July 4th: Consumers declare independence from big hotel compression pricing

This July 4th Weekend, countless families across the country are hitting the road, gearing up to celebrate America’s 241st birthday. As the big hotel chains continue their age-old practice of price gouging on holiday weekends, more and more consumers are turning to Airbnb as the more economical and family-friendly option for summer travel. From cabins in Lake Tahoe to cottages on Cape Cod, many families are seeking an affordable travel experience with an array of amenities they just can’t find at a hotel.

Sadly, the big hotel chains and their trade group, the American Hotel and Lodging Association (AHLA), have continued a coordinated attack on the middle class hosts who share their space on Airbnb. Despite four years of record rates and 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.

In addition to offering authentic experiences, Airbnb has succeeded by providing a platform for hosts to make their space available for occasional short-term rentals and increasing choices for consumers who want to avoid compression pricing. In fact, in 18 cities and five common tourist destinations over July 4 Weekend this year, travelers so far have saved an estimated $27 million by choosing Airbnb instead of the typical big chain hotel.

Airbnb also makes city economies stronger. With roughly three quarters of our listings located outside hotel zones, Airbnb gives millions of everyday people the chance to travel to cities and neighborhoods they might have missed had they stayed in a hotel. And Airbnb guests stay longer and spend more money in the communities they visit than a typical hotel guest: 31 percent of the people who travel on Airbnb say they would have stayed home or wouldn’t have stayed as long but for Airbnb; up to 50 percent of guest spending occurs in the neighborhoods where they stay; and 97 percent of the listing price stays with their hosts in the communities they visit, unlike big hotel chains that take their profits out of the communities where they do business.

In an effort to contribute more information and data to the discussion about how Airbnb is saving consumers millions of dollars and providing affordable options that bring more tourism to cities, Airbnb is releasing a new report regarding compression pricing around the July 4 Weekend, when a record number of people are expected to travel and a hotel room is expected to cost $185 per night.

This report builds our previous analyses and highlights hotel compression pricing and Airbnb savings over the July 4 Weekend. The report is divided into three parts:

Part One: Fighting compression pricing

Part One recaps big hotel chains’ propensity to use compression pricing and hurt consumers even when enjoying record-breaking rates and profits. It also reviews what these big hotel executives and industry experts are saying about Airbnb’s impact on their ability to exploit traditional hotel supply and raise prices on consumers.

Part Two: Consumers saved $15 million on July 4 Weekend last year using Airbnb

In Part Two, we discuss how Airbnb is increasing supply and creating a marketplace that is more fair, more transparent, and offers more choices for consumers. This work is in stark contrast to the corporate hotels that benefit when supply is restricted. We then compare hotel and Airbnb pricing data from July 4 Weekend 2016 in 18 cities and five common tourist destinations. The analysis indicates that Airbnb users saved a combined total of $15.5 million compared to what they would have spent had they stayed in hotels.

Part Three: Estimated $27 million in savings with great amenities this year

Part Three introduces evidence indicating how Airbnb is continuing to offer affordable options for July 4 Weekend this year, all while providing unique accommodations that include amenities for which big chain hotels typically charge extra or, worse yet, roll into hidden resort fees. The analysis indicates travelers have so far saved an estimated $27 million by choosing Airbnb instead of the typical big chain hotel for the holiday weekend this year. Further, the vast majority of Airbnb listings provide free wifi and have a washer, dryer and kitchen.

This analysis comes at a time when the travel and hospitality sector is surging. Travel accounts for 10 percent of global GDP (bigger than the oil industry and growing faster than many other sectors), claiming one in every 10 jobs. The annual number of global air passengers is approaching 4 billion, increasing by 3 billion in just the past three decades. As the industry continues to grow, Airbnb is democratizing travel, bringing more people and more communities the opportunity to benefit from tourism’s growth. In addition to one-third of Airbnb guests worldwide saying they either would not have traveled or would not have stayed as long without Airbnb, 89 percent say their listing locations were more convenient than hotels.

We look forward to continuing our work to spread the benefits of travel to more people by creating a fair, transparent travel marketplace that gives consumers more affordable, meaningful choices.

Read the full report

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