Airbnb has released a study in which it claims to have generated GBP502m in economic activity in the UK for the year to October 2013.
The move has raised suspicions that the company could soon face restrictions in the UK, in line with those seen in other jurisdictions as calls grow for it to face greater regulation.
The study is one in a series which the group has undertaken for global cities, which have commonly been released as local legislators sought to restrict the company.
The report was conducted in conjunction with London-based economist, Dr. Margarethe Theseira, senior manager of GLA Intelligence, which provides advice and analysis to the Mayor of London and GLA Group.
The study found that 80% of Airbnb hosts in the UK rented out only their primary residences and used the money earned “to help afford the increasing costs of living”. Sixty-three per cent of hosts said that their Airbnb income helped them pay bills they would otherwise struggle to pay, with 53% using their Airbnb income to pay their energy bills, and 44% to help them afford to stay in their homes.
Airbnb guests were also found to spend more time and money in the UK than “typical” visitors, staying on average 4.6 nights, compared to 3.1 nights for typical visitors to the UK, and spending twice as much over the course of their trips.
“This study shows that Airbnb guests stay longer, spend more, and explore new neighbourhoods,” Dr. Theseira said: “This undoubtedly has a positive impact on cities and residents across the UK.”
For London specifically, Airbnb had a total economic impact in London of GBP357m, with the average visitor staying 5.4 nights in London compared to a three-night typical stay in the city. On average, Airbnb visitors spent GBP1,231 during their stay compared to an average spend of GBP474 for typical visitors. Seventy-two per cent of Airbnb properties in London are located outside of the main hotel areas.
“Airbnb is creating a door to an open world and bringing tourists to neighbourhoods they might have missed,” said Airbnb co-founder and CEO Brian Chesky. “With Airbnb, more people are earning the extra money they need to pay their bills or pursue their dreams.”
The company has undertaken a number of such studies of different cities, seeking to push home the conclusion that Airbnb has a positive impact on the local economy. As previously reported in Hotel Analyst sister publication Hotel Analyst Distribution & Technology, a study on Paris study found
that people who rented their homes on Airbnb used the income to stay afloat in difficult economic times. Additionally, the study determined that travelers who use Airbnb enjoy longer stays, spend more money in Paris, and bring income to neighborhoods not frequently visited by tourists.
The study was released in June last year, as the city’s authorities were investigating the company. In September new legal requirements were issued concerning the rental market, from which Airbnb hosts were exempt as long as they wee only renting out their primary residences during the holiday season.
Following the changes, anyone renting out finished accommodation must notify the authorities. However, Cécile Duflot, the minister for housing, said that residents who occasionally rented out their primary residences during the holidays should not be deprived of this “additional income”.
The ruling was a welcome change for Airbnb, which has seen its hosts come under attack for violating laws in New York, and come under investigation in a variety of other jurisdictions.
In New York, where the company is under pressure to hand over details of all its renters to an investigation by the Attorney General, Chesky has come up with a three-point plan to work with the Schneiderman in this highly-lucrative market; including a right for people to rent homes without worrying about the illegal hotel laws that currently limit Airbnb. If they're allowed to do so, he says in a blog: “we believe that it makes sense for our community to pay occupancy tax, with limited exemptions for those who earn under certain thresholds”.
The hotel sector had so far steered clear of comment on the group, despite the group’s CTO Nathan Blecharczyk commenting last year to The Sunday Telegraph that he expected Airbnb to overtake InterContinental Hotels Group and Hilton Worldwide next year.
At the World Economic Forum in Davos, Richard Solomons, CEO, InterContinental Hotels Group, told the Wall Street Journal that home-sharing websites such as Airbnb should be regulated if they are to grow. He added that the sites had no barrier to entry, and if they were selling themselves as major players there should be a "level playing field”.
Solomons said that Airbnb did not compete with IHG, since around 60% of IHG's volume was business travel.
Chesky held talks with a number of hotel executives in Davos and confirmed, as he has done in New York, that he was eager to work on regulations for the company and its hosts. He said: “They had frankly different views to him [Solomons], so I don’t think that’s a shared view,” he said. “One executive said, 'We’re in business-to-business sales and you’re in consumer.’ Almost all their margin is in business travel.
“He [Solomons] said we should be regulated exactly the same. I would disagree with that but I am in support of regulation. Assuming that a person is exactly like a hotel, and therefore should be regulated exactly the same, seems over-simplistic to me.”
HA Perspective: [by Katherine Doggrell] Airbnb is finding itself backed into a corner and this is in many ways a shame. The concept, for the consumer, is a very appealing one. The chance to live in another city, in another country, as a native, is one which hotels, with their home-away-from-home taglines, have been pushing for years with nothing like that level of success.
But, as hotels have started to realise that what they can offer is often even better – a stay which is nothing like home – so Airbnb is starting to realise that it cannot continue as it has done and to prevent its model collapsing around its ears, it must make some concessions.
These attempts to prove the economic benefit to hosts and their cities is the wrong way to go about it. The IRS or HM Revenue & Customs do not, as a rule, have many tears to spare for rising costs of living or the energy bills of freelancers. They care about missing out on tax.
Likewise, those who go through the effort of renting their homes out legally must provide gas safety certificates and those who operate hotels must provide illuminated exit signs. Urban planners would also point out that those who were using Airbnb to help pay the mortgage could suffer further down the line when the reduction in residential property pushes up house prices.
Airbnb is likely to look rather different – and probably much less advantageously-priced – this time next year.