Growing demand for home sharing platforms will impact hotel room rates in Southeast Asia, with the number of listings expected to grow to 15 percent of total room inventory by 2020, a property firm report said.
In a report, real estate services firm Jones Lang Lasalle said listings for home sharing platform Airbnb currently account for 5 percent of total room inventory and around 2 percent of occupied room nights in Southeast Asian cities such as Singapore, Bangkok, and Kuala Lumpur.
On a global scale, home sharing platforms such as Airbnb and Homeaway account for 25 percent of the total available hotel room nights in global gateway cities in the US and Europe.
The impact on hotel room rates is likely insignificant in Southeast Asian countries, according to JLL.
“However, we expect the number of listings to grow to 15 percent of total inventory and 5 percent of occupied room nights by 2020,” JLL said.
This could be driven by the possible increase in prices of residential rents.
“If planning laws allow short-term stays in residential sites in central locations, residential prices could rise. As integration of use between retail, office, hotel, residential increases in city centers, values may depend more on location than allowable use in the next five to 10 years,” JLL said.
At present, JLL noted the gap between residential rents and hotel room rates remain significant in Singapore and Kuala Lumpur.
“Average monthly revenue from Airbnb rentals is estimated to be lower than residential rents largely due to lower occupancy rates of around 20 percent, compared to residential occupancy rates of 90 percent,” JLL said.
In the top global cities, the estimated Airbnb average occupancy rate is 25 percent to 30 percent, while hotel occupancy rates are at 80 percent.
“This implies that home sharing accommodations may make up 9 percent to 11 percent of total occupied room nights in these cities. Impact on hotel room rates is started to be felt as hotels experience fewer compression nights,” JLL noted.
Home sharing platforms continue to work with city planning authorities to regulate and manage social side effects of their operations, according to the report.
“Depending on the city, restrictions and taxes are being put in place to minimize the impact of these short-term accommodations on availability of affordable housing and disamenities,” the report said.
JLL noted a few hotel operators are starting to acquire home sharing platform in order to maintain market share.