Airbnb has quickly grown from a novel idea to rent air mattresses to strangers for a night to a major player in the lodging and travel industry, and the growth has caught the attention of numerous parties.
Cities Take Note
While alternative lodging companies, such as Airbnb, initially benefited from a lack of significant regulation, this portion of the industry faces several major pushes by state and local governments to expand existing lodging regulations or create new ones aimed at closing these regulatory gaps. Critics of the industry contend that operators frequently avoid required taxes and registrations, and that common industry practices worsen housing shortages – largely as a result of investment groups and real estate brokers renting a large number of apartments for the purpose of homesharing.
Alternative lodging providers continue to face new laws and regulations that effectively discourage homesharing, such as limits on the type and number of residences that can be rented and for what duration, as well as property owner identity disclosure. In many places, homesharing operations are considered illegal short-term rentals, and the rules are strictly enforced. Despite the negative attention and regulatory resistance, the market has attracted players from the predominant hotel lodging sector to enter the alternative lodging arena.
Hotels Share the Wealth
A number of hotel companies have attempted to enter the alternative lodging market with varied results. In April, Marriott International announced its new home rental operation – Homes & Villas by Marriott International. The division will rent homes through partnerships with a range of property management companies, including TurnKey Vacation Rentals. The commitment to the alternative lodging segment by a major hotel company is a strong indicator that homesharing is here to stay.
Interestingly, Airbnb has taken the opposite approach – utilizing its resources to rent hotel rooms to users in addition to homes and apartments, and going as far as acquiring the last-minute hotel room app HotelTonight. With the move toward a similar product mix on all sides in the lodging services industry, regulations may be the primary restraint on revenue growth in the near future.
As the alternative lodging and travel industry continues to expand, expect to see more traditional entrants to the space in the years to come. The regulatory landscape is likely to tighten further as well, given the amplifying effect an increase in alternative lodging and travel service providers will have on present government and public complaints. In the meantime, traditional service providers are not lacking in mainstream appeal.
Want to Learn More?
Don’t worry, we have you covered! For additional information and analysis of US industry trends, see Lodging Services: United States and Travel Services: United States, reports published by the Freedonia Focus Reports division of The Freedonia Group.
Lodging Services: United States forecasts to 2023 US lodging service revenues in nominal US dollars. Total revenue is segmented by establishment in terms of:
- hotels and motels
- casino motels
- RV parks and campgrounds
- bed and breakfast inns
- other establishments such as cabins, hostels, and short-term rentals of homes and apartments from owners
To illustrate historical trends, total revenues and the various segments are provided in annual series from 2008 to 2018.
Expenditures include services financed by third parties (e.g., business group visits) as well as services provided without a financial intermediary. Spending on other services – such as accommodation, dining, and shopping – offered by a recreation service provider is excluded from the scope of this report.
Travel Services: United States forecasts to 2023 US travel services revenue in nominal US dollars. Total revenues are segmented by service in terms of:
- trip planning
- other travel services such as insurance, travel documents, and currency exchange
- other sources such as advertising and sales of goods
Commission revenues are further segmented by source as follows:
- event tickets
- airline seats
- other commission such as fees from the booking of guided tours, miscellaneous forms of transport, and from allowing other companies to utilize the travel service provider’s electronic reservation systems
Total revenue is also segmented by market as follows:
To illustrate historical trends, total revenue and the various segments are provided in annual series from 2008 to 2018.
For the purpose of this report, commissions refer to remittances made by other travel companies (e.g., airlines, hotels, tour operators), such as those made for the referral of customers. Fees paid directly to the travel service provider by the customer for arranging services (e.g., accommodations, entertainment, transport) are included in trip planning revenue. US travel service revenues include income from all domestic locations primarily engaged in providing travel services. The revenues of both employer and nonemployer firms are included.
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About the Author
Chris Dyer is a Market Research Analyst for Freedonia Focus Reports. He holds a Master of Arts in Security Studies, and his experience as an analyst covers multiple industries.