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How Airbnb Is Really Impacting the Hotel Industry

MIAMI—What kind of impact is Airbnb really making on the commercial real estate industry? Jeffrey Margolis of Berger Singerman thinks it's a big one.

By Jennifer LeClaire | jenniferleclaire | | Updated on February 18, 2016
Jeffrey Margolis Jeffrey Margolis
MIAMI—What kind of impact is Airbnb really making on the commercial real estate industry? J effrey Margolis , partner with Berger Singerman and co-manager of the firm’s Business, Finance & Tax team, thinks it’s a big one. Airbnb was founded in 2008 and has evolved into a trusted brand in the accommodations booking industry. Through Airbnb, you can book m ultifamily units, castles, villas and other unique properties for a night, a week or a month in 190 countries. “Airbnb is already having an effect on the hospitality industry,” Margolis tells GlobeSt.com. “Despite initial dismissal by traditional providers, Airbnb is now valued in the billions, more than most well-established hotel brands.” Although the effect is likely being felt more by lower-priced hotels and hotels that do not cater to the business traveler, he says, Airbnb is starting to have an effect on higher end hotels with more luxury properties being listed through Airbnb. And with companies trying to lower costs, he says, business travelers may start to use Airbnb more. “Airbnb has grabbed market share and has forced traditional providers to lower prices,” Margolis says. “The effect on the h otel industry has been and will continue to be lower occupancy rates, decreased hotel room prices, and a decrease in hotel room revenue.” In fact, he points to one study by Boston University indicating a 10% increase in Airbnb supply results in a .35% decrease in hotel room revenue. That translates into a 13% impact on revenue in markets where Airbnb supply is the greatest. Marolis’ conclusion: “Although awareness of vacation rentals by US consumers is lower than in other parts of the world, as awareness  among US consumers increases, then the effects on the traditional providers will be more substantial.”

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