Airbnb Demand Outpaces Hotel Demand In London

Colliers International head of hotels and resorts Marc Finney says Airbnb has been regarded as a disruptor in the hotel industry for years and is said to have a major impact on the performance of traditional hotels, but until now there has been no publicly available data to support these claims.  But a new report by Colliers International, Hotelschool The Hague and AirDNA lays the facts bare.

Airbnb recorded 2 million overnight stays in London throughout 2015 and has seen the Average Daily Rate rise to $142/night, compared to $220 for hotels in London. Whilst Airbnb hosts recorded a total revenue of $286M, hotels realised revenue of $8.1B in 2015.

A snapshot of January 2016 indicated that hotels saw year-on-year demand decline by 2%,  revenues dropped by 9% and occupancy sank by 5%. Meanwhile demand for Airbnb listings in London is showing staggering growth rates. Over the same period, Airbnb saw 182% growth in revenues, 126% growth in occupancy and a 206% increase in demand.

“The hotels sector is strong in London, yet there’s no doubt that the continued growth of Airbnb presents a threat,” Marc says. “An interesting finding of the report is Airbnb’s ability to perform even in the notoriously slow ‘off season.’ Our research showed that demand steadily increased throughout the year, and although we see a much faster increase in the summer months, this demand continues to increase outside of peak season. This demonstrates that Airbnb does not seem to be impacted by seasonality in the marketplace, which gives it a distinct advantage as this is not something that we are seeing as much in the hotels sector.”

Just five areas of London were responsible for over 1 million Airbnb overnight stays last year, according the report. Westminster, Tower Hamlets, Camden, Kensington & Chelsea, and Hackney are hotbeds of Airbnb activity and account for more than half of all Airbnb bookings in London. These boroughs also account for the majority of the city’s Airbnb supply at almost 4 million listings.

In the future, supply growth in Airbnbs in London is expected to be more limited than demand growth, in part driven by increased pressure from local governments and complaining neighbours for regulation and residents experiencing negativity upon offering their property on the platform.

Still, those figures paint a very healthy outlook for Airbnb hosts.