A Hotel Industry Analysis of Airbnb

Why Do Hotel Valuations Matter in Africa
October 30, 2018
The Raising of Equity in the Hotel Industry
October 30, 2018
Show all

A Hotel Industry Analysis of Airbnb

The hotel industry analysis undertaken by HTI Consulting addressed the question of whether Airbnb has had an effect on hotels in South Africa or not. The analysis into this alternative type of accommodation showed that Airbnb is not necessarily as disruptive as initially thought. It also showed that Airbnb is, for some, an alternative platform to market what was already an existing product that was being marketed via online travel agents. Airbnb’s introduction of a hotel distribution platform is a case in point.

There is no doubt that the number of rentals associated with Airbnb is growing. A hotel industry analysis done by AirDNA shows that in Cape Town, the number of rentals participating in Airbnb increased from 10 627 total rentals cumulative in 2015 to 39 538 total rentals cumulative YTD 2018. This is positive growth and a portion of these rentals might have displaced the demand from hotels. However, hotel industry analyses show that a large proportion of the rentals is not available year round. AirDNA indicates that only 12% of the Airbnb properties in Cape Town (an estimated 1 970 properties) is available for rental 10-12 months of the year. The majority (48%  – an estimated 8 100 properties) is only available for rental 1-3 months of the year. It is highly likely that many of these properties are let over the peak holiday periods, such as Christmas/Easter when hotels in Cape Town are full and operating at premium prices.

It is also interesting to note that whilst the number of Airbnb rentals in Cape Town has continued to increase in recent years, the hotel industry analysis shows that occupancies for hotels in the city have grown at a CAGR of 3,3% between 2012 and 2016, despite changes to visa laws, the effect of the Ebola virus, an increase of 1 000+ rooms, and the growth of Airbnb. Along with the positive occupancy growth, rates have also increased at a CAGR of 10,7% over the last six years.

The hotel industry analyses therefore show that despite the significant growth in Airbnb rentals in Cape Town, the effect on the hotel market has been limited.