WASHINGTON, D.C.—The American Hotel & Lodging Association (AH&LA) today released a new study that provides a detailed analysis of the rise in commercial activity taking place in Chicago on Airbnb, one of the most trafficked short-term rental websites. The study was conducted by John O’Neill, MAI, ISHC, Ph.D., professor of hospitality management and director of the Center for Hospitality Real Estate Strategy in the School of Hospitality Management at Penn State University, and examined activity on Airbnb between October 2014 and September 2015.
The study builds on the national analysis released earlier this year that shows a troubling trend: A growing number of commercial operators are using Airbnb to run unregulated, and often illegal, lodging businesses.
Key findings: Almost all—96 percent or $47.6 million—of Airbnb’s revenue in the Chicago metropolitan area came from the nearly 75 percent of operators who listed their unit(s) for rent for more than 30 days per year. Commercial operators who listed their unit(s) for rent over half the year (180 days) captured nearly 60 percent of Airbnb’s revenue in the Chicago metropolitan statistical area (MSA), grabbing $28.8 million. Full-time operators who listed their unit(s) for rent 360 days or more each year delivered nearly $12 million (or almost one quarter) of Airbnb’s revenue in Chicago. Operators listing more than one unit for rent drove nearly 40 percent of Airbnb’s revenue in the Chicago region: $19 million.
“Chicago, like many large metropolitan areas across the country, is seeing a significant growth in the number of Airbnb hosts that are renting out their units full-time, or operating multiple units, as unregulated, and often illegal and unlicensed, hotel businesses. The rise of these commercial hosts represents a large and growing revenue stream for short-term online rental platforms like Airbnb and a challenge for elected officials who are trying to protect communities and ensure a level playing field for businesses in Chicago,” said Marc Gordon, president and CEO of the Illinois Hotel & Lodging Association.
“Commercial landlords using short-term rental platforms such as Airbnb are operating on an un-even playing field from small businesses like my own, as they skirt rules and regulations that were put in place to protect our guests and the communities we operate in,” said Kapra Fleming, owner of the House of Two Urns bed & breakfast. “The Chicago tourism and lodging industry thrives on competition, and we believe that we serve our customers best by following the rules of the road. Commercial operators using sites like Airbnb should also follow the same basic set of rules and regulations that promote fairness, respect communities and protect consumers.”
“Unregulated hotels operated in residential properties are disruptive to communities and pose serious safety concerns for guests, for communities and for neighborhoods,” said AH&LA President and Chief Executive Officer Katherine Lugar. “We have seen again and again across the country that Airbnb is unwilling to be transparent with its data and be a partner in creating safe environments for its users and the communities in which it operates. And now we know why: a growing portion of Airbnb’s revenue comes from commercial landlords using the platform to operate unregulated and often illegal lodging businesses. Airbnb’s reluctance to be more forthcoming with their data should call into question their ‘honor system’ for how the short-term rental platform plans to remit taxes in the city and crack down on illegal hotels. Policymakers should act to ensure a fair travel marketplace by addressing illegal hotels and commercial operators in Chicago.”
Chicago is the third of 14 cities profiled in a series of reports that comprise a second phase of an analysis into the commercial activity being transacted on Airbnb’s platform. The initial analysis (“From Air Mattresses to Unregulated Business: An Analysis of the Other Side of Airbnb”) was released in January 2016. That analysis revealed a troubling trend: In the nation’s largest cities, multiple-unit operators and full-time operators generate a disproportionate share of the company’s revenue – and their numbers are growing. From October 2014 through September 2015, only 5 percent of hosts renting out three or more units drove nearly a quarter (24 percent) of Airbnb’s Chicago-area revenue: $12 million.
The full report is available for download on the AH&LA website at www.ahla.com.