Airbnb Could Hurt Hotel Industry in 2017

Room sharing service gained ground in 2016, with more market share expected to shift in coming year.

Hotel occupancy rates could continue to decrease because of the rise of room-sharing website Airbnb. Bloomberg reports the peer-to-peer service could continue to erode profits away from traditional accommodations and mega hotel chains, as supported by a research study from Morgan Stanley.

The financial firm polled over 4,000 individuals from both the United States and European countries France, Germany and the United Kingdom to better understand consumers’ attitudes about hotels. Among those responding, nearly half said Airbnb replaced the need for a hotel during their trip. One-third of travelers noted that Airbnb replaced their stay in a bed-and-breakfast, while one in four said that they stayed at an Airbnb instead of an extended-stay hotel.

While the news could be bad for hotels, more Airbnb guests could mean good news for online travel agencies (OTAs). Over half of those polled said they booked their leisure travel through OTA websites, and would continue to do the same in 2017. Meanwhile, the same group said they would be less likely to book directly through the hotel website in the coming year, as only 46 percent said they would check at the hotel chain website.

“Our AlphaWise survey shows rising Airbnb adoption (now ~18 percent of travelers) with demand increasingly coming from hotels,” the Morgan Stanley team wrote in their report, according to Bloomberg. “While still small, we believe Airbnb has been almost double the threat to hotels in 2016 than previously believed, and the threat is growing.”

The increased adoption marks a turning point for Airbnb, which was once under scrutiny over safety concerns and perceived racial discrimination by hosts. A 2015 report found booking with the room sharing site was more difficult with an African-American sounding name, leading the group to revisit their policies in 2016.