Comment: The rise of Airbnb converts
I have been surprised to read so little in the business media about the impact of Dubai Tourism’s official endorsement of Airbnb in the emirate, since the MoU legally enabling Dubai residents to rent out their homes to visitors on the sharing platform was signed in May.
The cynics among us could take this to mean that the hotel industry in Dubai has responded with a certain dose of complacency. The old adage that “all competition is good competition” might well be true when it comes to keeping hoteliers on their toes and ensuring superior service is maintained, but it’s most definitely not so positive when it starts to eat into market share.
There is no denying that the addition of new room inventory to Dubai is having an impact on even the most established hotels’ share of the pie, yet supply is continuing to increase apace. Around 350 rooms entered the market at W Dubai Al Habtoor City in June and the Westin on the same complex is adding more than 1,000 rooms to the pile this month.
Occupancy might remain fairly even, and at nearly 80% in April there’s no major cause for concern — until you look at rate. Official numbers from STR revealed a 15.4% decrease in average daily rate to AED 771.74 (US $ 210.12) in April this year compared to the same period in 2015; and a 16.1% decrease year over year in RevPAR to AED 615.12 ($167.47).
June performance figures haven’t been released yet, but from the hoteliers I’ve spoken with, rate is down further still, declining at anywhere between 15 to 30%, with a 26% slump reportedly the average at one luxury operator.
A quick examination of the holiday packages being offered by the major airlines from a key market like the UK to Dubai, for example, gives a snapshot of what’s really happening.
Seven nights’ half board at a high-end five-star beach hotel in Dubai in September, including flights, cost GBP 700 (AED 3,454). It would be cheaper for me to book myself a little holiday on the beach here rather than my standard AED 4,000 ($1,089) return flight!
Joking aside, this surely shows the severity of the rate situation and it’s likely that many hotels are being forced to reduce costs in order to stand any chance of hitting budget.
To not consider the impact of Airbnb in this mix seems short-sighted to me.
On the positive side, it will attract new visitors to Dubai who will have not previously considered the destination due to their travelling preferences, for example, a desire for self-catering. It might also, however, convert traditional hotel guests even at the luxury level to try the home sharing alternative.
After all, the apartments available to rent on Airbnb are not pokey London-style flats. There’re spacious, luxurious, new, centrally located homes and looking at the prices available for accommodation in the peak period of November, they are offering fantastic value for money, even in premium places such as Downtown and Dubai Marina.
And if you’ll excuse the personal aside, I have to admit I am a recent Airbnb convert.
I tried Airbnb myself for the first time in April this year and used it to book accommodation in Paris. As someone that loves the hotel experience, and is willing to pay for the luxuries it offers, I spent hours labouring over my decision.
However, at the end of the day, I couldn’t ignore the value of a one-bedroom central Champs-Élysées apartment via an Airbnb host compared to a four-star, small hotel room a matter of metres away. I signed up and my experience was excellent, with what I can only describe as a level of personal concierge service from my host — who offered advice on restaurants and city travel, and direct contact via WhatsApp — that would put some hoteliers to shame.
If you haven’t looked at what’s available in Dubai on Airbnb by now, and added it to your competitive analysis, it could be time to factor it in.
About the Author:
Louise Oakley is a freelance hotel, food and travel writer and PR professional based in Dubai, and a contributing editor to Hotelier Middle East. Contact: louise.oakley@os.itp.com