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The Conference Board Consumer Confidence Index® improved in May, following an increase in April. The Index now stands at 134.1 (1985=100), up from 129.2 in April. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 169.0 to 175.2. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – increased from 102.7 last month to 106.6 this month.
“Consumer Confidence posted another gain in May and is now back to levels seen last Fall when the Index was hovering near 18-year highs,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The increase in the Present Situation Index was driven primarily by employment gains. Expectations regarding the short-term outlook for business conditions and employment improved, but consumers’ sentiment regarding their income prospects was mixed. Consumers expect the economy to continue growing at a solid pace in the short-term, and despite weak retail sales in April, these high levels of confidence suggest no significant pullback in consumer spending in the months ahead.” The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was May 16. Consumers’ assessment of present-day conditions improved further in May. Those stating business conditions are “good” increased from 37.6 percent to 38.3 percent, while those saying business conditions are “bad” decreased from 11.3 percent to 10.2 percent. Consumers’ assessment of the labor market was also more positive. The percentage of consumers stating jobs are “plentiful” increased from 46.5 percent to 47.2 percent, while those claiming jobs are “hard to get” declined from 13.3 percent to 10.9 percent. Consumers expressed greater optimism about the short-term outlook in May. The percentage of consumers expecting business conditions will be better six months from now increased from 19.4 percent to 21.9 percent, while those expecting business conditions will worsen declined from 9.0 percent to 8.4 percent. Consumers’ outlook for the labor market was also more favorable. The proportion expecting more jobs in the months ahead increased from 16.7 percent to 19.2 percent, while those anticipating fewer jobs declined from 13.2 percent to 12.5 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement increased from 21.5 percent to 22.6 percent, however, the proportion expecting a decrease rose from 6.8 percent to 8.2 percent. Source: May 2019 Consumer Confidence Survey®
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by Jena Tesse Fox | Hotel Management
Hotels and resorts across the Caribbean are adapting quickly to new demands from travelers. A new report from Agnes Pierre-Louis, a senior consultant at Horwath HTL Miami, examines how the Caribbean resort product is evolving to stay relevant in an increasingly global tourism market. Regional Pipeline The Caribbean is showing a healthy development pipeline. According to STR, the overall Mexico/Caribbean region had 131 hotels with 29,187 rooms in the construction phase, a 30.7 percent increase in rooms year over year. The Dominican Republic has 6,216 rooms under construction, while Jamaica has 2,144 rooms and Cuba 1,327. Hilton is on track to open its 100th hotel in Mexico by 2022, and Marriott International expects to expand its footprint in the country more than 50 percent by the end of 2023. In 2018, Marriott signed deals to open 36 hotels with more than 2,300 rooms in the Caribbean and Latin America. Close to 40 percent of this total is for development in Mexico. Four of the company's boutique Moxy Hotels projects have been approved for the region as well. Experiential and All-Inclusive While the opportunities and pace of development vary among the different islands, the region also faces increasing competition from warm-weather destinations in Latin America, Southeast Asia and North Africa. While beach vacations are popular, the growth in demand for experiential travel is driving Caribbean hotels to expand their offerings. The report noted shifts in the socioeconomic environment have influenced consumer purchasing habits, encouraging travelers to seek value-add opportunities. This has driven a boost in all-inclusive resort development. Last year, Apple Leisure Group, owner of AMResorts, purchased The Mark Travel Corp. to “deliver exceptional value to travelers.” Hilton and Netherlands-based Playa Hotels and Resorts formed a strategic alliance in September that specifically focuses on boosting the American company's all-inclusive offering. At the time of the deal's signing, Hilton and Playa announced plans to open eight additional all-inclusive resorts together by 2025. All-inclusive resorts usually require a minimum of 300 rooms, the report notes, and pass on savings to the guests by scaling operations and through vertical integration with tour operators. The Caribbean is positioned to accommodate the growing multi-generational trend—but some families are opting for vacation rentals as opposed to staying in traditional hotels. Private rentals are not only seen as offering better value than hotels for groups but also provide private spaces for gathering; one of the most sought-after amenities by this segment, the report noted. Caribbean hoteliers also are incorporating elements of the increasingly popular boutique and lifestyle segments into their resort designs. The design experience is intended to set a tone and influence the mood and activities of customers as well as immerse them in a unique environment, according to the report. For example, Kimpton Hotels opened in Grand Cayman in 2016 and is planning a property in Grenada for this year. Kempinski and Marriott’s Autograph collection are both scheduled to open in Dominica shortly. Ushuaia by Palladium, Margaritaville and Hard Rock Hotels are all looking to increase their presence throughout the region in the coming years. In April 2019, Hawai‘i hotels statewide reported lower revenue per available room (RevPAR), with higher average daily rate (ADR) and lower occupancy compared to April 2018.
