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Is Airbnb Killing the Hotel Business?

SmarterTravel

The traditional taxi business is far from dead, but the ever-burgeoning popularity of rideshare services like Uber and Lyft is a clear threat to the survival of the yellow cabs that for decades have been a mainstay of big-city transportation. It’s fair to say that the rise of Uber and its ilk have led to the erosion of taxis, and could eventually lead to their outright demise (or, perhaps, their radical transformation).

Should hotels be worried that homesharing services like Airbnb and HomeAway portend a similar withering of the traditional hotel business model?

Just this week, Bloomberg reports, financial analysts at Bank of America downgraded the stocks of several hotel companies, including Hilton and Hyatt, citing pressure from oversupply and competition from homeshare services: “Alternative accommodations—including Airbnb—are a threat.”

So homesharing is a threat. But is it a death threat, or just a bump in the lodging industry’s road?

There’s an argument gaining currency that while Airbnb will continue to grow, its effect on the hotel industry will be mostly limited to the budget-sensitive segment of the travel market. Wealthier travelers and business travelers, it’s asserted, have no interest in sleeping on someone’s couch, in a fifth-floor walk-up, in a sketchy part of town.

So Hyatt will be unfazed, Motel 6 will take a big hit, but both will survive.

That notion accords with common sense, and is supported by the results of a Pew Research Center study, released yesterday, on the impact of the sharing economy on Americans’ lives. Among the survey’s findings:

  • 11% of Americans have used a homeshare service, but fully half aren’t yet aware of them
  • College graduates are heaviest users (25%, versus 4% of high-school grads)
  • 24% of users have incomes of $75,000 or more

With half the potential market not yet even aware of homeshare services, it’s clear that Airbnb is where Uber was five years ago, with the potential for enormous growth and industry disruption ahead of it. Whether that potential is realized, and at whose expense, remain to be seen.

Reader Reality Check

Are you a homeshare customer?

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After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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