Not even President-elect Donald Trump can make the hotel industry great again.
The industry is already experiencing trouble with lower occupancy rates and smaller profits per room, and a new survey from Morgan Stanley points to more problems in the future. The bank's survey found that peer-to-peer travel startup Airbnb Inc. is presenting an even greater threat to hotels than expected.
"Our AlphaWise survey shows rising Airbnb adoption (now ~18 percent of travelers) with demand increasingly coming from hotels," the team, led by Brian Nowak, writes. "While still small, we believe Airbnb has been almost double the threat to hotels in 2016 than previously believed, and the threat is growing."
The survey, in which more than 4,000 consumers from the US, UK, France and Germany participated, was meant to gauge not only the growth of Airbnb but also the biggest sources of demand for the service. There is a variety of opinions on whether Airbnb is more of a threat to hotels or to online travel companies like The Priceline Group Inc., and Morgan Stanley is now of the mind that hotels are going to take the bigger hit.
In contrast, the team says, online travel agencies (OTAs) should remain "more resilient," with only small decreases in user penetration. The survey showed large drops in both the number of people using hotel websites as well as the number of people saying they call or walk in to hotels.
Adding to that, if Airbnb continues to have a growing impact on hotels, the industry could become more reliant on those very online travel agencies.
"With 2 years of data points, we are less concerned that Airbnb is a material competitive threat to the OTAs," the team writes. "First, our survey data shows the OTA channel has been relatively more resilient than the hotel channel over the past two years. Second, if hotels continue to lose share to Airbnb, they could become more dependent on OTAs for volume, which will be positive for OTA take rates [the rate the agency takes when a customer books] and profitability."
High satisfaction rates and returning users are also playing a big role in Airbnb's success. According to Morgan Stanley's survey, Airbnb has a 90 percent satisfaction rate, and both Goldman Sachs Group Inc. and Cowen Group Inc. put out research earlier this year that touted the rates at which users return to the service.
Airbnb still has challenges to fight over safety, privacy, and convenience for business travelers, but Morgan Stanley doesn't see those as being significant impediments to growth; the survey showed that the biggest reason people cited for not using the service was simply that they had never heard of it. The company also continues to face regulatory challenges in a number of large cities such as New York, San Francisco, and Paris, but Morgan Stanley said it's hard to calculate the impact this will have on adoption.
Morgan Stanley's survey data points to 19 percent of leisure and 18 percent of business travelers having used Airbnb at least once, and that those numbers will grow to 25 percent and 23 percent, respectively, over the next 12 months.
"Notably, Airbnb adoption over the last 12 months rose (modestly) by more than our 2015 survey data indicated, which could indicate some upside to the 23-25 percent of travelers that intend to use Airbnb in the next 12 months," they conclude.
