airbnb guests origination

Leveraging Airbnb to Grow the Tourism Market


Airdna empowers Destination Marketing Organizations – DMOs – to know exactly where their Airbnb guests are coming from with its’ powerful new dashboard. This serves¬†as a great proxy for the overall origin of visitors. We examine the Los Angeles market to see exactly where visitors are coming from and how often they return.

Airbnb has exceeded just about everyone’s expectations. In eight short years they’ve gone from renting out a single air mattress in a San Francisco apartment to accommodating over 80 million travelers across 34,000 cities. Hotel executives that once scoffed at the idea of Airbnb disrupting the lodging industry are now fighting to retain the loyalty of their customers.

Survey after survey has shown that Airbnb guests are more satisfied with Airbnb than traditional hotel stays. They prefer the uniqueness of the travel experience, the diversity of locations in which they can stay, and the value of accommodations. These high consumer satisfaction rates have fueled triple digit growth for Airbnb each and every year.

In our latest analysis, published in conjunction with Bank of America Merrill Lynch, Airbnb now accounts for 7.7% of total hotel room nights available for rent across the US. Airbnb popularity soars in many major market and makes up 22.7% of the lodging supply in Miami Florida.

airbnb room supply

Taxing Airbnb Rentals

Many cities around the world are now taxing Airbnb rentals at the same rate as hotels stays.  Airbnb collects the taxes when a booking is made and then remits the total amount at the end of the year. These taxes on short term rental have created significant revenue streams for dozens of progressive cities.  But, there are even more city regulators that are resistant to accept the inevitable future of peer to peer platforms.

In our analysis earlier this year, we estimate that New York City would have generated $28.5MM in additional occupancy tax in 2015, and Los Angeles would have added another $25.9MM in transient occupancy tax revenue if Airbnb rentals were taxed at the same rate as hotels. It seems like every day there is an announcement of a new city that is acting in the best interest of it’s residents and implementing taxes on short-term rentals.

Why Now? What’s Changed?

Short-term rentals have been largely overlooked by tourism organizations. Up until recently they have accounted for a tiny portion of the overall lodging market and it was impossible to get good data even if one had the inclination. The vacation rental market was comprised of thousands of small property management companies that would oversee a couple dozen units each and there was no good way to roll up the performance of all of these individual operators.

Airbnb changed the game by getting into the middle of each transaction. By becoming the financial intermediary of every reservation, Airbnb became the largest aggregator of short-term rental data nearly overnight.  Fast forward eight years and the treasure trove a short-term travel insights has never been greater.

How can DMOs Leverage Airbnb to Grow the Tourism Pie?

Airdna has analyzed 32 million Airbnb reviews, 30 million reservations and 5 million Airbnb guests profiles to shed some light on the origin and demographics of Airbnb travelers and the revenue associated with their stays in over 5,000 cities worldwide.

As a long time Airbnb host in the city of Los Angeles, I will take a deep dive into my home town to analyze travel trends such as the origin of guests, the distribution of visitors across the city, and the revenues generated by Airbnb travel. DMOs can benefit hugely by the insights generated.

Airbnb Guest Origin

63% of visitors to the city of Los Angeles came from within the United States, with 25% of total visitors originating from within the state of California while New York added 8% of total guests. 37% of guests were from outside the USA, with Australia, the UK, and Canada all comprising between 4% and 5% of visitors each.

The travel demand for specific neighborhoods within LA is interesting. For example, the Playa Vista neighborhood is close to the beach and Los Angeles International Airport, but no hotels reside in the neighborhood. Nearly 50% of visitors to the area are traveling from outside of the USA., with 17% from Europe and 11% from Asia. Comparing this to Downtown LA which has only 27% of visitors traveling from outside of the United States, with 7% from Europe and 6% from Asia.

This data can analyzed at an even deeper level to understand the exact cities guests are traveling from as well as some basic demographic information.

This Airbnb data for DMOs is powerful in the right hands. International travelers stay longer and spend more on average. More targeted ad campaigns to these hyper-focused customer segments can create a massive ROI.

Repeat Travel on Airbnb

26.5% of all guest reviews in LA came from repeat visitors.  Of guests that returned to LA exactly twice, only 10% of them stayed at the same property for both visits.  Of guests that visited exactly four times, 68.5% stayed at four separate rentals.

Airbnb hosts are doing a terrible job of nurturing their most lucrative source of business Рprevious guests.  OTAs, including Airbnb, have started to dominate the source of vacation rental bookings.  The fees for sourcing bookings continues to increase and and individual hosts will need to do a better job retargeting previous guests.

This creates an opportunity for forward thinking DMOs. ¬†Marketing unique and aspirational short-term rentals in the area is a great way to make your destination stand out in the crowd. ¬†A great example is this treehouse in Atlanta, Georgia, which Airbnb recognized as “The Most Wished-For Listing Worldwide”.

Revenue Generated by Airbnb Stays

The headline number that everyone wants to get their hand ¬†is overall host revenue. How much revenue is actually being put into the hands local Airbnb hosts and what corresponding revenues are these guests generating for local businesses. The first question is easier to answer so let’s start there.

I’ll refer to our Market Summary Report¬†for a quick look at how the overall Airbnb market is trending in the greater Los Angeles Metropolitan Area.

LA AIRBNB growth

 

Definitions for the above metrics are available in this downloadable sample report

Los Angeles is the 5th largest Airbnb market in the world with 28,200 total listing available for rent in July 2016. These listings account for 16.8% of the total lodging room supply in the city.  In the month of July 2016, $51.8MM of revenue was generated by entire place rentals on Airbnb.  This is up 68% from the $30.9MM generated in the same month in the previous year.

Airbnb’s Overall Economic Impact

This is a highly disputed topic. ¬†Depending on what assumption are made, and what group has commissioned the study, the results vary widely. ¬†I will not attempt to recreate these economic impact studies but simply reveal a few important figures to keep in mind when reviewing numbers submitted by Airbnb or the Hotel Associations and their affiliated organizations such as “Share Better”.

  • The majority of local hotel profits are shipped out of state to corporate headquarters never to be re-circulated in local economies.
  • The average Airbnb stay in the US is 4.5 days and the average hotel stay is 1.5 days.
  • Airbnb guests spread economic stimulus throughout a city a more evenly. This is¬†only logical based on the highly distributed supply of Airbnb rentals as compared to hotel properties.

What Does This Mean for DMOs?

Airdna’s tool is an amazing resource for DMOs to understand their visitors better. Now they can see, in almost real time, where their visitors came from and how often they return. Even better, they can quickly see how effective their marketing strategies are. If a DMO puts on a big marketing campaign in New York for visitors to come to Los Angeles, the size of the Airbnb market provides a great proxy for how effective their campaigns are.

DMOs Can Use Airbnb To Get The Best Data on Visitor Behavior

The lines continue to blur between home rentals and hotel stays and the revenue generated by these ‘alternative’ accommodations can no longer be ignored. A more holistic marketing strategy is needed to attract visitors and measure the success of advertising campaigns. ¬†Also, Airbnb offers a treasure trove of visitor information so DMOs can get ahead in monitoring and targeting their campaigns. To learn more about how to be at the cutting edge of the collaborative economy era, drop us an email.