http://www.buzzfeed.com/mariahsummers/hospitality-industry-elephant-in-room#.nh6AxzB0j
Something is biting into the hotel industry’s profits in New York City, one of its most important markets. It’s bad enough that America’s biggest hotel operators have all discussed it on earnings calls with analysts: Revenue from NYC hotel rooms is falling even as a record number of tourists flood the city.
The story was the same at Starwood. “We did not see a material decrease in the number of international travelers inbound to either the U.S. overall, or New York specifically in the first quarter,” CFO Thomas Mangas said on an earnings call the day before. “We have, however, seen a decrease in the average daily rate in New York from those international guests.” Indeed, the number of international visitors—the heaviest users of Airbnb—hascontinued to climb over the last 10 years, reaching a record high of 11.4 million in 2013. Still, hospitality giants like Marriott, Starwood, Hilton, and Hyatt have found themselves struggling to grow revenue in the city.
When asked what the problem is, they cite issues like “supply growth” and a “strong dollar” as reasons they’ve failed to thrive in the New York City market. But there’s one word they’ve never said when discussing their New York challenges, and it’s becoming an elephant in the room for all four companies. Neither Hilton nor Hyatt have never said the word “Airbnb” on an earnings call, in any context, according to a review of call transcripts. At Starwood, the apartment rentals site has only come up once, in April 2014, when an analyst asked then-Starwood CEO Frits van Paasschen to address the impact it has had on Starwood’s business.
From my personal perspective, I think it is a really big challenge for the hotel groups, just like the shock Uber gives to taxi industry. Especially for those economic hotels focusing on young people, they would lose more customers because of Airbnb. According to the call transcripts. Airbnb, already has about 16,000 New York listings, and is expected to cross the $500million revenue mark by the end of this year.
MKT 248 Spring 2015 