According to the Hawai‘i Hotel Performance Report published by the Hawai‘i Tourism Authority (HTA), statewide RevPAR declined to $215 (-0.9%), with ADR of $275 (+2.3%) and occupancy of 78.4 percent (-2.5 percentage points) in April. Through the first four months of 2019 average room occupancy has fallen by 2.7 percentage points from 82.9% in 2018 to 80.2% this year. ADR has increased by 0.6% to $286.41 while revpar has fallen by 2.6%, to $229.79. HTA’s Tourism Research Division issued the report’s findings utilizing data compiled by STR, Inc., which conducts the largest and most comprehensive survey of hotel properties in the Hawaiian Islands. In April, Hawai‘i hotel room revenues fell by 2.4 percent to $349 million. There were more than 25,000 fewer available room nights (-1.5%) in April and nearly 61,000 fewer occupied room nights (-4.6%) compared to a year ago (Figure 2). Several hotel properties across the state were closed for renovation or had rooms out of service for renovation during April. 1 Among the classes of Hawai‘i hotel properties statewide, only Luxury Class and Upper Mid-scale Class properties reported RevPAR gains in April. Luxury Class properties reported RevPAR of $422 (+1.7%) with ADR of $548 (+0.4%) and occupancy of 77.0 percent (+1.0 percentage points). Upper Mid-scale Class hotels reported RevPAR of $124 (+2.2%) with ADR of $153 (+1.5%) and occupancy of 81.3 percent (+0.6 percentage points). Among Hawai‘i’s four island counties, Maui County hotels led the state in RevPAR ($307, +3.0%) in April. ADR grew to $390 (+3.4%) and occupancy was similar to last year (78.7%, -0.3 percentage points). Maui County was boosted by the strong performance of properties in Wailea, which were 91.3 percent occupied (+1.9 percentage points) with ADR of $601 (+4.5%). Kaua‘i hotels’ RevPAR fell to $201 (-8.1%) in April, with flat ADR of $278 (-0.2%) and lower occupancy of 72.3 percent (-6.3 percentage points). Hotels on the island of Hawai‘i reported a drop in RevPAR to $197 (-4.0%) in April, with growth in ADR ($264, +1.5%) unable to offset lower occupancy (74.6%, -4.2 percentage points). O‘ahu hotels reported lower RevPAR in April ($183, -1.9%) compared to a year ago. Growth in ADR to $229 (+1.2%) was counter-balanced by a 2.5 percentage point decrease in occupancy to 79.9 percent. Tables of hotel performance statistics, including data presented in the report are available for viewing online at: https://www.hawaiitourismauthority.org/research/infrastructure-research/ Properties report rooms as officially out of service to STR if they are unavailable for rent for 30 days or more. However, it should be noted that rooms out of service for renovation for less than 30 days are still included in the Supply numbers presented in Figures 2 and 4 and may be considered overstated. About the Hawai‘i Hotel Performance Report. The Hawai‘i Hotel Performance Report is produced using hotel survey data compiled by STR, Inc., the largest survey of its kind in Hawai‘i. The survey generally excludes properties with under 20 lodging units, such as small bed and breakfasts, youth hostels, single-family vacation rentals, cottages, individually rented vacation condominiums and sold timeshare units no longer available for hotel use. The data has been weighted both geographically and by class of property to compensate for any over and/or under representation of hotel survey participants by location and type. For April 2019, the survey included 161 properties representing 48,442 rooms, or 89.7 percent of all lodging properties with 20 rooms or more in the Hawaiian Islands, including full service, limited service, and condominium hotels. As has been reported, many international airlines have succumbed to extreme financial pressures in the not too distant past. Now, European travel conglomerate Thomas Cook appears to be on the verge of collapse after its stock nosedived 44% on Friday May 17th to end the week trading at only 16 cents per share.
