their guests and communities; they should not be enabling the corporate landlords who are clearly using their platform to run illegal hotels.”