Oct. 01–Does Airbnb hurt hotels?
The controversies swirling around the San Francisco company usually look at its impact on permanent residential housing, with critics contending that unscrupulous landlords turn units into lucrative vacation rentals. But Airbnb and its ilk also compete with hotels by offering short-term lodging.
Now a national hotel trade group and a Bay Area hotel union are joining forces to slam Airbnb as hurting their business. Anti-Airbnb group ShareBetter SF on Friday released a study funded by the American Hotel & Lodging Association that looked at how many San Francisco hosts flouted city limits on vacation rentals in 2015. It said that hosts who seemed to be commercial operators accounted for a disproportionate share of revenue.
"Airbnb rents out over half-a-million room nights (in San Francisco) every year, which translates into 50,000 housekeeping shifts (lost) out of hotels," said Ian Lewis, research director of Unite Here Local 2, which represents some 12,000 hotel workers in San Francisco and San Mateo. His members are doubly impacted because they also "are on the front lines of the (housing) affordability crisis," he said.
The report comes ahead of a week when San Francisco hotels will be bursting at the seams and raking in premium rates, as tens of thousands of business travelers roll into town for Dreamforce, Salesforce's annual conference at Moscone Center.
But even though hotel rates for Dreamforce average $426 a night, they would soar even higher if it weren't for Airbnb infusing such a huge volume of inventory, said Daniel Ruch, CEO of Rocketrip, whose company tracks spending on business trips for its customers.
"Hotels are no longer in control of the supply-and-demand equation," he said. "Saying Airbnb doesn't affect the hospitality industry and hotel workers is equivalent to saying that Uber doesn't affect the taxi industry. Anyone who believes that isn't living in the world of reality."
Airbnb said it expects more than 11,000 guests during Dreamforce, at an average rate of $241 a night per listing. (Some of those listings might be shared by multiple guests.) For just private and shared rooms, the average conference rate was $125, it said. Some 90 percent of Dreamforce Airbnb rentals are in neighborhoods outside downtown.
With 160,000 registered attendees, those staying at an Airbnb are a small fraction of the total. And San Francisco's hotel supply is tight. That, plus the city's attractiveness to visitors, keeps its occupancy rates high. The city now has just over 33,000 hotel rooms — the same number it had in 2001. While some small properties have opened since then, others have closed. Five new hotels adding about 730 rooms are under construction.
"San Francisco is one of the strongest hotel markets in the United States," said Catherine Bolstad, director of CBRE Hotels, a consulting and analysis firm. It's second only to New York in occupancy rates and average daily room rates.
For 2015, the city's occupancy rate was 86.6 percent; for the first six months of this year, it was 87.5 percent, CBRE said. No city sees 100 percent annual occupancy rates, because there are typical slow times, such as Sunday nights and the months of December and January, Bolstad said. San Francisco hotel rooms averaged $268 a night last year, up 5.6 percent from the prior year. For the first part of this year — admittedly skewed by February's Super Bowl — the average room rate was $285.
"The occupancy rates would be much higher and we'd be seeing more development of hotels were it not for the addition of short-term rentals," Lewis said. More large hotels were built during booms in the 1980s and 1990s, he said. "We're not seeing that in this cycle, the hotels (being built) are very much smaller in size."
ShareBetter's report said that 1,352 entire homes were rented out for more than the city's 90-day annual cap in 2015. That was about double the number reported by The Chronicle from its analysis of 12 months of listings ending in May. The report's authors said they analyzed Airbnb listing calendars to determine when properties were rented, while The Chronicle's data inferred rental frequencies based on number of guest reviews.
The ShareBetter report found 1,463 entire homes controlled by hosts with two or more listings, versus 385 in the Chronicle report. Since hosts can only legally rent a property where they live, having multiple listings is a red flag.
ShareBetter said it wants San Francisco to rein in vacation rentals and do a better job of enforcing its laws, but didn't give specifics other than saying the city needs "meaningful caps." The group backed last year's Proposition F, which would have capped all vacation rentals at 75 days a year, and curtailed them in other ways. Airbnb spent $8 million to defeat it at the polls.
In a statement, Airbnb repeated its contention that most hosts are regular people using rentals to afford the city's spiraling costs.
"It's disappointing to see organized labor partner with one of the most anti-union, anti-living-wage, corporate trade groups in the country to attack a few thousand middle class people," wrote Airbnb spokesman Christopher Nulty.
"Short-term rentals do affect the hotel industry, but it's different at different times," said Kevin Carroll, executive director of the San Francisco Hotel Council, which represents over 100 hotels accounting for two-thirds of the city's rooms. Hotels can't quantify just what that effect is. His group's primary concern is that the city enforce its laws and crack down on illegal operators, he said.
Carolyn Said is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @csaid
