Home-rental service Airbnb Inc. is growing rapidly on Long Island, doubling its bookings and almost doubling listings for the 12 months through April, according to newly disclosed company data.
Though the lodging industry is working to curb the upstart, Wall Street research and anecdotal evidence suggest that Airbnb’s growth is not built on the business traveler who is the core customer of hotels, but rather on a separate clientele. Airbnb’s biggest impact here may be at the community level — where it represents extra income for some residents, a worrisome disruption to others, and competition for bed-and-breakfasts and vacation rentals.
Airbnb bookings on the Island increased to 17,000 in the 12 months ended April 30 from 8,400 in the prior 12 months, and listings climbed to 2,000 from 1,070 in the year-earlier period, Airbnb said on Wednesday. Airbnb previously reported that its hosts on Long Island earned $15.4 million in 2015.
Despite Airbnb’s growth, it remains a fraction of the size of the traditional lodging industry on Long Island, where more than 300,000 hotel and motel rooms were booked in March alone, a year-over-year increase of about 3 percent.
A survey of 4,116 travelers in the United States, the United Kingdom, France and Germany by Wall Street bank Morgan Stanley & Co. concluded that Airbnb is “focused on non-hotel, leisure, longer-duration stays” and not on the corporate traveler.
While some Airbnb customers in the survey said they used the service instead of a hotel, many also said they used it as an alternative to staying with friends and family or booking vacation rentals, long-term-stay hotels and bed-and-breakfast establishments.
Mike Johnston, president of the Long Island Hospitality and Leisure Association, which represents the region’s hotels and motels, said Airbnb so far has had little impact. But he said pressure from Airbnb and similar companies would be felt most keenly in an economic downturn.
“It will chip away, but it’s not going to destroy the hotel business by any stretch of the imagination,” he said.
For now, “the impact on Long Island hotels is minimal,” said Steve Rushmore, founder of Mineola hospitality consultancy HVS, because Airbnb offers limited competition for business travelers. “People aren’t coming to Garden City to take in the sights.”
Jan Freitag, senior vice president of STR Inc., a Hendersonville, Tennessee, data and analytics tracker, said no one knows how much business is siphoned off from Nassau’s 59 hotels and Suffolk’s 103 by Airbnb, but demand for Long Island hotel rooms is strong, with a 2015 occupancy rate of almost 80 percent in Nassau County.
Since Airbnb’s founding in August 2008, STR said, full-year revenue at Nassau County hotels and motels has grown every year except 2009, when the country was in the grip of the Great Recession, and 2013, when local experts noted that a surge in occupancy related to superstorm Sandy subsided. In Suffolk, lodging revenue contracted only in 2009, in line with the overall U.S. hospitality industry.
Except for 2009 and 2010, occupancy has been 65 percent or higher in Suffolk and 70 percent or higher in Nassau, compared to the 64.4 percent U.S. average cited in an American Hotel & Lodging Association report for 2015.
Rob Salvatico, who owns the Holiday Inn Express and Hotel Indigo in Riverhead, said Airbnb has had no apparent influence on his properties.
“I haven’t noticed an impact at all,” he said, adding that his area is short on hotel capacity.
Salvatico said Airbnb appeals to younger travelers who are “price sensitive and brand insensitive,” especially in urban centers where hotel prices are “exorbitantly high.”
Rosanne Washington, a retiree living in Sea Cliff, is one of the hosts who form the backbone of Airbnb’s “sharing economy” business model.
Washington learned of Airbnb a few years ago while watching a segment on “Click,” a technology program on the BBC.
After having a difficult experience with the tenant of the studio apartment attached to her house, she said, the short-term nature of Airbnb had appeal: “I thought: ‘That’s good. You’re not married to somebody.’ ”
At the same time, the widow needed extra income.
“It’s not hard to figure out that as you get older, your income shrinks, but your expenses continue to grow. No one’s going to retire with what they make from Airbnb, but it does provide an additional source of income.”
Washington found that setting up her website was a breeze.
“All you had to do was get pictures and write a story,” said the retired interior designer and magazine writer. “The guest pays with a credit card, and when the guest arrives the money is released into the host’s checking account.”
She said her Airbnb guests bear little resemblance to the typical business traveler who would check into a hotel.
Washington said she hosted two doctors for a month who were in the final year of their internship and attending a special program. Another guest was a University of Kentucky student who was interning with the New York Islanders.
