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Airbnb emerging as multimillion-dollar threat to traditional Austin hotels

Airbnb emerging as multimillion-dollar threat to Austin hotels

Airbnb Austin apartment downtown skyline view
Texas Airbnbs are projected to rake in $200 million in revenue this year.  Photo courtesy of Airbnb

If current trends continue, vacation rental giant Airbnb is on track to be a $200 million-a-year force in Texas, with Austin leading the charge, according to a hotel consulting firm.

For the first time ever, San Antonio-based Source Strategies Inc. has included figures for Airbnb stays in its quarterly report on the Texas hotel market. From this June through August, the firm says, Airbnb-listed properties generated $56.5 million in rental revenue statewide.

At nearly $19 million, Austin grabbed the largest chunk of Texas’ Airbnb revenue in the third quarter, according to data supplied to CultureMap. Among the state’s other major cities, Houston ranked second for Airbnb revenue during the quarter, with more than $6.7 million, followed by Dallas, with almost $5.8 million; San Antonio at nearly $3.7 million; and Fort Worth coming in just over $1.1 million.

Only those cities with at least $35,000 in Airbnb revenue for the three-month period were included. Other Texas cities that made the cut were Arlington, Corpus Christi, and Fredericksburg.

As hotel operators and industry experts track Airbnb’s ascent in the Lone Star State, they’ll be keeping a close eye on the Capital City, where demand for Airbnb rentals benefits greatly from annual events like SXSW and Austin City Limits Music Festival.

“Our current analysis is that Austin lodging prices are high in general, which gives homeowners an incentive to rent their own property or buy up houses for this purpose,” Paul Vaughn, senior vice president at Source Strategies, tells CultureMap. “Much like other similar disruptive services, like ridesharing, people in Austin are quick to embrace short-term home rentals.”

Vaughn says the third-quarter statistics indicate Airbnb is emerging as at least a $200 million-a-year threat in Texas. By comparison, Texas hotels racked up nearly $10 billion in room revenue in 2016, according to a report compiled for the state’s tourism agency.

“Airbnb is poised to be a disruptive force in the lodging industry, with revenue equivalent to established hotel brands," says Vaughn. "This is a brand that people are adopting, and it will be very interesting to see where the trends go in the coming quarters.”

Traditional hotels are working on ways to combat the “major effect” that Airbnb and rival services like Austin-based HomeAway are having on the lodging industry, he says.

“Airbnb represents a new powerhouse lodging brand with considerable marketing and brand recognition. Older and lesser-branded hotels will likely see declining market shares as the Airbnb concept becomes more widely adopted,” Vaughn says.