Airbnb’ planned float won’t have a significant impact on UK’s hotel sector
Richard Talbot-Williams, Alternative Markets expert at BNP Paribas Real Estate comments
Airbnb announced last month, in the briefest of releases, that the company will be going public in 2020 either via IPO or a direct listing. Whichever route it decides towards a $30bn-$40bn float we believe the further impact on the UK hotels sector will not be significant.
Airbnb has certainly been a disruptor to the hotel sector; its growth since 2008 has already led to a shift in the wider accommodation market. Competition from Airbnb has encouraged ‘defensive’ expansion from the budget hotels sector, in particular.
In addition, it is increasingly apparent that business travellers, who accounted for 16.3 million trips and 39 million bed nights in 2018, according to Visit Britain, still find hotels preferable to Airbnb, particularly the new breed of city centre ‘affordable’ lifestyle hotels. Whilst on the supply side of the equation there are suggestions that the home booking market is finite and Airbnb may be close to saturation point.
A recent industry study looking at the performance of hotels and Airbnb across 13 global markets, reported that hotels performance was holding up despite strong growth from Airbnb in those local markets.
Looking to the future, likely tightening in letting regulations, the setting of rental caps in some major markets and a failure of property management companies to achieve required scale may continue to hinder Airbnb growth.
There are reports that Airbnb will start to move into hotel operation having opened its first hotel in New York and having made a minor investment in Oyo, the giant budget focused Indian owned hotelier. However, we remain unconcerned that Oyo will impact business travellers decisions in the UK.
Our belief is that Airbnb will continue to grow and succeed as a company but the majority of this future success will originate from an expansion of the services it offers to consumers rather than a significant increase in its share of the accommodation market. It will be targeting professionals directly with initiatives such as Urbandoor (for longer stays) and indirectly with Airbnb for Work (helping corporates to manage business travel) but in the context of the brand dominated business friendly UK hotel environment we are doubtful that its future impact will be more detrimental than it has been to date.
