More than half of all Airbnb trade is concentrated in just five areas of London

10 November, 2016
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Colliers International, Hotelschool The Hague and AirDNA team up to analyse the impact of Airbnb on London’s busy hotel sector

Just five areas of London were responsible for over one million Airbnb overnight stays last year, according to a joint report by Colliers International, Hotelschool The Hague and AirDNA. In “Airbnb - Impact and Outlook for London” the report identifies the boroughs of Westminster, Tower Hamlets, Camden, Kensington & Chelsea and Hackney as hotbeds of Airbnb activity and account for more than half of all Airbnb bookings in London. These boroughs also account for the majority of the city’s Airbnb supply at almost four million listings.

“The popularity of London as a travel destination continues to grow, with overnight stays and visitation numbers in the city on the up,” said Marc Finney, Head of Hotels & Resorts Consulting at Colliers International. “Airbnb has been regarded as a ‘disrupter’ in the hotel industry for a number of years now and is said to have a major impact on the performance of traditional hotels, but until now there has been no publically available data to support these claims.”

The report analyses Airbnb activity in London and considers how the accommodation rental website is performing across the city. The report shows that in total, Airbnb recorded two million overnight stays in London throughout 2015 and has seen the Average Daily Rate (ADR) rise to $142 per night, compared to $220 for hotels in London. Whilst Airbnb hosts’ recorded a total revenue of $286 million, hotels realised a total revenue of $8.1 billion in 2015.

A snapshot of January 2016 indicated that hotels saw year-on-year declines of -2 per cent in demand, -9 per cent in revenues and -5 per cent in occupancy. Meanwhile demand for Airbnb’s in London is showing staggering growth rates. Over the same period, Airbnb saw 182 per cent growth in revenues, 126 per cent growth in occupancy and a 206 per cent increase in demand. In the future, supply growth in Airbnb’s in London is expected to be more limited than demand growth, in part driven by increased pressure from local governments and complaining neighbours for regulation and residents experiencing negativity upon offering their property on the platform.

Dirk Bakker, Head of EMEA Hotels for Colliers International said: “Due to the current oversupply of Airbnb accommodation in London and the increasing demand figures, a healthier balance in demand and supply is expected in the future. This will lead to higher ADR levels and revenues, which overall paints a very positive outlook for Airbnb hosts.”

Finney adds: “The hotels sector is strong in London, yet there’s no doubt that the continued growth of Airbnb presents a threat. An interesting finding of the report is Airbnb’s ability to perform even in the notoriously slow ‘off season’. Our research showed that demand steadily increased throughout the year, and although we see a much faster increase in the summer months, this demand continues to increase outside of peak season. This demonstrates that Airbnb does not seem to be impacted by seasonality in the market place, which gives it a distinct advantage as this is not something that we are seeing as much in the hotels sector.”

Jeroen Oskam at Hotelschool The Hague underscores the threat posed by Airbnb by explaining the impact of hosts with more than one listing, known as ‘multi-listers’: “Multi-listers account for more than half of all Airbnb listings in London. When you consider the characteristics of these units and their spatial distribution, it is clear that these rentals are primarily a commercial activity; the uncontrolled expansion of which is not only harmful to the hotel market, but also to city neighbourhoods and the housing market.”

About the author

Research Centre

In 2010 Hotelschool The Hague has founded a university-wide Research Centre. This centre encourages interdisciplinary research with a strong practice-oriented focus, and (inter)national collaborative dimensions. The Research Centre of the hotel school is anticipated to become a major driver of the integration of programmed research, innovations in industry practice, and the educational programme.

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