From July 2017 to July 2018, there were more than 223,000 active UK listings on Airbnb’s website, with 8.4 million guests using Airbnb accommodation in Britain. That’s a lot of listings, so it’s certainly not surprising that, since its launch in 2008, Airbnb has brought significant disruption to the hotel industry.
Short-term stay Airbnb accommodation listings are available in 191 countries around the world, with a total of around 4 million worldwide listings, higher than the leading five major hotel brands combined.
In 2017, Airbnb saw an 80 percent jump in visitors to Britain, as travellers arrived in the UK in their droves, keen to exploit the weaker pound. In this article, I want to look at how Airbnb is shaking up the Bristol hotel industry, as well as that of the wider UK.
Airbnb’s Impact on the Hospitality Industry
The rise in popularity of Airbnb was always going to cause disruption to the established hotel industry, in much the same way that Uber was always going to upset traditional cab companies. This disruption can be understood as part of a wider move towards disruptive technologies, online community marketplaces and pier to pier networks and reviews.
The desire for homeowners to earn an income sharing their home, a formerly underutilised asset, with others was always there but it’s taken Airbnb’s platform to release it. Where social media has made everybody a commentator, Airbnb has made everybody a would-be hotelier.
With guests increasingly opting to stay in Airbnb accommodation, competition between traditional hotels and Airbnb is intensifying and spilling over into dispute.
In a paper titled ‘The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb’, authors Chiara Farronato and Andrey Fradkin note how Airbnb has created a greater need for quality listings within the hospitality sector.
“Consumers don’t always pay a lower price. What changes is the quality of the listings. You might find a Fifth Avenue apartment or a place by the beach at a more reasonable price than you would if Airbnb wasn’t an option. Or a listing might have additional amenities, like a kitchen. And if you still prefer a hotel room, competition from Airbnb means you’ll pay a lower price for it,” says Farronato.
This point about kitchens is an interesting one. The Airbnb experience is a self catering one and that’s something that is about a lifestyle choice. Whilst many people won’t complain about room service and hotel breakfasts, they may not want to pay for the privilege. Others might just prefer a more self-sustained self catering model.
Perhaps most of all though, the idea of staying in a genuine flat or room can be seen as part of a wider trend in the tourism industry towards authenticity and ‘off the beaten track’ experiences. It’s very hard for traditional hotels to fight this.
How Bristol Has Been Affected by the Rise of Airbnb
Hoteliers in Bristol have been proactive in their grievances of short-term letting companies like Airbnb, where there are around 2,000 properties registered on the room booking platform. The Bristol Hoteliers Association (BHA), which promotes the interests of hoteliers in and around Bristol, is calling for the city’s leaders to look urgently into the rise of rooms being offered through Airbnb, which they say is damaging their trade.
Former BHA’s chairman, Imran Ali, has said that rooms are being made available on “an uneven playing field” and wants leaders in Bristol to consider strategies that will help lessen the impact Airbnb is having on the hospitality sector in Britain.
Imran Ali also called for Airbnb rooms to be forced to comply with health and safety standards and for exclusion zones to be introduced based on Bristol’s ward boundaries.
“Why should hotels and B&B owners have to pay business rates, VAT and comply with rigorous health and safety checks, fire assessments, PAT testing, visits from environmental department and undergo food hygiene tests while those offering their property or rooms on Airbnb don’t have to do any of these things,” Imran Ali commented.
These comments are understandable and in many ways are the result of Airbnb taking advantage of a lack of regulation around these types of listings. As with so many disruptive technologies, which establish themselves as major players in established sectors around the world in a matter of a few years, regulation is clunky and very slow to catch up. This doesn’t make the technology itself bad, but it does highlight a disconnect between national and local lawmakers the reality on the ground.
Can Airbnb and Hotels Coexist?
Antipathy towards Airbnb in hospitality might be rife but it is of course possible for these two types of accommodation to co-exist.
Traditional hotels and Airbnb offer two intrinsically different types of accommodation and therefore experience. Playing to their strengths is the job of hotels, as much as it is Airbnb hosts, but there is often a need for regulation in order to create a more even playing field.
As hospitality consultant Leigh Silkunas notes: “I believe that there is a way for hotels and rentals to coexist. The traveller profile can vary greatly between a guest who favours hotels and one that favours a rental. Neither guest is a superior demographic, and some guests can fluidly go between the two archetypes depending on the purpose of stay.”
In this sense, it could be argued that both models of accommodation are the product of an increasingly diverse and varied marketplace with many different needs and requirements of accommodation suppliers.
The Need for Airbnb Regulation?
However, for Airbnb and traditional hotels to coexist in greater harmony, Airbnb needs to be regulated so it’s more on-par with the strict regulations and standards traditional hotels are subjected to. This isn’t necessarily just about protecting an established and often incredibly lucrative industry, but also to protect consumers and local communities as well. Indeed, it’s ultimately these two latter groups that need to come first when drawing up new regulation.
For cities like Bristol looking to adopt a far tougher approach to Airbnb regulation, one model could be Berlin, which in 2016 implemented some of the world’s strictest laws for holiday rentals, covering Airbnb listings. Berlin’s 2016 laws prohibit home sharing except for homeowners who received one of a small number of permits from the government. Huge fines were also instated for short-term hosts violating the law.
However, despite Berlin’s best efforts to crack down on short-term holiday rentals, the market has continued to expand, and the city has started to loosen the legislation, highlighting the difficulty and complexity around implementing such regulation. Ultimately though, this is a good example of local authorities taking action to try and protect both hoteliers and local communities, without strangling Airbnb out of the market entirely.
Management Advice for Airbnb Owners
For Airbnb owners and hotels to operate concurrently without ‘stepping on each other’s toes’, there are certain aspects short-term holiday rental owners should be aware of and adhere to. For example, Airbnb hosts should make sure they understand what’s required of them and check the legality of their listing with both local authorities and their mortgage lender.
Airbnb owners should also be mindful of the tax implications of their business venture and if they earn more than the £7,500 tax-free allowance for letting out a room in their house, they will need to file a tax return with HMRC.
Airbnb is undeniably disrupting the hospitality industry in a big way. Hoteliers in tourist-heavy cities like Bristol may be feeling the pinch of the Airbnb shake up, however demand for such intrinsically different accommodation models isn’t going away so traditional hotels and Airbnb need to find new and perhaps innovative ways to coexist. I believe it’s possible, but we’re not quite there yet.
About the Author
Adam Kershaw is the owner and managing director at Airbristol, a short term lets management company, as well as Hopewell Properties.