Allowing travellers to book rooms directly from the consumers's households, Airbnb has been labelled as a big threat to the hotel business. But according to a report by the Business Insider, Deutsche bank analysts say that it isn't just yet.
According to a deep-dive research note written by Iona Dent and Geoff Collyer, Airbnb looks to be 'increasing the pie' rather than being a threat. "Currently, when cities sell out for an event, for example, and the market rate goes significantly higher than normal, we believe that is where Airbnb is currently offering a key alternative," they wrote. "Drawing an analogy with the low-cost airlines, such as easyJet and Raynair, it was clear these offerings expanded the travel market and opened up opportunities for those who would otherwise not have been able to travel, or certainly would have travelled less frequently otherwise," they added. They also noted that in major cities, hotel income per available room has stayed the same while the supply of rooms that included Airbnb listings have significally increased.
The CEO of Hilton, Chris Nassetta, has also mentioned that Airbnb was not a major threat to his business. In Dent and Collyer's note, they have written that the effect across markets is eclectic and cities like New York and Paris have seen a larger impact as compared to Madrid and London.
The two analysts also stated in their note that experience from the media and retail sectors have shown how rapidly incumbents can decline in the context of technology facilitated 'disruptive' entrants.
In the words of Dent and Collyer, Airbnb is more of a complement rather than replacement, but this does not mean that the hotel chains should just ignore the possibility of Airbnb becoming a major threat to their businesses. Ultimately, the hotel chains are safe for now.
