If New Year’s eve is any indication, Hotels should worry from Airbnb’s continued rise as a preferred stay in comparison to traditional hospitality outlets. While IPOs were not mostly glamorous in 2019, Airbnb is perhaps the most prominent prospect to go public this year.
New Year Eve’s guest stays
Airbnb, the popular lodging marketplace that grew into the hotel industry’s biggest nightmare in recent years has raised more than $4.4 billion in funding to date and is currently valued at more than $30 billion, according to Statista.com.
Fans of the company’s service value it as an affordable and often more attractive alternative to hotels.
The below chart, based on data shared by Airbnb and reported by journalist Jon Erlichman on Twitter, illustrates Airbnb’s blockbuster growth by showing the estimated number of guest stays on what is arguably the biggest night of the year for the hospitality industry, New Year’s Eve. In 2019, the company expected 4.5 million guests to stay at an Airbnb on New Year’s Eve, up from just 540,000 five years earlier.
What about Hotels during New Year’s Eve?
While we don’t have global hotel occupancy rates on New Year’s Eve, reports from the region were extremely positive.
Hotel bookings made well in advance, and some made at the very last minute, all culminated in hotels across the UAE posting record occupancy rates for New Year’s Eve – a momentum that many hospitality experts say will carry over into the new year as the UAE gets ready to host Expo 2020 Dubai.
New from India reported favourite five-star hotel mostly being sold out that last evening of the year. As 2019 drew to a close, bookings for New Year’s Eve staycation packages at luxury hotels went up exponentially.
Almost all the top hotel brands in the country – The Leela, ITC, Andaz, Swissôtel, Hyatt, Four Seasons, The Westin, St. Regis and Lemon Tree were curating events to ring in the New Year and expected a full house from customers. Earnings were expected be 10-25% higher than normal, depending on the type of hotel and its location.
Airbnb vs. Hotels
According to iProperty Management, average rates for an entire home on Airbnb is the same or lower for the cost of a single hotel room. The average cost of an Airbnb rental is $160.47.
In Europe, Airbnb is anywhere from 8% to 17% cheaper than a regional hotel’s average daily rate, while in the top 25 markets in the U.S., Airbnb is 6% to 17% cheaper than hotels in those markets.
HVS Global Hospitality Services estimated that hotels lose approximately $450 million in direct revenues per year to Airbnb..
Issues with Airbnb
3% to 7% of Airbnb stays go awry.
20.5% of issues are caused by hosts canceling guests’ bookings.
15.4% of issues are caused by scams (i.e. The host demands extra money, host falsifies damages, or fake emails and websites are used).
13.45% of issues are caused by unsafe or unpleasant conditions (i.e. Bug infestations, broken appliances, hostile/intimidating hosts, or hidden cameras placed in the unit).
12.2% of issues are caused by the unit not being as described (i.e. Photos do not match up to reality, location is different, missing amenities, or the unit is dirty/messy).
82% of people who had a problem with their Airbnb stay mentioned customer service as a problem.
General Statistics About Airbnb
Iproperty Management brings us important statistics about Airbnb, and here we list a few of these that help understand the growth behind the company.
- Airbnb has over 150 million users worldwide.
- There have been over half a billion Airbnb stays all-time.
- There are over 650,000 hosts worldwide.
- There are over 6 million Airbnb listings worldwide.
- Airbnb offers listings in over 191 countries.
- Airbnb averages about 500,000 stays per night.
- On any given night, 2 million people are staying in Airbnb rentals across the world.
- By 2020, Airbnb’s revenue is projected to be as much as $8.5 billion.
- The property of every Airbnb host is covered up to $1 million.
- 54% of Airbnb guests are female.
- There have been over 400 million guest arrivals at Airbnb listings since 2008.
- 700,000 companies use Airbnb for work.
- Users spend an average of 11 minutes and 31 seconds on the Airbnb app, and 50% of the traffic is through mobile devices.
- Airbnb has an average of 3 listings per host.
- 90% of Airbnb guests have said they were “satisfied” or “very satisfied.
- The fastest-growing Airbnb host demographic is seniors, with over 200,000 senior hosts and over 120,000 senior women hosts.
- 88% of Airbnb’s reservations are for groups of two to four people and 60% of the reservations were for an entire home/apartment.
- Only 11% of the reservations were for one-night stays.
- $20,619 is the average expected annual profit of Airbnb hosts renting out a full two-bedroom apartment or house in major cities.
- Millennials account for roughly 60% of all guests who have ever booked on Airbnb.
- Airbnb guests stay 2.4 times longer and spend 2.3 times more money compared to typical tourists. They also stay in more diverse neighborhoods throughout the city, and 45% of their spending occurs in the neighborhood where they stay.