While Thomas Cook’s airline businesses, including Thomas Cook Airline and Condor, have performed well recently, the 178-year-old company reported a £1.5 billion GBP pretax loss for the trailing six-month period. This summer Thomas Cook airlines (including Condor) will provide 727 flights from Europe to the Caribbean with 203,000 seats. This coming 2019/2020 winter they are scheduled to provide 1,125 flights and 317,000 seats. Thomas Cook has been in talks to sell some of its airline operations and appeared to have secured a 300 million euro loan contingent on that sale, but on Friday external auditors for the airline raised serious concerns about that sale. With the company’s stock rendered essentially worthless and major hedge funds positioning themselves to benefit from a debt restructuring, it’s likely we’ll see a sale of Thomas Cook and/or Condor sooner rather than later. Thomas Cook revealed in February that it was looking to raise cash by selling airline operations that carry 20 million passengers a year from the U.K., Germany and Scandinavia to the Mediterranean and other holiday sunspots. The fleet of about 100 jets flew 90% full in 2018, generating 3.5 billion pounds ($4.5 billion) in revenue and 129 million pounds in underlying earnings, with Deutsche Lufthansa AG, Virgin Atlantic Airways Ltd. and Ryanair Holdings Plc said to be taking a look. But the unit’s allure is tempered by its seasonality (spare jets are sent to Canada each winter for Caribbean flights), while Europe is already enduring a capacity glut that’s sparked a price war and prompted Lufthansa to freeze growth at its once fast-expanding discount arm. A sale of Cook’s Frankfurt-based Condor brand to the German giant remains possible but sliding fares and the deepening crisis mean the price may be falling. Lufthansa confirmed it had submitted a bid for Condor, with the option to extend that to all of Thomas Cook Airlines. Virgin Atlantic is also reportedly involved in the bidding process. So, what would a takeover of Condor by Lufthansa or Virgin Atlantic look like? While it’s possible that they would continue to operate the airline separately, it seems much more likely that this is simply a distressed asset sale and we’d see Condor and/or Thomas Cook’s fleet, and more importantly landing slots, absorbed by the successful bidder. Lufthansa would certainly like to prevent any other airline from gaining a foothold in its Frankfurt hub where Condor is headquartered. Thomas Cook operates a fleet of about 100 Airbus A321s and A330s while Condor operates a more diverse mix including 767s, 757s, A320s/A321s and A330s. While the short-haul jets would fit naturally into either Lufthansa or Virgin Atlantic’s operations, it would be interesting to see what they do with the 767s and 757s. Neither of the rumored bidders currently operates those airframes, and there is a real incentive against introducing a new type of plane and complicating scheduling and maintenance operations. The Thomas Cook company as a whole faces a number of issues. Loan Lifeline For all its troubles, banks haven’t turned their backs on Cook yet, with lenders last week agreeing to provide a 300 million-pound loan to help support the travel agent through next winter, when it needs cash to book hotels for 2020. Unlike the company’s existing debt, though, the facility comes with strings attached. It’s a secured loan, meaning that there will be less money available for other creditors in case of liquidation. And while it’s available from October through June next year, that’s only if the company shows “progress” on the airline sale. Quite what that means hasn’t been fully explained. Brexit Concerns Chief Executive Officer Peter Fankhauser said in an earnings statement last week there is “little doubt” that concern about Britain’s plan to leave the European Union has put a brake on U.K. demand. Other travel companies, including EasyJet Plc and Ryanair, have also been negatively impacted by the uncertainty surrounding the protracted negotiations. But as a tour operator Cook’s thousands of hotel rooms mean it can’t simply redeploy planes. Unlike global rival TUI AG, which owns much of its hotel space, Thomas Cook can’t cut prices to boost occupancy without taking a profit hit. With the European Union extending the Brexit deadline to Oct. 31, the issue isn’t about to go away. Demand elsewhere is also weakening, with sales in Germany and Sweden failing to match availability even after swingeing capacity cuts. Rain Dance The start of Thomas Cook’s current ills can be traced to it reserving too much hotel space in south European resorts -- especially in Spain -- last summer when temperatures surged beyond 30 degrees Celsius (86 Fahrenheit) across Britain and other northern nations, prompting millions of sun-seekers to holiday at home. Cook had initially predicted that it would partly make up lost ground with a surge in winter bookings to locations such as the Canary Islands, but that failed to transpire. Another year of record highs in northern climes would be disastrous. So, a spell of wet, cool weather will be at the top of Fankhauser wish list for coming months. Debt Swap Thomas Cook has suffered a debt crisis before and lived to tell the tale, flirting with collapse in 2011 when bookings were hit by a consumer spending squeeze in the U.K. and unrest in tourist resorts in North Africa. Its salvation then came in the form of a rescue loan and subsequent 1.6 billion-pound refinancing that included a rights offer and bond sale. The new threat to the company may require stronger medicine, especially since scope for cutting costs through the closure of travel shops has been largely exhausted. Bondholders now expect to recover as little as 34% of their investments, based on declines this week, with Thomas Cook’s credit-default swaps indicating that it has a 67% chance of defaulting before summer 2020, according to ICE Derivatives data. That could point to a debt-for-equity swap as the company’s best chance of survival, Citigroup analyst James Ainley said Monday. The analyst on Friday cut his share-price target to zero, saying its debt outweighs the intrinsic worth of the tour-operator and airline arm. Consumer Concern None of the above will matter if customers stop buying vacations and flights from Thomas Cook for fear that the company won’t be around to honor their bookings. Concerns were heightened Saturday after Sky News said payment firms are seeking to hold on to money from transactions for longer to guard against a further deterioration in Cook’s financial health. “The wider issue now is that they may be facing a loss of confidence among consumers spooked by the risk of disruption,” said Olivier Monnoyeur, a London-based high-yield portfolio manager at BNP Paribas Asset Management. “That could be the final straw that accelerates the company’s deterioration.” The situation is deteriorating rapidly, and Thomas Cook could likely be forced to sell one or both of its airlines in the near future in order to keep the rest of its operations running.
