How big a threat is home-stay travel to the hotel industry?

With the near-omnipotence of Airbnb, it may seem that threats to the traditional hotel is a pretty new thing. However, alternatives to hotels have been around for a long time: for example, aparthotels have existed since the 1970s, and B&B’s a great deal longer.

Even so, Airbnb’s growth has been meteoric by any standards. In the summer of 2010 around 47'000 people stayed with an Airbnb host. In the summer of 2015 the figure was almost 17 million. Its valuation according to investors exceeeds that of the major hotel companies.

Also, its number of rooms exceeds theirs. At the start of 2014 it offered 300'000 rooms, and at the end it was one million. That’s especially impressive when compared with the Marriot, Hilton and InterContinental chains all having around 700'000 rooms each.

Undoubtedly, the growth of Airbnb and similar websites like holidaylettings.com and homestay.com unsettled the hotel sector, not only at their rapid insurgence into the market, but also their ability to avoid such strict regulations (such as those concerning fire and safety, disability access and public liability) and taxes that the hotel sector was obliged to adhere to.

The hotel sector wondered why consumers would choose to stay at a strangers’ home that could be of very variable quality rather than an hotel that can offer facilities like a bar, spa, concierge and restaurant.

The Four Seasons chain, for example, believes that their customers expect a level of service that is different, more sophisticated, detailed, and skillful than homestay accommodation can provide, while IHG says they’re trusted because of high levels of regulation applicable to hotels.

Recently the Hotel Association commissioned a report by HVS Consulting and Valuation on the financial impact of Airbnb on the hotel industry. The report focused upon New York City, and estimated that hotels lose approximately $450m (446m CHF) in direct revenues to Airbnb each year. By 2018, HVS Consulting estimates that Airbnb room nights will reach 5 million annually, which will affect the demand for traditional hotel rooms even more.

Many rooms are only available for some of the year

However, hotels have much to be confident about. Airbnb doesn’t own the rooms it sells, many are only available for some of the year, and it still takes many less bookings than the major hotel chains.

And despite Airbnb seeing a great increase in bookings in recent years, the share of the market by hotels is growing heathily too, in Europe alone up €8 billion (8.75 bn CHF) to €88 billion (96 bn CHF) in 2015.

Not only that, but nearly three-quarters of travellers did not consider a rental option last year. And global GDP rising by approximately 3.6% per year in the last decade has produced a greater availability of disposable income and middle-class growth - especially in emerging markets, such as Turkey, Malaysia, China and Peru - meaning more people travelling.

A new study by CBRE Hotels' Americas Research found that US travellers spent $2.4 billion on Airbnb from October 2014 to September 2015, just 1.7% of the $141 billion generated by hotels.

The homestay sector has been ruffled by regulations around the world restricting homeowners from renting out their homes on the short term. In London, for example, since the 1970s homeowners have not legally been able to let their homes for less than three months per year unless they have obtained planning permission, although this regulation was relaxed in March 2015.

A report by New York’s state attorney general found that 75% of Airbnb rentals over four years in the city were illegal. Rules state that a New York City resident renting out their home for under 30 days when they are not present (ie renting out their whole apartment rather than a room in one) is illegal. This led to Airbnb removing 1000 NY listings in November last year.

Santa Monica fought back at rises in house prices and dwindling housing supply by slapping regulations on short-term rentals in June 2015. It required that anyone listing their property on sites like Airbnb to live there during the renter’s stay, collect a 14% occupancy tax and register for a business licence.

Last year Paris cracked down on apartments set up for short-term rentals and issued a flurry of hefty fines, unwilling to let entire neighborhoods or buildings be transformed into tourist homes. Berlin has beefed up its laws to combat short-term rentals, while authorities in Barcelona fined Airbnb €24,000 for breaches of local laws.

The homestay sector has been accused in some cities of contributing to the lack of affordable housing, and some buildings have so many homestay apartments, longterm residents have been incensed by the huge disruption caused, whether noise or other nuisances.

The homestay sector has also been dented by a succession of horror stories in the media about vandalised appartments and fraudulent bookings.

With all these changes in Airbnb’s fortunes in recent months, perhaps hoteliers have less to worry about after all.