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BU Prof: Airbnb has consistent negative economic impact on hotels in US cities

20 November 2018

In looking into why Airbnb is a successful as it is, Boston University School of Hospitality Administration Assistant Professor Makarand Modi finds that Airbnb properties provide a "more fun" experience than do hotels.

Modi and his researchers looked at the economic impact of Airbnb on hotels in 10 American cities and found a "consistent negative impact" of 2% to 2.5% on occupancy, RevPAR and ADR. This equates to about $6M in lost annual revenue for Boston hotels.

Modi says that "localness" and "sense of community" - including in many cases location outside the usual tourist zones - are important dimensions of the Airbnb experience that give it an edge over hotels.

Modi and colleagues also found that community reaction toward Airbnb in towns with many properties tends to be favorable, because the service draws more visitors, which in turn creates jobs and increases sales for other local businesses.


So, an actionable item for hotels: find ways to deliver a more "local" and "communal" experience. Think about partnering with local restaurants, retailers, tours and attractions that can provide guests with more authentic, local experiences.

We can see some first steps going in this direction, like the "Local Experiences" program from Omni Hotels & Resorts for which Omni makes this pitch:

" Want to see a side of international travel the typical tourist misses? Omni Hotels & Resorts is proud to offer Local Experiences to all Platinum and Black level members of the DISCOVERY loyalty program. With Local Experiences, you can get more out of your trips and experience authentic local culture in ways many do not."

Omni's offerings include experiences like:

  • Whale watching and private charter in Carlsbad, CA
  • Gondola cruise in Dallas
  • Kayaking in San Diego
  • "Bath Ritual" or Cooking with the Chef in Bedford, PA
  • Carriage ride in San Antonio

Obviously these experiences are different from those provided by most Airbnb properties - and priced accordingly; to qualify for an Omni Black Local Experience you have to log 30 or more nights of Omni stays in a year.

But the trend is there.

Another example: In Boston, the Liberty Hotel is offering a curling experience two days a week this winter. (Tell me this didn't come about at least in part as a response to Airbnb competition.)

Airbnb poses a threat and a challenge to hoteliers, but it's making travel more fun - and cheaper - for the rest of us. With intelligent health and safety regulations and inspections to level the playing field, Airbnb and similar services could help make travel more rewarding for both travelers and suppliers.

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And if you have questions or comments, you can easily send them to me with the Quick Reply form, below, or send me an e-mail.

David Boggs    - David
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