Published results from eleven major Caribbean destinations show they have experienced a good first quarter with ten of the eleven posting increases in the number of stopover visitors with only Bermuda posting a decline in stopover arrivals. Puerto Rico led the way with a 62.3% increase in non-resident hotel registrations as that destination recovered from the impact of 2017’s Hurricane Maria. Jamaica and Curacao both posted growth of between 10% - 15% while six other destinations saw growth of between 4% - 9%.
First Quarter Stopover Arrivals 2019
The strong growth may reflect some movement of business from Cancun and Riviera Maya as Cancun’s Airport saw a below average increase in international air arrivals of just 0.9% in the first three months of 2019 with hotel occupancies in both Cancun and Riviera Maya declining by 4.4 percentage points and 0.7 percentage points respectively.
Puerto Rico saw average hotel room occupancy fall by 6.1 percentage points in March 2019 to 75.6%.5/15/2019 According to the Puerto Rico Tourism Company (PRTC), the hotels and resorts endorsed by the PRTC saw the number of non-resident hotel registrations increase by 47.4% in March 2019, growing from 108,842 registrations in March 2018 to 160,444 registrations in March 2019. Registrations by local residents grew by 24.6% from 31,825 in March 2018 to 39,659 in March 2019. The number of hotel registrations made by guests from the USA increased by 51.3%, from 96,657 in March 2018 to 146,249 this March. Puerto Rico was severely impacted in September 2017 by Hurricane Maria which resulted in damage to, and the closure of, a number of hotels in Puerto Rico negatively impacting business in late 2017 and early 2018.
PRTC reports that the number of hotel/resort available room nights grew by 3.3% in 2019, from 360,959 in March 2018 to 372,777 in March 2019. The number of occupied room nights fell by 4.4% from 294,807 in 2018 to 281,978 in 2019 largely due to a decline in the average length of stay from 3.4 nights to 2.5 nights with average room occupancy falling by 6.1 percentage points from 81.7% in 2018 to 75.6% in 2019. ADR grew by 9.3% from $166.25 in March 2018 to $181.73 in March 2019. In the first three months of 2019 the number of non-resident hotel registrations increased by 62.3%, growing from 268,424 registrations in 2018 to 435,578 registrations in 2019. Registrations by local residents grew by 25.7% from 83,567 in 2018 to 105,013 in 2019. Registrations by visitors from the USA increased by 73.6%, from 227,773 in 2018 to 395,324 this year. The number of hotel/resort available room nights grew by 1.7% in 2019, from 1,053,996 in 2018 to 1,071,800 in 2019. The number of occupied room nights fell by 11.4% however from 867,285 in 2018 to 768,137 in 2019 largely due to a decline in the average length of stay from 3.9 nights in 2018 to 2.5 nights in 2019, with average room occupancy falling by 10.6 percentage points from 82.3% in 2018 to 71.7% in 2019. ADR grew by 8.8% from $165.69 in 2018 to $180.22 in 2019. Tourism will fall by as much as 30% this year at Quintana Roo beach destinations due to the invasion of sargassum, according to the federal government.
