NEW YORK—Supply-demand imbalance from over-building in the hotel sector poses a greater threat to U.S. traditional lodging sector fundamentals for hotels backing commercial mortgage-backed securities (CMBS) than peer-to-peer home renting platforms such as Airbnb, even as the latter continue to grow, says Moody’s Investors Service.
“Airbnb has had a remarkable growth trajectory,” says Vice President and Senior Analyst Jay Rosen.”But the company competes for leisure guests mainly with lower-priced hotels that are unaffiliated with major hotel brands. Airbnb is less competitive for business travelers than higher priced, traditional brand name hotels. Given the construction that is currently planned or underway in the hotel sector, excess supply is the more likely near-term threat to traditional lodging-backed CMBS loans than is Airbnb.”
Price remains the key determinant for the majority of travelers who book accommodation through Airbnb, and most Airbnb guests are leisure travelers, Rosen says in “Airbnb Growth Poses Minimal Threat to Traditional Lodging Sector.” This makes the company less competitive with higher priced, traditional hotels, particularly those that offer conference facilities and amenities such as spas, room service, in-hotel dining and other services that appeal to corporate users. Airbnb stays also tend to be longer, so may be more affordable than traditional hotels for those traveling solely for pleasure.
Increased governmental scrutiny, regulations, and taxation that aim to protect affordable housing and other interests are also potential obstacles to the company’s growth. Nevertheless, Moody’s expects Airbnb and other peer-to-peer accommodation options to remain a viable alternative to lower-priced hotels, and to continue to grow. That growth, however, will likely be less determinate of higher-priced and branded hotel performance than supply-demand imbalances and larger, macroeconomic factors.
