Analysis: is Airbnb a threat to hotels?

Photo of Forbes article about Airbnb co-founder Brian Chesky. [Shutterstock]

When Airbnb first burst onto the tourism scene in 2008, offering people the chance to find cheaper-than-hotel accommodation in a number of cities, the millennials snapped it up. The firm reportedly has its fingers in the pies of more than 35,000 cities and 192 countries across the world — it’s growing, and how. Airbnb is expected to post revenues of US $900 million in 2015, and the company is valued at more than $25 billion — which is more than the market value of many hotel chains.

In the Middle East, luxury accommodation is very much the norm — even though mid-market is rearing its head —and the lure of paying less for rooms is attractive for tourists. Although, it could be argued that Airbnb is more a competitor of hotel apartments rather than hotels. However, France’s hoteliers didn’t think so. They raised objections to Airbnb, and in December 2015, Airbnb’s deal with Voyages-SNCF.com, a unit of France’s national rail monopoly, was cancelled amidst pressure from hospitality trade unions.

The Hotel Association of New York City (HANYC) also conducted a year-to-date study from September 2014 for 12 months, which revealed that the service had a direct negative impact to the hotel industry of New York City —US $451 million worth. However, Airbnb has carried out its own studies in the past to show that it is not harming, rather it is helping the economies of cities it has offerings in.

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However, in the UAE for example, subletting without the consent of the landlord as well as a licence to operate what is considered a “holiday home” is illegal.

At the time the holiday homes law was introduced, Khaled Bin Touq, executive director, licensing & classification sector at Dubai Tourism, commented: “We have made great progress in setting up regulations for holiday homes. These are designed to benefit both home owners and guests, by ensuring the holiday homes market is aligned with the rest of Dubai’s tourism industry and maintains the high standards for which the emirate is known.”

While regulations are slowly being implemented in the UAE, Airbnb has expanded further across the African continent and is showing its interest in the MEA region. From July 2014-July 2015, Airbnb has more than doubled in size in Africa. In that time, the number of people staying in Airbnb listings in the region has increased by 145%, with the number of Africans using Airbnb to travel has increased by 139%.

To help spur additional growth, Airbnb has also appointed Nicola D’Elia as general manager for Middle East & Africa.

However, the Middle East is not feeling the pressure. Hoteliers in Dubai have shared their support of Airbnb’s presence in the region, provided accommodation offerings are placed under the same regulations as hotels.