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Tuesday, 14 January 2020

Hotel Industry Looks to Emulate Airbnb Model

The home-sharing company thrived last decade, blurring the lines between hotels and Airbnb.

Commercial Real Estate Direct Staff Report

Home-sharing company Airbnb Inc., which was founded 11 years ago by three guys with an extra air mattress in San Francisco, has been actively growing its foothold in the hotel industry.

The company, which is expected to go public this year, counts more than 150 million users globally and more than six million room listings, making it one of the top hospitality providers in the world, rivaling industry giants such as Hilton Worldwide Holdings Inc. and Marriott International.

Airbnb has been making inroads into the hotel market, while the industry has recovered handsomely from the aftermath of the 2008 recession. The industry has been posting record-performance numbers since 2012, with occupancy, average daily rate and revenue per available room increasing every quarter through the fall of 2019. The cycle is finally starting to wind down as supply projections start to outweigh demand. Airbnb is hardly blamed by industry experts for the forecast. While the company has undoubtedly affected the hotel market, its exact impact can be difficult to pinpoint.

"It's really hard to quantify what Airbnb has done to the industry," said Luigi Major, managing director and partner at the Los Angeles office of brokerage firm HVS. "It's hard to track the numbers and quantify units in the market on an annual basis because the supply can be added or removed at any time by owners.

Meanwhile, he added, "Hotels have to stay open all the time, so it's easier to quantify changes in the hotel space."

Major said that it's clear that Airbnb and lesser known rivals such as Expedia's HomeAway platform have tapped into a previously underserved market. The affordability of a spare room attracts a segment of people who otherwise might skip a vacation because they couldn't find a cheaper place to stay.

"They have opened up the travel industry to demand that was unsatisfied in the past," he said. "It has provided a unique product throughout the world."

In 2007, a tech conference in San Francisco inspired Joe Gebbia and Brian Chesky to rent some space in their apartment to out-of-towners. They offered guests an inflatable mattress and meal—airbed and breakfast, hence Airbnb - for $80 a night. They partnered with Nathan Blecharczyk to transform the quick cash grab into a fledgling web platform that launched in 2008. Airbnb got its first seed investment in 2009 - 600,000 from Sequoia Capital, and by 2011 it had reached one million nights booked in 89 countries. As the company gained ground, the hotel industry was on the cusp of a major recovery.

The hotel industry was reeling in 2009 from the recession, with overall gross revenue declining $13.4 billion to $127.2 billion, according to STR, a...





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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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