The secretariats of the Environment (Semarnat) and the Interior (Segob) predicted in a joint report that at least 200 kilometers of coastline in the Riviera Maya will be affected by the seaweed. Cancún, Playa del Carmen, Puerto Morelos, Tulum, Cozumel and Isla Mujeres are all located on the stretch of coast where more than a million tonnes of sargassum could sully the turquoise waters and stain the white-sand beaches. Cancún and Puerto Morelos Hotels Association president Roberto Cintrón said the downturn in tourism due to sargassum will cost the industry millions of dollars. “If the problem is not adequately contained the economy of the state and country will be at risk,” he said. Cintrón contended that the viability of the Maya Train project and the National Tourism Promotion Fund (Fonatur) – which is managing the ambitious Yucatán peninsula rail project – could also be placed at risk if visitor numbers to the state significantly decline. “Quintana Roo attracts 50% of international tourists who arrive in the country, Fonatur depends on the non-resident tax that international tourists pay. If that’s affected by 50% the Maya Train, as well as the fund for international promotion and the National Tourism Promotion Fund, will be at risk,” he said. “The problem will grow to a national scale because if there is a reduction [in funds] for the organization in charge of international promotion, other tourist centers like Los Cabos will also be affected and they all need international promotion,” Cintrón added. In Mahahual, where large quantities of sargassum have begun washing up on the beach, 40% of hotel reservations have been canceled in recent days, according to a Quintana Roo tourism official. “This is serious. A lot of sargassum has already arrived . . . People who arrive say: ‘I’m not going to the beach, I’m better off going to another place’ and they leave,” Arturo García said. He added that it was concerning that authorities haven’t yet begun contributing to clean-up efforts, leaving local hoteliers and their employees to remove the seaweed from the beaches themselves. Armina Wolpert, the Russian consul in Quintana Roo, also said that there are “apparently no concrete actions” from state and federal authorities to combat the arrival of sargassum. She said that “Russian tourists come only and exclusively for the Mexican Caribbean Sea,” pointing out that they are prepared to put aside security concerns to visit Quintana Roo. However, Russian media has published images of people swimming amid sargassum and “that generates a negative impact on tourists’ plans,” Wolpert said. There are currently 11 direct flights between Moscow and Cancún each month but the consul warned that flights will be canceled if demand from tourists drops as a result of the sargassum invasion. President López Obrador announced earlier this week that the navy will lead efforts to combat the massive arrival of seaweed and said the government’s anti-sargassum plan will be presented next week. According to a forecast made by a Quintana Roo sargassum council in January, three times as much seaweed will invade the Caribbean coast this year. If the prediction comes true, 1.56 million tonnes of the brown macroalgae will arrive. Federal, state and municipal authorities spent 332 million pesos (US $17.2 million) between June and December 2018 to attend to the invasion of sargassum but this year an investment of more than 720.5 million pesos (US $37.6 million) is predicted in the Semarnat/Segob report. The two secretariats estimated that the arrival of the smelly and unsightly seaweed caused economic damage of just under 5.3 billion pesos (US $275 million) last year. At least 522,226 tonnes of sargassum were removed from the sea and beaches in Quintana Roo, they said. The report, which was obtained by the newspaper Milenio, revealed that a four-phase plan to tackle the sargassum problem has been developed. The first 30-million-peso phase involves tracking the movement of the seaweed using radar and satellite images, while the second 420-million-peso phase consists of using boats to remove sargassum from the sea. A third phase involves removing sargassum from beaches at a cost of just under 235.5 million pesos while the fourth and final 35-million-peso phase consists of monitoring water and air quality at Quintana Roo beaches. The Guardian - May 5 2019
In just 11 years, it has grown from nothing to a $30bn firm. But critics say Airbnb’s rise has come at a huge cost to urban life – and cities across the planet are trying to find ways to rein it in. Rowan Hughes stayed in Airbnb accommodation on holidays for several years before she decided to make some extra cash from her own home in south-east London. When refurbishing the property, she created a room with an en-suite bathroom and its own front door, listing it on the accommodation-sharing platform at the start of this year. Hughes, 37, considered getting a lodger, but using Airbnb offered the flexibility to reclaim the room when her own friends and family came to stay. So far, she has mainly attracted business travelers, who prefer her homely atmosphere and £50-a-night charge to nearby chain hotels where soulless rooms cost significantly more. “I make it clear on the listing that it’s a family home, so guests know what to expect,” she said. “It’s still early days but it has been great. It brings in