The booming business of Airbnb rentals in Asheville is changing the dynamics of the Buncombe County tourism industry, according to a report (Asheville_Competitive_Demand_Analysis_08282017) by the Buncombe County Tourism Development Authority’s advertising agency that was delivered to the TDA board on Wednesday.
Amy Hubbell, director of research and analytics at Peter Mayer, the New Orleans-based advertising agency the Buncombe TDA keeps on retainer to help it market the Asheville area to the outside world, told the board that demand for lodging in the county was high. Demand was so strong, in fact, that it outpaced the lodging demand in three other markets the agency included in its report, markets that Asheville competes with for visitors: Charleston, Greenville and Savannah.
But it was soaring demand growth for Airbnb rentals, and not hotel room rentals, that was driving the growth, Hubbell said. And it as Airbnb that was reaping the benefits of that demand growth, not hotel owners, Hubbell said. That skyrocketing demand for Airbnb rentals threatens to financially sting hotel operators.
A key takeaway for the board, according to Hubbell’s report: “AirBnB is a powerful force in Buncombe County, with significant implications for the hotel industry and for bed tax revenues. It may make sense to study traveler behavior related to AirBnB in more detail, to help determine what – if anything – should be done to influence choice of lodging.”
The tourism board members peppered presenters Hubbell, as well as Mark Mayer, the ad agency’s president and CEO and Chris Cavanaugh, president and founder of the market research firm Magellan Strategy Group, with several technical questions but kept their reactions to the information to themselves. Board chairman Jim Muth said the Airbnb impacts on the tourism industry would be part of ongoing discussions. Stephanie Brown, president and CEO of the Explore Asheville Convention and Visitors Bureau, stressed that the report was for informational purposes only and did not offer a “value judgement” regarding any type of lodging.
One group of meeting attendees did speak their mind at the end of the meeting – a handful of former TDA board chairmen who had been invited to sit in. Hotelier John Winkenwerder led off the reaction by saying that the whole Airbnb issue is “going to be a tremendous problem if we don’t get a handle on how we make this work in the community.” (Read his, and other reactions from hoteliers, here.)
The presenters said their data came via Smith Travel Research, a well-known source of hotel information, as well a company called AirDNA, which uses programs to gather information only on Airbnb by “scraping” listings on the web. The report does not include information on short-term rentals that are being sold on other sites, such as VRBO, and there’s no source of data on bed and breakfast rentals. All that adds up to the fact that their report probably skews numbers lower than what’s actually happening, the presenters said.
For the 2016-17 fiscal year, there were 281,00 room nights sold through Airbnb, up from 137,000 the year before, according to the report. That’s a 105 percent increase for Buncombe County, and there are no signs of that growth slowing, Hubbell said. Demand for hotel rooms was also up for the fiscal year, but only at a little over 3 percent.
In addition, the average daily room rate was much cheaper through Airbnb compared to hotels. Hotel room rates vary by season, with a seasonal average daily room rate high of $188 for October and a low of $111 for January. On Airbnb, the average daily rate for every month of the year stayed between about $115 and $123.
(Airbnb issued its own report last year that showed local property owners renting houses to tourists collected $13.1 million and hosted 104,500 guests in 2016. That covered all rentals with an Asheville zip code, and that $13.1 million number was more than Charlotte, Raleigh and four other top North Carolina cities combined.)
Background of the debate
The issue is a vexing one for the tourism authority, which collects a 6 percent hotel room tax from hotels and Airbnb, which started paying room tax in June 2015. (2015 was also the year that the local hotel room tax was increased by state lawmakers, the first increase in decades). That money is used to market Asheville and Buncombe County as a tourist destination, and to develop amenities that will attract visitors.
But the authority’s members mostly represent the hotel industry, along with a member who manages vacation rentals, a member from the nonprofit community and ex-officio members representing Asheville City Council, the Buncombe County Board of Commissioners and the Asheville Area Chamber of Commerce. The hoteliers, in particular, hammer home the fact that they employ hundreds of workers, pay millions in property taxes each year and run insured establishments that meet a host of regulations, including fire, safety and handicap-accessible codes. Airbnb operators should come under those same regulations, hotel owners and managers argue.
There’s also evidence that hot markets for home rentals aimed at tourists can drive up housing costs, making the price of a home unaffordable for some homebuyers.
The Airbnb impact has been a hotly debated topic at City Hall. Asheville City Council in the past two years moved to address the issue on a couple of fronts. First, City Council cracked down on illegal Airbnb operators by increasing the enforcement of the city’s ban on short-term rentals and increasing fines to $500 a day. Short-term rentals are defined as houses rented out for overnight stays for fewer than 30 days, where the owner is not staying in the home. Short-term rentals are allowed in commercially zoned areas of the city, like the central business district, but illegal in most other parts, including residentially zoned areas. Furthermore, City Council decided against allowing accessory dwelling units (out-buildings and garages) to be rented out to tourists.
That enforcement angered some residents, who argued that City Council was protecting big hotel owners and taking away the rights of property owners. Some residents said they can only afford to live in Asheville if they have the ability to rent out rooms to tourists. But Asheville City Council eased rules on allowing locals residents to rent part of their home to visitors if the owner is present and has the right permits, something that’s termed a “homestay.”
It’s interesting, the more Asheville is marketed as a hip destination, the more people want to come here. But those people are not in an income bracket that can afford a $200-$400/night room. So, they stay at an AirBnb rental, which allows them to then spend their money in breweries, restaurants, music venues, etc. Asking someone who makes sub-par wages to pay premium rates for a room is simply non-sense. The new hotels cater to a niche market, a wealthier and more upscale one, that tends to be older. So, you have a lot of younger travelers coming here that would probably never stay at one of the new hotels. Yet, hotel owners are concerned about this? What the hotels need to do, if they want the AirBnb market, is make their properties less cookie cutter, and more interesting. They refuse to follow trends that are changing travel, and will continue to see low growth as a result. Look at what’s going on in the hostel industry, with places like Freehand, and you’ll get an idea of where it’s headed.
“What the hotels need to do, if they want the AirBnb market, is make their properties less cookie cutter, and more interesting.”
Dude, every new hotel in town is part of some niche sub-brand aimed at a carefully-researched demographic. If you’re waiting for Marriott to launch a “Futon In The Spare Room” sub-brand, don’t hold your breath.
So what demo do you fall into? Mom’s spare room with futon, or Mom’s rec rec room on floor?