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Why Do Cities Take Aim At Airbnb

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GLOBAL HOSPITALITY PESTEL JOURNAL ANALYSIS #2:
Economic Perspective

Danielle Fernandes, 100978251

Cities Take Aim at Airbnb
By Sunny Dhillon

Source: The Globe and Mail

Summary

The author takes the reader on a journey starting in a small, Southeastern community in British Columbia, called Nelson, to examine how it is being targeted by rental housing constraints. The developing issue that many face stems from not being able to secure their living arrangements. This is due to lack of property ownership, terminated leasing agreements, and a high demand in tourism. The interest in Airbnb, which is a property-sharing network that enables tourists to travel comfortably by hosting accommodations, has conquered the short-term rental market. Short-term …show more content…

(Dhillon, 2016) Although short-term renting is an attractive option that many are taking advantage of, the hospitality industry is in turn being compromised. Airbnb is a threat to sustaining success in the hotel sector. Straying from a more reliable and predictable experience that the older generation is accustomed to, younger tourists are willing to pay less in order to enjoy themselves from the viewpoint of a local. Hosting rates can be considerably inexpensive compared to fixed hotel rates, ultimately depending on the size and location of the room or house. There is a further explanation that ties in the economic perspective on a macro and micro level in regards to understanding how both Airbnb and hotels compete. According to revenue manager, Ahmed Mahmoud, “By comparing hotel revenue per available room to the number of active Airbnb units in a particular location, it appears that hosts respond to market incentives, such as a higher room rental rate and excess demand. The presence of these factors cause more Airbnb units to appear in the market, which holds true at the macro level–where markets with higher average dollar room rates and occupancy have the highest number of active Airbnb units, and on the micro level–where we see a spike in the number of active Airbnb units during major events such as the Super Bowl and New Year's Eve.” (Mahmoud,

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