This piece originally appeared in the Tallahassee Democrat.
Temporary stay, or vacation rentals, are in the forefront of legislative reform efforts, and upstart technology companies like Airbnb and Homeaway are in the crosshairs.
In Tallahassee alone, Airbnb reports visitors booked 3,285 rentals for five home-game football weekends in 2017. Users spent $372,000 for weekend rooms, apartments and houses. Many of these trips would have been impractical without the online options provided by Airbnb.
Opponents of Airbnb and other internet-based rental companies worry that traditional hotels cannot compete successfully against these companies. But research shows that online vacation home and rental companies benefit the hospitality industry, not threaten it.
Airbnb is the largest internet broker of previously hard to find overnight stay options such as vacation rentals, apartment rentals, homestays, hostels and even some hotels. Since Airbnb provides a platform for people willing to rent just one room or even shared space to travelers, some believe these online room brokers give small renters an unfair advantage. Because they don’t pay the same taxes, face similar regulatory burdens, or incur the same levels of investment, they can charge significantly lower prices.
Research shows this concern is unwarranted. MIT professor Michael Cusumano examined competition in the sharing economy and found that hotels are not likely to go out of business as long as they are willing to compete on their core strengths.
For example, the study found that conventional hotels were considered more reliable and localized in design. They also provide a wider range of services, such as the ability to host major events and connect customers to a variety of vendors in tourism and transportation.
Ryerson University professors Gábor Forgács and Frederic Dimanche came to a similar conclusion. However, Forgacs and Dimanche also suggest that traditional hotels are more likely to remain competitive if they match Airbnb’s intuitive and user-friendly websites and deepen their commitment to providing more explicit safety, security and professionalism.
In a 2017 study, researchers Georgios Zervas, Davide Proserpio and John Byers found that budget hotels — Red Roof Inns, Super 8 Motels, Budget Inns — were most susceptible to competition from these hospitality industry disruptors. Consumers, however, benefited from online competition, since the budget hotels needed to compete by increasing levels of cleanliness, safety, security and convenience.
Consumers, legislators and regulators should not worry that their favorite hotels will be forced to close their doors due to increased competition. Research shows that customer experience drives the hospitality and tourism market.
Florida would strengthen its tourism market by ensuring online companies such as Airbnb and Homestay flourish, not contract.
Maia Hass is a Marketing and International Affairs major at Florida State University.
Catherine Annis, MPA, is a policy analyst and manager of policy analysis at the DeVoe L. Moore Center in the College of Social Sciences and Public Policy at FSU.
This article was not written with support, financial or otherwise, from Airbnb, Homestay or any affiliated third-party funder.
The featured image is from airbnb.com.