Airbnb accuses hotels of price gouging during holiday weekend
In an escalating war of words with the lodging industry, Airbnb on Thursday released a report documenting what it claims is price gouging by hotels during the Memorial Day weekend.
Its analysis concludes that last Memorial Day weekend consumers staying at 21 U.S. destinations, including San Diego, saved $12 million by using the Airbnb platform for a home stay instead of reserving a room at a hotel.
The San Francisco-based company is projecting that this holiday weekend, the average savings for a single Airbnb booking over three nights will be $276, although the company acknowledges it does not have current hotel pricing data for each of the 21 locations it analyzed.
“Despite four years of record profits, the big hotel chains are targeting people who share their homes because they want to continue exploiting their control of supply in markets in order to use ‘compression pricing,’ the industry term for price gouging, to raise prices for consumers,” states Airbnb in its report.
The report’s release comes a little more than two months after the hotel industry’s trade group released a report intending to show how Airbnb’s business increasingly is driven by commercial operators renting out multiple units.
The American Hotel & Lodging Association responded Thursday to the Airbnb pricing report with a defense of its industry’s competitive business practices.
“Airbnb’s report is nothing more than supply and demand 101 – we see this in all kinds of dynamic markets where prices rise as demand increases,” said Troy Flanagan, the association’s vice president of state and local government affairs. “In fact, Airbnb itself admits that it facilitates this market behavior from its hosts. The difference is, when there is a special event and revenues do increase, legal lodging businesses obey zoning and safety rules and pay their full share of the tax bill to support their communities, unlike Airbnb and its army of commercial – often illegal – operators.”
Relying on pricing data it purchased from the hotel-tracking firm STR, Airbnb compared average rates last year with its own bookings over the 2016 holiday weekend. In San Diego, for example, it cites an average nightly hotel rate of $161, compared with the average Airbnb room price of $120 — a cumulative savings of $339,275 based on 8,275 room nights reserved through Airbnb over the holiday weekend.
In Los Angeles, the savings was nearly $1.1 million, based on a nightly differential of $44 between staying in a private home as opposed to a hotel, the Airbnb report found.
Airbnb policy head Chris Lehane said that while its hosts will respond to market conditions by raising rates modestly, the supply of short-term rentals tends to grow during high-demand events like Super Bowls, helping tamp down pricing surges.
“It’s pretty clear that our hosts don’t engage in gouging,” Lehane said. “When demand for Airbnb increases, supply also tends to increase. When you look at big events, like for a Super Bowl weekend, there’s maybe a $20 increase but not the type of gouging you’d see on the hotel end.”
That’s not entirely true, especially for a high-demand event like Comic-Con in San Diego.
A couple of years ago, an analysis prepared for the Union-Tribune by Everbooked, an Oakland-based firm that provides pricing and market analytics to Airbnb hosts, found significant price hikes by hosts during the sold-out pop culture convention.
Nearly half of a large sample of Airbnb listings in downtown San Diego revealed price hikes, with the average increase close to 100 percent. Some hosts raised their prices by almost five times the normal rate, Everbooked found.
Hotels too tend to raise their rates during Comic-Con, although there is a large block of properties that commit to discounted pricing during the four-day July convention.
Read more here from Lori Weisburg.