Unsurprisingly, Millennials make up the largest portion of user share. It is estimated that about 60% of all guests who have ever booked on Airbnb are of the Millennial generation. Recently, however, the demographics of hosts has been diversifying. As many as 200,000 seniors (over the age of 60) have registered their properties to be available for rent in the last year — representing a 102% increase in senior hosts since 2017 (iPropertyManagement, AirDNA, 2018). Also of note, from that 200,000, 120,000 have been women. As time passes, this trend shows that generations of senior internet users are becoming more savvy, resulting in more varied user markets.
Airbnb is often thought of as a home rental tool. While this is true, in one way or another, Airbnb also offers its users the opportunity to have unique experiences by renting unusual accommodations. Since its official launch in 2007, Airbnb has seen around 575,000 people stay in boats, 120,000 or more in castles, and 130,000 plus in treehouses (Airbnb statistics, 2017). This year, rustic locations — many of which take advantage of easy access to nature — are sharply increasing. Airbnb statistics show that nature lodges have seen the biggest increase, as bookings have shot up by over 700% this year. Ryokans (traditional Japanese inns) are second on the list with a 600% increase (Forbes, 2018).
Airbnb isn’t only benefiting travelers. Hosts have found themselves seriously profiting from listing their homes and properties on the site. Hosts, who are able to rent out two-bedroom apartments or a full house, in or around major cities, have been seeing an average expected annual profit of over $20,500 (AirDNA, 2018). Nowadays, hosts’ properties are in even better hands, as in the event of damage, accommodations are insured for up to a million dollars (Airbnb).
When some of the recent Airbnb statistics were revealed, the message was clear; they are not slowing down any time soon. In the last year alone, Airbnb has seen a 63% increase in guest arrivals. Meanwhile, the site has also seen consistent yearly growth in the United States. According to one estimate, there is a 45% increase in bookings from year to year in its home country. Since 2009, the company has experienced a 153% global compound growth rate (iPropertyManagement, 2018).
After posting revenue of 2.6 billion dollars last year, the company is projecting substantial gains, expecting revenue to reach up to 8.5 billion at the beginning of the next decade in 2020 (iPropertyManagement, 2018).
Airbnb Versus Hotels
Airbnb has quickly become the main competitor for hotel conglomerates, with their effect on the travel market being strongly felt across the world. Besides offering an authentic way of staying in a community, Airbnb is also consistently cheaper than hotels. Already hotels have seen a sharp decrease in occupancy as in 2016 the industry apparently saw its second-lowest growth rate in 20 years. This is in large part because of cost. In major markets in Europe and the United States, Airbnb is somewhere between 6% to 17% cheaper than the average daily rates for hotels in those regions (Skift, 2017).
In turn, Airbnb is creating interesting habits in how travelers spend upon arrival. In New York, Airbnb tenants stay for 6.4 nights versus 3.9 nights for hotel guests, they also spend on average $200 more at New York businesses (Airbnb). In San Francisco, Airbnb guests stay a full two nights longer and spend $1,045 versus the $840 hotel guests spend (Airbnb). And this is not unique to US markets. In Sydney, Airbnb guests spend almost $600 more than their hotel counterparts (Airbnb).
In Berlin, Airbnb sees the length of stay beat that of hotels’ by four full days (Airbnb). Overall, Airbnb stays are 2.4 times longer and their guests spend 2.3 times more than travelers in hotels (Airbnb). Much of that money, 45%, is spent in the neighborhoods where the Airbnb is located, generating income for a more diverse range of places — important considering Airbnbs are not concentrated in one place like hotels can be (Airbnb). According to HVS Global Hospitality Services, hotels lose around $450 million in direct revenue to Airbnb (HospitalityNet, 2016).
For property managers in the hotel and hospitality industry, here are 8 Ways Hotels can Learn From Airbnb and How They can Compete.
Cities on the Rise
While Airbnb has firmly established itself in many major markets, it is seeing massive growth in mid-sized cities, particularly in the Midwest. Indianapolis, Columbus, and Minneapolis have all seen growth over 190% in the last year. Indianapolis’ 256% growth made it the fourth fastest-growing Airbnb city in the world (Forbes, 2018). However, one city in particular stood out far above the rest for its increase in booking percentages. Gangneung in South Korea saw a 2175% increase (Forbes, 2018). This giant leap is thanks to the city’s proximity to the Pyeongchang Winter Olympics. If Airbnb is able to continue cornering the market for rentals around major events, this bodes extremely well for growth also.
The Experiences Market
Airbnb in the last few years has launched Experiences, a tailor-made way for tourists to venture out of their rental home and out on an excursion nearby. Currently hosted in 58 different cities, Airbnb has over 5,000 Experiences listed (Reuters, 2018). Tokyo is currently the city that has seen Experiences used most and notably, Tokyo was also the most popular city to rent an Airbnb in 2017. The company has announced that they expect Experiences to be profitable by the end of 2019 (Reuters, 2018).