The seeds for a significant transformation within the tourism accommodation sector were laid in 2007 in the form of three air mattresses on the floor of a San Francisco apartment. A major conference was in town, and two recent university graduates had used a simple website to successfully advertise their apartment as an ‘AirBed & Breakfast’ for conference delegates looking to avoid the city’s high hotel prices.
Feeling they had a business idea, the roommates recruited another friend and turned the website into a service for other people to similarly advertise their spaces as shared accommodation for tourists, initially focusing on major events.
After enjoying some moderate success, particularly at the 2008 Democratic National Convention, the website was re-launched in 2009 as Airbnb.com, and the service was expanded beyond shared accommodations to also include the rental of full residences. Since then, Airbnb has grown extraordinarily rapidly and now books millions of room nights for tourists around the globe (Botsman & Rogers, 2010).
With lesser demand for hotel rooms comes an additional negative effect for hotels and their employees. When guests choose not to stay in a hotel, the money they would have spent on food and drinks at the hotel’s restaurant and bar is likely spent elsewhere.
Therefore, the hotel loses out on the revenue they otherwise would have received from that guest. In total, over $108 million of food and drink revenues ($88 million on food and $20 million for drinks) are lost because travelers choose to book with Airbnb.
But while you might think that it’s only tourists and hosts that are benefiting from signing up to the service – which can often work out cheaper than staying in a hotel – it turns out that Airbnb is quietly playing a huge role in boosting local economies.
The company’s first UK Insights Report has revealed that the continuing growth of guests seeking out new and unusual destinations has generated an estimated £3.64 billion in economic activity for local communities across the UK.
It is widely accepted that eating fresh, local foods is healthier and more nutritious. Guests using Airbnb spend an average of £147 per day with almost half (43 per cent) of guest spending taking place in the neighbourhood where they are staying.
This means that visitors who choose to stay outside of the usual hotel districts, and opt for a homestay instead, are helping to boost local businesses and spread tourism benefits to smaller communities. More than three quarters of guests said they chose Airbnb because they wanted to “live like a local”, and the vast majority (86 per cent) said they chose a listing on Airbnb because of the specific amenities and local menus it offered.
In October 2016, the home-sharing company released a new report it has compiled that concludes Airbnb generated $4.5 billion in revenue for restaurants in 36 markets around the world in the past year. Airbnb estimates that guests have spent $1.5 billion of that in major cities in the U.S., with an average of $50 to $90 per guest per night in restaurants.
In the U.S., New York City earned the top spot with $470 million in guest spending in restaurants, followed by Los Angeles with $236 million. London restaurants earned an estimated $561 million from Airbnb guests, followed by Paris with $430 million and Tokyo with $329 million.
Airbnb’s argument is that its service helps generate restaurant patronage that wouldn’t otherwise happen. Airbnb says that 74% of its listings are located outside of traditional hotel districts, and that 42% of guests’ spending is in the neighborhood where they’re staying. The company also claims that 56% of guests who saved money by booking a room on Airbnb instead of a hotel spend more on food, drinks and shopping during their visit.
To date, Airbnb says that 200,000 businesses, including 90,000 food and drink restaurants have been added to those guides, which are available for 40 cities around the world. Next month, Airbnb is expected to unveil travel packages that will let guests book activities, in addition to a place to stay.