Manila, 12 March 2019 - In a recent report, Colliers International’s Valuation and Advisory Services (CIVAS) unit assessed the impact of Airbnb on hotels. Colliers notes that the impact can and will vary from destination to destination. A good analogy will be with how ride-sharing firms have fared. Evidence suggests that in ‘imperfect’ markets that are usually union or driver led, alternatives that are more consumer friendly are quickly seized upon. In Manila, hotels remain the preferred accommodation of business travelers especially in key business hubs such as Makati CBD, Ortigas Center, and Fort Bonifacio while the Airbnb market competes head on with the two- and three-star hotel segment in capturing the millennial and ‘staycation’ market. Colliers believes that the conversion of a number of condominium units in Metro Manila into Airbnb units has partly contributed to sustained residential take up over the past three years. 

The key reason for the discrepancy for the magnitude of impact between mature markets and emerging markets is the price difference between hotel rooms and Airbnb rooms. In key mature markets such as Seoul, Tokyo and Melbourne, Airbnb listings are approximately 49% cheaper than the average daily hotel rates. For example, in Tokyo, Japan, a night’s stay at a hotel will set one back an average of US$220 per night while a comparable Airbnb room will cost less than half of that at about US$93 per night. This translates to significant savings of US$127.  

Colliers International notes that the savings for an emerging market like Bangkok pales in comparison with only US$15 per night as hotel room rates are only marginally higher. Thus, tourists are still likely to stick to traditional hotel options due to the amenities, safety, convenience as well as reputation that hotels bring about. 

Airbnb defined
Airbnb is an online community marketplace that bridges people looking to rent out their homes with people seeking accommodation. Airbnb started off in 2008 primarily as a couch-surfing site for people to make some extra cash renting out a spare room and over the years, it has transformed and grown its appeal from budget-minded tourists to savvy business travellers. According to Airbnb, it currently has over 5,000,000 listings for lodging available across 81,000 cities in 191 countries. 

How can hotels be more competitive?
Colliers International points out that while it would be almost impossible for majority of hotel chains to rival the affordability and personalised experience by Airbnb, hotels do have certain advantages over a typical Airbnb listing. 

One aspect that hotels have an edge over is in terms of amenities. Hotels have a wide range of amenities such as restaurants, bars, spas, gyms and function rooms onsite. The ease of access to such amenities would be what certain travellers are looking for. Another major advantage that hotels have is the structured services it provides. Guests can walk into a hotel knowing exactly what is being offered due to the standardised service provided. Hotel staff are on duty round the clock to tend to their needs and requests. Getting a fresh towel or a change of sheets in the middle of the night would not be an issue. This convenience ensures a comfortable and luxurious experience every single time. In contrast, as Colliers International points out, the Airbnb accommodation quality is highly reliant on each individual host. 

Friend or foe, like online travel agents, Airbnb is here to stay. The advantage is knowing that its formula will only be successful in markets that are either mature or imperfect.

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