ALIS conference members do not see Airbnb as providing new supply, but rather as a new platform for existing rental units. However, for existing supply, Airbnb's ADR appears to be very competitive especially on weekends, when there is stronger competition for leisure travelers. According to the Smith Travel study, US hotel ADR on weekends has a negligible 2% to 8% price premium over Airbnb. On weekdays, however, the premium is 14% to 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. Some of this increased business activity is already occurring with last year's announcement that American Express Global Business Travel will integrate Airbnb into its platforms. As a result, its employees and travel managers are able to book stays with Airbnb, where 10% of its current bookings are for business travel.

Millennial travelers have gravitated towards Airbnb for nontraditional lodging experiences at affordable prices. This cohort currently makes up more than one-third of the world's hotel guests. According to the Cornell Center of Hospitality Research, millennials could represent 50% of all travelers by 2025.

Although Airbnb currently has a small market share, its continued growth particularly among millennials has been met with a full frontal attack by the lodging industry. Hotel companies are attempting to appeal to millennials with technology, high-end amenities and local designs/neighborhood themes.

Specific brands have also been introduced to attract the millennial generation as well. Marriott has been expanding its Moxy brand, which has a more contemporary design, but smaller room sizes competitively priced to Airbnb's. Hilton introduced Tru, a brand that is more technology focused than other hotels in the mid-price segment. Tru also caters to younger travelers with public spaces that typically include a large flatscreen and activities such as table tennis and foosball tables.

Nonetheless, the lodging industry continues to respond to the growth in home rental sites and consolidations. With Expedia's acquisition of HomeAway, Orbitz and Travelocity, merger and acquisition activity in the lodging sector has picked up. However, the secular online threat of peer-to-peer accommodations will persist, according to Kroll Bond Rating Agency.

SAN FRANCISCO—Airbnb has an online hospitality platform of roughly 3 million global rental unit listings. According to a recent Smith Travel Research study, this figure is more than the number of listings for the next three largest traditional hotel companies combined. The study indicated that Airbnb had a fairly small market share across 13 global markets, with less than 4% of total demand and 3% of revenues.

Smith Travel also reports that one-half of the rooms listed on Airbnb are sold for seven days or more. This challenges the conventional wisdom that Airbnb typically competes for the short-term or daily traveler. Based on this analysis, it may compete more directly with extended-stay properties, according to Kroll Bond Rating Agency.

According to a recent Americas Lodging Investment Summit conference, hotel operators are not overly concerned about competition from Airbnb, reflecting the industry's all-time high occupancy rates and RevPAR growth. However, although the industry has achieved strong growth, performance has varied by market.

“San Francisco/Oakland/Hayward was the third largest market for Airbnb listings with the highest average daily rate for both hotels and Airbnb. The ADR premium was 12.1% for hotel ADR compared to Airbnb ADR. Late last year, San Francisco limited Airbnb rentals to 60 days per year,” Larry Kay, senior director, Kroll Bond Rating Agency, tells GlobeSt.com. “Short-term rentals also have been impacted in certain markets such as Miami and New York City.”

ALIS conference members do not see Airbnb as providing new supply, but rather as a new platform for existing rental units. However, for existing supply, Airbnb's ADR appears to be very competitive especially on weekends, when there is stronger competition for leisure travelers. According to the Smith Travel study, US hotel ADR on weekends has a negligible 2% to 8% price premium over Airbnb. On weekdays, however, the premium is 14% to 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. Some of this increased business activity is already occurring with last year's announcement that American Express Global Business Travel will integrate Airbnb into its platforms. As a result, its employees and travel managers are able to book stays with Airbnb, where 10% of its current bookings are for business travel.

Millennial travelers have gravitated towards Airbnb for nontraditional lodging experiences at affordable prices. This cohort currently makes up more than one-third of the world's hotel guests. According to the Cornell Center of Hospitality Research, millennials could represent 50% of all travelers by 2025.

Although Airbnb currently has a small market share, its continued growth particularly among millennials has been met with a full frontal attack by the lodging industry. Hotel companies are attempting to appeal to millennials with technology, high-end amenities and local designs/neighborhood themes.

Specific brands have also been introduced to attract the millennial generation as well. Marriott has been expanding its Moxy brand, which has a more contemporary design, but smaller room sizes competitively priced to Airbnb's. Hilton introduced Tru, a brand that is more technology focused than other hotels in the mid-price segment. Tru also caters to younger travelers with public spaces that typically include a large flatscreen and activities such as table tennis and foosball tables.

Nonetheless, the lodging industry continues to respond to the growth in home rental sites and consolidations. With Expedia's acquisition of HomeAway, Orbitz and Travelocity, merger and acquisition activity in the lodging sector has picked up. However, the secular online threat of peer-to-peer accommodations will persist, according to Kroll Bond Rating Agency.