Remember When Airbnb Was Supposed To Kill The Hotel Business?
From 2013-2015, the financial media wrote countless obituaries projecting the impending death of the hotel business at the hands of the sharing economy’s newest darling: Airbnb.
At the time, Airbnb was raising capital at valuations that exceeded the market capitalization of the entire hotel REIT industry. We questioned Airbnb’s actual appeal to the mass market.
Entering 2016, the consensus opinion on hotel REITs was overwhelmingly negative on fears of oversupply, weakening demand, and this severe threat from Airbnb.
Over the last 52 weeks, hotel REITs have outperformed the REIT index by 20%. Q1 2017 was the best year on record for the industry and Q2 looks stronger.
Using Google Trends data, we see that the growth of Airbnb is already decelerating. Regulation has caught up with the “illegal hotel” model of the commercial use of short-term Airbnb rentals.