Kroll Bond Rating Agency Releases PropertyBeat/Secular Trends – Hotels Are Not Taking Airbnb Lying Down

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) today released a research report –
“Hotels Are Not Taking Airbnb Lying Down.”

Airbnb, an online community marketplace for room accommodations,
continues its rapid growth and popularity with millennial travelers.
This sought-after cohort currently makes up over one-third of the
world’s hotel guests and according to the Cornell Center of Hospitality
Research could represent 50% of all travelers by 2025.

Airbnb’s Average Daily Rate (ADR) appears to be very competitive with
hotels’ rates, especially on weekends, when there is stronger
competition for leisure travelers. According to a recent STR study, the
U.S. hotel ADR on weekends has a negligible 2%-8% price premium over
Airbnb. On weekdays however, its 14%-23% reflecting more demand, higher
occupancies, and less price sensitivity from corporate travelers. As
millennials move into the corporate world and are in positions that
oversee travel accommodations, an increase in Airbnb’s corporate clients
could narrow the weekday price spread. Airbnb estimates that 10% of its
bookings are for business travel.

The lodging industry continues to respond to the growth in home rental
sites and online travel agents. With Expedia’s acquisition of HomeAway,
Orbitz, and Travelocity, merger and acquisition (M&A) activity in the
lodging sector has picked up. Hotel consolidations have been occurring
as chains look to increase scale, improve operating efficiencies, and
maintain a larger marketing budget for national campaigns. Hotel M&A
activity typically follows economic cycles. However, in our view, the
secular online threat will persist.

To view the report, please click here.

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a
Nationally Recognized Statistical Rating Organization (NRSRO). In
addition, KBRA is recognized by the National Association of Insurance
Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical:
Larry Kay,
646-731-2452
Senior Director
lkay@kbra.com
or
Eric
Thompson, 646-731-2355
Senior Managing Director
ethompson@kbra.com
or
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