Tourism report discusses AirBnB impacts on online travel agencies and hotels

The sharing economy is shaking up the travel market.

Services offered via the sharing economy (also called peer-to-peer) are growing annually. It was just earlier this year that General Motors invested $500 million dollars into Lyft, a ride-sharing service company. Uber, Lyft’s primary competitor, partnered with Mercedes Benz and Google to advance driverless cars. Both of these companies, along with Airbnb (short for Air bed-n-breakfast) are essentially the cornerstone examples when discussing the sharing economy.

Airbnb is now estimated at nearly $26 billion dollars and growing. A recent report from SKIFT, an online portal that continuously monitors and reports on the travel and tourism industry, discussed the growing company’s impact on online travel agencies (OTA) and hotels. Examples of OTAs would include Expedia and Priceline. SKIFT reported on data obtained via a mobile app data mining company (not mentioned in this article). The research conducted by the company looked at nearly 2 million mobile devices across 75 countries and examined the growing company’s impact on OTAs. The research also looked at 200,000 frequent travelers that either use Airbnb, only use OTAs, and/or consumers which use both.

The report found that OTAs are being impacted by Airbnb minimally, and specifically stated that, “In 2015, Airbnb users spent 2 percent less on OTAs compared to other frequent travelers and per capita OTA spending among Airbnb users was 4 percent lower in the first quarter of 2016 compared to other travelers. Among Airbnb users, total travel spent is roughly 100 percent higher, too.”

The same report from SKIFT also identified a Goldman Sachs survey that compared preferences for shared housing and hotels. The study found that, “…of consumers, who’ve stayed in peer-to-peer lodging in the last five years, 36 percent prefer peer-to-peer lodgings, 40 percent prefer hotels, and 24 percent have no preference.”

The report goes on to say that, “…just because someone has stayed in an Airbnb or similar short-term rental, doesn’t mean they are likely to stop staying in a hotel, or decrease their number of hotel stays.”

The discussion of industry impacts of short-term housing rental companies such as Airbnb is more focused on the hotel industry rather than OTAs. Several states, such as Michigan, have a bed tax on individual hotel rooms. The tax dollars collected are used to fund Convention and Visitor Bureaus’ (CVBs) operations, such as Blue Water Area Convention and Visitor’s Bureau located in Port Huron, Michigan. Right now, services provided via Airbnb in Michigan do not include this bed tax, which means state dollars to fund CVBs cannot be collected; however, large metropolitan areas such as San Francisco, have passed legislation requiring an occupancy tax be collected. These tax dollars, collected from consumers in the reservation process, serve a similar purpose as those collected from overnight hotel stays.

Tourism in Michigan is essential to our economy and communities, and sustaining this industry is imperative to our revitalization and resiliency to future challenges. MSU Extension works with local communities throughout the state to identify strengths and assets to leverage for tourism.

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