A first in 2018: American consumers spent more on Airbnb than on Hilton
Airbnb, today’s leading home-sharing solution, is continuing to hit profits of traditional hospitality players
Airbnb now owns roughly 20% of the entire U.S. consumer lodging market and shows no signs of slowing its growth.
For many years, hotel companies have seen Airbnb as somewhat of a distant threat, with some companies taking it more seriously than others. Recent data, however, shows that those hotel companies now have cause to take note.
In fact, last year consumers in the United States spent more money on Airbnb than on Hilton and its subsidiary brands like DoubleTree and Embassy Suites. These details were revealed by Second Measure, a company specialised in analysing billions of dollars in anonymized debit and credit card purchases.
American consumer spending on Airbnb, their information shows, has even started to catch up to Marriott, the world’s largest hotel company. This is despite Marriott’s acquisition of Starwood Hotels in 2016 and the resulting increase in total revenue.
Where is Airbnb’s growth coming from?
The data shows roughly 30% growth in US consumer spending on Airbnb in 2018, which is expected to go public next year and is currently valued at about $38 billion.
Much of that growth, according to Second Measure, is coming from travelers who live in the central US.
Currently, about a third of Airbnb’s US customers are from populous coastal states like California, New York, and Florida. That is a departure from 2012 when people from those states still made up half its customers.
What makes this even more relevant to hoteliers, however, is that Airbnb—which has long stuck to being a way for people to rent out space in their homes—is branching out and now targets traditional hotel spaces.
Earlier this month, Airbnb acquired the last-minute hotel booking site HotelTonight, bringing it even deeper into the mainstream hotel market.
This means that hotels and Airbnb are increasingly competing for the same customers. 12% of major hotel groups’ customers also booked with Airbnb last year, up from 1% in 2013, according to Second Measure.
Out of all US consumer lodging spending last year, Airbnb made up nearly 20%, according to Second Measure’s data. HomeAway, its home-sharing competitor owned by the travel booking site Expedia, brought in 11%.
This is impressive considering the US hotel industry brings in more than $200 billion in revenue a year.
Note that Airbnb only considers as revenue the fees it gets from renters and travelers, not the gross bookings — what consumers spend — which is included in the Second Measure data.
This makes it a different revenue model from hotels, which take in all the gross bookings but also have much higher expenses like building and running the hotels.
Seeing these numbers in context
There is some context, however, that is key to this discussion.
Airbnb’s revenue in this data includes the total amount consumers spend on its lodgings and its “experiences,” while hotel data includes room rates as well as food, beverages and incidentals.
In short, everything listed on the consumer’s credit card bill under Airbnb or a hotel would be included.
Second Measure’s data is for personal US credit cards, so people traveling from abroad or using corporate accounts are not included.
Hotels tend to be more popular among business travelers — and business travelers tend to be more lucrative than leisure guests — so including them would move the data in the hotels’ favour.
Let’s take a look at a few other projects currently underway related to residences:
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