Has the Rise of the Sharing Economy Killed the Hotel Industry?

Ride sharing apps like Uber have made waves in the transportation industry by providing regular commuters with more viable options. In the same manner, alternative lodging and the “sharing economy”, facilitated by companies such as Airbnb, were thought to be the killers of the hospitality industry. Why? Here’s what billionaire real estate investor, Thomas, Barrack had to say at the Milken Institute Global Conference: “[Airbnb] is killing [the hospitality industry], of course. If you look at the hospitality industry… you have to adapt the regulatory environment, the tax environment, all of the local handicap requirements… keeping full-time employees. You just impute that on capital structure, versus a non-asset intensive engine of management, you can’t compete.”

The Death of Hotels

Is this true? In a way, yes. Airbnb’s growth has been explosive; it is currently valued at $20 billion and boasts 550,000 listings in 192 countries. Yet the hospitality industry differs in opinion and argues that Airbnb caters to a completely different market than more traditional hoteliers. Looking at the statistics, the general hotel industry has a valid point. The numbers show that indeed, the hotel industry is thriving. Given that, it is unsurprising that resort brokerage and the hotel management industry remains competitive. Just in Queensland, sales of hotel management rights are abundant. Many hotel owners are listing the management rights to their properties for sale, and just as much are purchasing them.  If you are looking to invest in the hospitality industry, then now is as good a time as any.

Win-Win Situation

As an investor, you want to be wise with your money and put it in the most profitable area. The fact both the sharing economy and the tradition hotel industry are thriving makes this a difficult choice. One that you should make after careful analysis. You can make money either by gambling on the alternative lodging market, or by stacking your chips on the hotel or resort industry. Maybe the decision will boil down to personal preference, because the way things are going, you are a winner either way.