Hotels, cottages, inns and bed-and-breakfasts have long had a stranglehold on a lodging industry aimed at satisfying travelers’ desires to stay someplace special — that is, until Airbnb came along.
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Hotels, cottages, inns and bed-and-breakfasts have long had a stranglehold on a lodging industry aimed at satisfying travelers' desires to stay someplace special — that is, until Airbnb came along.
The online marketplace that allows people to rent their homes or apartments has taken business away from traditional lodging establishments, attracting 64,000 guests in the Nutmeg State last year alone.
The presence of Airbnb, and other online home-sharing marketplaces, has forced some Connecticut hoteliers to adjust, not only in pricing, but also in their marketing efforts, insiders and state experts say. Airbnb is also generating some pushback from those who want the company's hosts to face tougher oversight, similar to what traditional hotel establishments must endure.
Win Smith III, who manages his mother's Morris boutique cottages nestled in the Litchfield Hills village, said the recession and pressure from Airbnb competitors have forced him to lower prices for some customers.
“[Clients] would often compare us [to Airbnb] and say, 'Why don't we rent a house in the area instead? We'll come to you one day for lunch instead,' ” Smith said. “It definitely affected my rates and occupancy level.”
Airbnb accounted for 5.4 percent of the country's lodging room stays in 2016, up from 3.6 percent in 2015, according to Goldman Sachs.
Jan Freitag, senior vice president at hotel industry research firm STR, said even with the added competition, there is enough demand to satiate all lodging industry players. He said it's hard to determine Airbnb's impact since hotels in the U.S. hit record occupancy and room rate levels in 2016.
In Connecticut, however, that wasn't the case.
Of the 41,000 hotel rooms at 400 properties here in 2016, guests stayed over for 9.3 million room nights, yielding $10.8 billion in business sales, according to the American Hotel and Lodging Association. But hotel occupancy rates here were flat at 61 percent from 2015 to 2016, and up slightly from 59 percent in the two years before that, state tourism documents show.
While some local hotels say they haven't experienced much direct impact, there is no denying Airbnb is absorbing market share in Connecticut. In February, Airbnb said this state's 2,400 active hosts earned over $11 million in supplemental income in 2016 by welcoming approximately 64,000 visitors. Some lodging executives agitate over that — while using Airbnb to market their business.
The Nehemiah Brainerd House in Haddam obtained three recent bookings by listing rooms on Airbnb's website, says Jeff Muthersbaugh, co-owner of the bed-and-breakfast with his wife, Maryan.
“It's one more platform to get your message out,” he says of his practice of using Airbnb. “That's the app on [Millennials'] phones.”
As vice president of the Connecticut Lodging Association and head of its B&B committee, Muthersbaugh said Airbnb's services are legit, but he still believes some of its hosts unfairly compete with traditional hotels and B&Bs for business.
Some in the lodging industry argue that Airbnb hosts run the equivalent of hotels out of residential buildings, said Troy Flanagan, a spokesman for the American Hotel and Lodging Association (AHLA).
Unlike hotels and B&Bs, however, those hosts do not have to comply directly with fire and health codes and insurance requirements, creating an unfair playing field, AHLA said.
Airbnb spokesman Peter Schottenfels said such concerns and criticisms are overblown.
“We're happy to work with any local government to craft smart, sensible regulations that guarantee home sharing is an option for families looking to earn some extra money,” he said, “and ensure that guests, hosts and neighbors have a safe experience.”
Schottenfels said the main attraction for Airbnb users is that it gives travelers a different experience.
“On Airbnb, you can rent someone's couch in New Haven or mansion in New Canaan,” Schottenfels said. “We're a home-sharing and experience-sharing platform. We want travelers to have a different experience, go to a place and live like a local, and we're confident Airbnb offers that experience.”
One area where Airbnb has faced tighter scrutiny in Connecticut is tax collections. Airbnb no longer sidesteps the state's 15 percent lodging tax, reaching an agreement in 2016 with the state Department of Revenue Services to collect and pay the hotel tax on behalf of homeowners who rent to the company's customers.
Now, Department of Revenue Services Commissioner Kevin Sullivan said he and lawmakers are working on a bill that would require all home-sharing companies — not just Airbnb — to collect and pay the lodging tax.