some extra cash for holidays or things for the children, and it’s a competitive price for my visitors. It works for everyone, and I don’t want to be greedy.” Hughes is exactly the kind of host the founders of Airbnb had in mind when they launched the business in 2008. Joe Gebbia and Brian Chesky dreamed up the idea of a website that would allow people to rent out a spare room for the odd night or two after they charged three guests $80 each to sleep on airbeds in their San Francisco apartment when every hotel room in the city was taken. Eleven years on, Airbnb’s site lists more than six million rooms, flats and houses in more than 81,000 cities across the globe. On average, two million people rest their heads in an Airbnb property each night – half a billion since 2008. London, Paris and New York have the biggest number of listings, but Airbnb accommodation is available in Mandalay, Ulaanbaatar and Brazzaville. Last year, Forbes estimated the business to be worth $31bn (£23bn). In the coming months, Airbnb is expected to become a listed company, with an initial public offering netting enormous wealth for Gebbia, Chesky and co-founder Nathan Blecharczyk. But Airbnb’s extraordinary success has not been welcomed unreservedly. Some residents in areas with a big Airbnb presence claim the business is hollowing out communities by forcing up rents and limiting availability for people seeking long-term lets, and importing large numbers of tourists who display scant interest in courtesy to their temporary neighbours. Social media and websites such as airbnbhell.com abound with stories from hosts, guests and neighbours of excessive noise, trashed homes, wild parties, last-minute cancellations and scams. But they are matched by positive experiences from satisfied travelers who have found affordable alternatives to hotel rooms. Many local authorities are implementing or exploring regulation to mitigate the negative impact of short-term rentals. In London – where more than 77,000 homes are listed on Airbnb, a fourfold increase since 2015 – mayor Sadiq Khan last month called for a registration scheme for people renting properties on a short-term basis. Since 2015, a legal cap of 90 nights a year for short-term rentals in London has been in place, but it has proved almost impossible to enforce. City Hall acknowledged that the 2.2 million guests who stayed in short-term rentals in the year to July 2018 generated £1.3bn for the local economy, but said the time had come for a mandatory registration system for hosts and zero tolerance for those trying to flout the 90-night limit. James Murray, deputy mayor for housing, told the Observer: “In principle, a good balance can be struck. Londoners can make a bit of extra money by renting out their homes, and visitors can have more options for places to stay. But that does have to be balanced against protecting long-term rented housing in London and the impact on neighbours of people coming and going. In some areas, the balance is not being struck.” Airbnb – which backed the mayor’s call – takes measures to enforce the 90-night cap with its hosts. Other accommodation platforms are less compliant, the mayor’s office said. An Airbnb spokesperson said the company wanted to be “a good partner to the places in which our hosts live... We have already collaborated and worked with over 500 governments to help hosts share their homes and follow the rules.” The spokesperson said “countless studies” had shown that Airbnb had no significant impact on housing, adding: “We always welcome working with local authorities and partners on how we can ensure hosting and home sharing continues to grow responsibly and sustainably, and help spread the benefits of tourism to local families, small businesses and their communities.” Last week an adviser to the European Court of Justice said the company – which is registered in Ireland – should be regarded as a digital service provider rather than a real estate business. This could exempt it from onerous regulation. Airbnb has spawned competitors though none has matched its scale. Marriott International recently said it would become the first global hotel chain to launch a home-rental business. Hilton and Hyatt are considering similar moves. Meanwhile, Airbnb is moving into the hotel business, partnering a New York developer to turn commercial properties in the city into a “new category of urban lodging”. The first venture will be to convert 10 floors of the Rockefeller Plaza in Manhattan into “high-end apartment-style suites”. At the other end of the spectrum, Fairbnb, a co-operative “seeking to create a just alternative to existing home-sharing platforms”, will launch in five European cities next month. The venture is committed to sustainability, transparency and compliance with local and national legislation. Its hosts will be permitted to advertise only their own homes, and the co-op’s 15% commission fee will help local development projects. Fairbnb is perhaps closer to Gebbia and Chesky’s original vision for community-based tourism than the behemoth that Airbnb has become. Although most Airbnb hosts in the UK – 76% – let out their own homes for extra cash, the platform is increasingly used by business people who own or manage multiple properties. Housing activists and analysts say that some landlords have shifted from offering long-term tenancies to more