Airbnb has been the subject of heated discussions among tourism and hospitality scholars. In order to understand the true impact of P2Psharing on the tourism and hospitality landscape, it is important to understand that market in detail first. Therefore, in this paper, we explore the development of the Airbnb market over the last seven years in Paris, the most popular destination for Airbnb guests with more than 40,000 accommodation rentals. This research note is a summary of our findings on the Paris market. Our study shows different growth and seasonality patterns for Airbnb and hotels and dissimilarities in the geographical location of the offers. The findings indicate that the two products are not in direct competition and that their relationship might be more complex than previously thought. We trust that exploring the nature of the competitive relationship would be a valuable avenue for further investigation.

Introduction

Airbnb has been the subject of numerous and often heated discussions among hoteliers and academics in the industry. The original “Airbed and Breakfast” offer of two students in San Francisco, abbreviated AirBnb since, is a platform that allows people to look for, rent and/or list properties for accommodation. While official revenues have not been disclosed, Fortune magazine reports that Airbnb’s annual revenues are expected to reach $10 billion by 2020. Despite this meteoric growth, major hotel chains have yet to show substantial action to withstand the potential competition from the sharing economy. Steve Joyce, the chief executive of Choice Hotels International, mentioned that his brands had not seen any effect from Airbnb. Equally, Kerry Ranson, chairman of the InterContinental Hotels Group Owners Association, said that he did not see Airbnb as a threat or a competitor (Weed, 2015). Hilton CEO Chris Nassetta expressed a similar view, saying that Airbnb was not a major threat to his company’s business and the effect of Airbnb is heterogeneous across hotel markets (Bryan, 2015). However, HVS analysts reported that the overall impact of Airbnb’s operations in New York City is estimated to be $2.1 billion over the twelve-month period from September 2014 through August 2015. Further, the report concluded that Airbnb has eliminated more than 2800 jobs and resulted in more than $226 million annually in lost tax revenues for local, state, and federal governments. And recent research appears to substantiate these findings. Zervas, Proservio, and Byers (2017) measured that a 1% increase in Airbnb listings causes a 0.05% decrease in hotel revenues in the U.S. state of Texas. But according to STR research, Airbnb did not have a measurable effect on hotel demand in Manhattan. Similarly, analysts at Deutsche Bank noted that in many major cities, hotel revenue per available room was maintained while the supply of rooms including Airbnb listings has increased significantly (Bryan, 2015). Their view is that Airbnb is not a risk for hotels. To the contrary, they see such businesses growing the market by creating new demand. These analysts draw the parallel between the sharing economy in the hotel industry and the low-cost airlines in the air transportation sector. Low-cost airlines such as EasyJet or Ryanair expanded the travel market and provided opportunities for those who would otherwise not have been able to travel, or would have travelled less frequently otherwise. In line with this viewpoint, Airbnb claims that its offer has had positive economic impact. In France, for instance its executives report that its visitors contribute significantly to France’s tourism industry, local businesses and local households (Airbnb, 2015). According to an Airbnb report, the company has contributed to the increase in tourism in France. Indeed, they report that 23% of Airbnb guests said they would not have gone on their trip or would not have stayed as long without Airbnb. Also, 66% of Airbnb guests said they would not have stayed in a hotel even if Airbnb had not been an option.