“I don’t think the Hilton hotels or the Garden City Hotel is going to be threatened by this operation,” she said. “I doubt that someone who came here is going to cancel their reservations. They’re just two different things. Bicycles versus limousines.”
Nevertheless, there are plenty of examples of old-style industries crippled by Internet upstarts — just think of the music industry. And New York’s hotel industry is seeking to have Airbnb regulated to the same extent it is.
In a statement, the lodging industry’s New York State Hospitality & Tourism Association contrasted the “strict set of rules and regulations” that traditional hotels follow with the lax environment surrounding Airbnb.
“Simply put, we believe that if you look like a hotel and if you act like a hotel, then you should be treated like a hotel,” the organization said in a series of “advocacy points.”
Clay Sauer, owner of the Stirling House Bed and Breakfast in the Southold village of Greenport, said many of the Airbnb operations in the area are investment properties.
“They’ll buy a two-family or single-family and rent them out,” he said. “They’re basically not owner-occupied. It causes a lot of hell for the neighbors. These places become flop houses for 12 to 14 people.”
Past Airbnb surveys have shown that most of the company’s rentals are in owner-occupied properties, a spokesman said. He added that current data show most Long Island hosts have a single listing.
Unlike Airbnb properties, Sauer said that inns and hotels collect sales and occupancy and hospitality taxes and are bound by health and safety regulations. The Morgan Stanley report said that about 36 percent of the travelers it surveyed used Airbnb instead of a B&B.
“These places are doing what we’re doing without all the red tape,” he said.
Some Long Island municipalities, including the village of Great Neck Estates and the towns of Islip and Southold, have sought to rein in Airbnb and similar short-term rental services such as Austin, Texas-based HomeAway Inc. Matt Curtis, senior director of government affairs for HomeAway, said the company has about 3,500 listings on Long Island, and those listings have been growing at a rate of about 10 percent per year. Unlike Airbnb’s properties, almost all of HomeAway’s are not owner-occupied, and many are listed by management companies.
In August, the Town of Southold passed a law banning rentals of fewer than 14 nights that are advertised on websites such as Airbnb.
Southold Supervisor Scott Russell said that the impetus of the town law came from neighbors of the properties.
“We did this based on community concerns,” Russell said, “not on business concerns.” Neighbors, he said, found it “unsettling” to discover “new faces every weekend.”
So far, the town has issued about 40 summonses with no impact on the local economy, he said.
“I went to the business owners,” he said. “The overwhelming feeling was ‘Ho-hum.’ ”
In response to moves by state and local officials to restrict Airbnb, the company is making a lobbying effort. On Tuesday, company executives and about 40 hosts who use the service met with 23 Albany lawmakers to lay out the service’s economic benefits to hosts and the surrounding community.
Josh Meltzer, head of New York public policy for Airbnb, said the company is in talks with Nassau and Suffolk officials: “Over the past few months we have engaged in conversations ... on an agreement that would allow Airbnb to collect county local occupancy taxes on behalf of our hosts.” Airbnb officials said they hoped to reach an agreement with the counties by the end of the summer.
Meltzer urged Long Island officials to talk to Airbnb hosts “before pursuing regulations that might prohibit residents from sharing their home to make ends meet.”
Suffolk County Comptroller John Kennedy Jr., however, said that Airbnb’s talks with the county about collecting the 3 percent lodging tax halted in November. Kennedy said his office has been scouring free shoppers and the websites of companies like Airbnb to identify short-term rental properties, primarily on the East End. The office has collected $350,000 in additional lodging taxes and penalties and identified 410 previously unregistered properties, he said.
Airbnb and the incumbent lodging industry may be locking horns now, but some observers see them converging in the future.
HVS’ Rushmore said Airbnb eventually will evolve into a reservation system that will serve not only Airbnb hosts, but the hotel industry as well.
With Memorial Day approaching, the East End summer rental season is heating up. Airdna, which “scrapes” and analyzes data from the Airbnb website for rental entrepreneurs and customers on Wall Street and academia, recently listed 219 active Airbnb rentals in East Hampton. The median nightly rate was $550 for a house and $175 for a private room, according to the Santa Monica, California, company.
Meanwhile, in Sea Cliff, Airbnb host Washington
said travelers’ decisions about where to stay may be a matter of personal preference. She likened the decision to an Italian saying about food: “Some like it cooked, some like it raw.”