profitable short-term lets. In some places, they say, properties are being turned into de facto hotels or hostels, with locks on individual rooms, to maximize income. In London, according to database Inside Airbnb, 11 hosts have more than 100 properties listed on the site. Almost a quarter of London hosts list five or more properties. Other big cities show similar trends. Alex, 31, who has two central London properties on Airbnb, hopes to expand. “I see this as the future. It’s not so attractive to let properties now,” he said, citing the government’s increased taxation of buy-to-let property. A lot of landlords have had to sell up, but those who’ve managed to stay afloat have had to get creative. From the standpoint of making a profit, Airbnb is a good thing.” On his way to work on the morning of 1 May, Axel Avin, 36, was stopped in the Nostrand Avenue subway station in Brooklyn by a French family trying to figure out which MetroCard to buy. Three years ago, the tourists would have stuck out in that part of the Bedford-Stuyvesant neighbourhood. For years, the area has been home to predominantly working-class families. Outside the subway station is a Taco Bell, Burger King and a handful of mom-and-pop shops mixed with empty, graffitied storefronts. But with Airbnb, it’s now common to see tourists milling about, trying to make their way out of Brooklyn to the skyscrapers of Manhattan. “It’s like a neighbourhood that’s made up of older either African-American families that have been here, or younger gentrifiers who are white and in their 20s,” said Avin, who has lived in the area for 12 years. “Then you see a European 50-year-old couple with their suitcase walking down the street. It stands out.” Despite hosting a massive Airbnb presence – New York is its third largest market, with an estimated 50,000 listings in every corner – the city has been a battleground for the company. City and state politicians have made it legally complicated to be an Airbnb host, attempting to prevent landlords and real estate agents from putting apartments on Airbnb that could have gone to permanent residents. State law prevents renting out apartments in most buildings for less than 30 days unless the hosts live permanently in the same space. Fears of using Airbnb for lucrative real estate schemes are not misguided. The city filed a $21m lawsuit against a group of real estate brokers who are accused of using Airbnb to rent out 130 apartments in the city. The restrictions have been supported by housing campaigners, who see the company as a factor in rising rents and gentrification. “We have a massive homelessness crisis, we’re coming up on 70,000 homeless people in the city, and we have thousands of apartments listed essentially as hotel rooms,” said Jonathan Westin, executive director of housing rights group New York Communities for Change. Airbnb is defending itself. A federal judge has temporarily blocked a city statute that would have forced the company to disclose information about its hosts, which would have made it easier to enforce restrictions. The company argues that New York politicians have been influenced by the powerful hotel lobbyists, once putting up a list of New York City Council members and how much money they take from “big hotels”. Any restrictions, they argue, hurt middle-class New Yorkers who are trying to make some money on the side and tourists who are looking for a cheaper place to stay, all because of a few bad actors. Ed, 27, who rents out a one-bedroom apartment through Airbnb in the East Village, said being a host has helped him pay for school as he works to get his bachelor’s degree. Ed declined to provide his last name for fear of legal repercussions in light of New York’s Airbnb restrictions. “It [Airbnb rental income] is putting me through school... without having to work at restaurants and shit, which would have been so much harder,” he said. “I grew up poor, I got up myself. It’s maintained by myself, I’m offering a service. I’m not a bad actor.” Lauren Aratani. Few UK cities have encountered a rise in Airbnb accommodation greater than that in Edinburgh. Scotland’s capital also houses many of the country’s most popular tourist destinations, while its international festival and fringe has become one of the world’s foremost cultural and artistic landmarks. According to Airbnb, of its three million or so global listings 6,272, including 4,225 active rentals, are in Edinburgh. These have begun to transform the character of a small city of just over 500,000 people. The Airbnb phenomenon in Edinburgh has led to concerns about the erosion of sustainable communities in the city. Louise Dickins is the owner of Dickins Edinburgh which specializes in Airbnb and short-term lets. She is sympathetic to concerns over the spectacular growth of such accommodation and seeks to mitigate these as she can. “I feel the Airbnb sector gets unfairly blamed for many ills present long before this came about,” says Dickins. “Yet we don’t talk about the ways in which the city has been improved, better restaurants, better retail outlets as well as the increased employment opportunities.” Luke Zach, from the US, spent several months in a flat in Edinburgh’s Grassmarket while working in the Borders. “Staying in an apartment definitely enhanced my experience of being in Scotland and living and working here,” he said. The journalist Mike Small is one of the founding members of Citizen, a campaign group seeking to protect Edinburgh from the negative impact of excessive tourism, gentrification, property development and the privatization of public space. Much of this change has taken place in the shadow of the city’s festivals. The phrase he uses to describe the consequences is “hollowed-out”. “Many people have spoken of feeling marginalized and culturally alienated by the encroachment of the festivals into their lives,” says Small. “The incidence of unregulated Airbnb and short-term lets has come in the wake of this and wreaked havoc in the Old Town. Old people are feeling isolated as the practice of buying properties for the sole purpose of using them as Airbnb accommodation has risen. “What seems to be driving this is a lust for growth, this being the only metric of value to Edinburgh city council. Each year a growth in numbers is trumpeted as a success with few questions asked about its nature and purpose.” Kevin McKenna “I lived here for 10 years and before the rent just went up a little with inflation,” says Maria, who lives in the popular Born district of Barcelona. “Then the landlord suddenly raised it by 30% and changed the contract from long-term to monthly. I’m a single mother with two small children and now I have to sub-let a room in order to pay the rent.” Maria, whose name has been changed to protect her anonymity, is a victim of the so-called Airbnb effect that has seen rents in the city rise by 30% while salaries have remained static. “Platforms such as Airbnb led to rent rises,” says Janet Sanz, the city councillor responsible for housing. “If you can earn €3,000 a week by renting to tourists instead of €800 a month to a resident, clearly there is a temptation to do so.” Airbnb offers around 18,500 properties in Barcelona which host some 1.5 million visitors a year. This is only one-fifth of the number in hotels, but it’s having a profound impact on the housing sector. The authorities launched a crackdown on unlicensed tourist apartments in 2016 and claimed to have removed some 5,000 lettings from the internet. But according to Jaime Palomera, spokesman for the Barcelona Tenants Union, they haven’t disappeared. “We think this has led to a boom in room rentals, which isn’t regulated like renting entire apartments for which you need a licence,” Palomera says. “But often the owner isn’t living there. Guests are sometimes encouraged to tell anyone who comes to the door that they are friends or that the owner is out. It’s nearly impossible for inspectors to prove that it’s an illegal rental. “Now we need to regulate room rentals, but we have to be cautious and limit the number of licences so that this clandestine hotel business that is Airbnb doesn’t become an even worse cancer.” Palomera sees Maria’s story as part of a trend. “Short-term rentals have pushed up rents so we are now seeing something we haven’t seen in 30 years, where families are sub-letting because they can’t afford the rent and in some cases are sub-letting to tourists. But we have to view this in the context of real estate speculation that goes beyond the tourist industry.” Airbnb claims its “community” of hosts brought more than €1bn to the city in 2018 but the question remains as to just who is benefiting. In spite of Airbnb’s claims that most of its hosts are renting out rooms to make ends meet, last year the data research organization DataHippo found that one Airbnb “host” managed 204 apartments with a potential rental income of €37,721 a day. The 10 biggest hosts managed 996 apartments between them. And it’s not just tourists. Barcelona is one of the world’s leading conference venues and during the World Mobile Conference in March rents increased by as much as 500%, with apartments being rented for over €400 a day. Whatever the authorities try to do to regulate the market, as long as demand and profits remain this high, it doesn’t look as though the game of cat and mouse between them and Airbnb is about to end. According to the Las Vegas Convention and Visitors Authority Las Vegas saw the volume of visitors decrease by 1.4% in March 2019, falling from 3,749,700 visitors in March 2018 to 3,697,100 arrivals in March 2019.
Las Vegas had 148,006 hotel rooms in March 2019 (up 0.4% compared with March 2018) and achieved an average city-wide room occupancy of 91.5% (down 1.2 percentage points compared with March 2018), an ADR of $133.95, (down 0.2% compared with March 2018) and a RevPar of $122.56, down 1.5% also compared with March 2018. Through the first three months of 2019 Las Vegas saw a 0.8% increase in the volume of visitors, growing from 10,274,100 arrivals in the first three months of 2018 to 10,351,800 visitors in the same three months of 2019. Las Vegas achieved an average city-wide room occupancy of 88.0% in the first three months of 2019 (up 0.7 percentage points compared with the first three months of 2018), an ADR of $141.77 (up 4.9% compared with ytd 2018) and a RevPar of $124.76, up 6.1%, also compared with the same three months of 2018. Gaming revenue declined by 1.2% from $2.67 billion in the first three months of 2018 to $2.64 billion in the same three months of 2019. |
Jim Hepple is an Assistant Professor at the University of Aruba and is Managing Director of Tourism Analytics. Archives
May 2023
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