In our previous article we discussed how touristic boom worldwide has caused demand on European hospitality market and how P2P accommodation takes great share on the market.

Now, let’s see what the dynamic in the number of arrivals to European capitals is and what supply of bedplaces there is for the city visitors.

Dynamics and Supply

The highest increase of arrivals, 22.9%, might be seen in Amsterdam, followed by Budapest and Prague with growth rates above 10%. The Dutch city also added the foremost places in hotels, the quantity of bedplaces grew by 14.2% within the monitored two-year period.

No other city within the study could increase its stock by over 5% and in Budapest, the capacity of hotels in 2018 was but in 2016. The sufficient reaction of the hotel market in Amsterdam to the stronger inflow of tourists, combined with regulation from local authorities led to a decrease of 8.9% within the number of listed beds over the 2 years.

Stagnation of hotel markets, despite the increasing number of international arrivals, within the other four cities led to a rapid development of the P2P accommodation market, which resulted in growth of up to 50% in two years. The case of Amsterdam shows that if the hotel market is ready to react to changes within the number of incoming tourists, the motivation of apartment owners to enter the hospitality market lowers.

Hotels and P2P accommodation

The entire number of overnights shows what number nights were spent within the cities in hotels and P2P accommodation. The figures for nights in hotels come from the statistical offices of respective countries, as tourist accommodation establishments are obliged to report the quantity of guests and nights they spend within the destination.

On the opposite hand, there are not any official statistics on what number overnights were booked through P2P accommodation. Portal AirDNA monitors the quantity of booked listing nights, which shows for a way many days listings in respective cities were booked in spite of the quantity of guests. We calculated an estimate of overnights using listings of booked nights and average listing capacity.

Although the share of P2P accommodation capacity in Barcelona, Budapest and Prague is over 40% of the entire accommodation capacity, its share on overnights spent is at 30% in Budapest and Barcelona and 22.5% in Prague.

Figures from Amsterdam and Vienna are even lower, reaching 17% and 15% respectively. The share of P2P accommodation overnights grew altogether the cities with the exception of Amsterdam, where it decreased by one mathematical notation. The lower share of P2P accommodation on total nights spent might be possibly explained by the fluctuating character of the availability. 

A number of the apartments may only be available for some days a year, while others are offered for its entirety. there’s a seasonality within the offer, with peaks in high touristic seasons in summer and before Christmas.

In absolute values, Barcelona had the best number of overnights with over 20 million in both 2017 and 2018. Visitors in Prague’s hotels spent over 18 million nights annually and hotels in Amsterdam and Vienna both had over 15 million bookings in 2017 and 2018. In Prague, Barcelona and Budapest, the overnights grew substantially faster year-on-year in P2P accommodation than in hotels. These cities recorded a rise of around a million overnights.

Nights spent in P2P accommodation also grew in Vienna by 800 thousands, but the hotels added roughly an equivalent amount of nights. Consistent with our estimates, only Amsterdam had a stagnating number of overnights in shared accommodation listings while the hotel market grew by 800 thousands overnights. Visitors in Barcelona spent over 30 million nights in 2018, which implies that each night there have been almost 83 thousand tourists within the city per night.

Prague is second with over 64 thousand tourists spending the night within the city. Amsterdam and Vienna had both eclipsed the 50 thousand mark with 55 and 51 thousand overnights per day. In Budapest, a median of virtually 41 thousand visitors slept within the city nightly.

Occupancy rates

A lower share of P2P accommodation on overnights than on the capacity of accommodation might indicate that the listings have a lower rate of occupancy. After staring at the table below, it’s evident that the occupancy of both hotels and P2P accommodation are at very similar levels. The sole justification left to explain the above-mentioned discrepancy is that the seasonality on the availability side. Hotels are single purpose buildings, which are very hard and value consuming to rework for one more use, so their offer is stable throughout the year, with none fluctuations.

On the opposite hand, owners and operators of P2P listings can easily attempt to move their apartments from the short-term rental market to the rental housing market looking on their current preferences and therefore the demand on both markets.

This way, an P2P apartment will be, as an example, offered to tourists in summer months and for the remainder of the year, it will be rented to students. Its occupancy will reflect into the statistic just for the summer months. By moving the apartments between the housing and hospitality markets, the owners can protect returns on their investment and keep the general occupancy at a high level.

Occupancy rates of both hotels and P2P accommodation are the best in Amsterdam, with both values slightly below 82%. Just in case of hotels, there had been a decrease, possibly caused by growing supply. For P2P listings, matters was the other, because the municipality imposed regulation on short-term rentals, which led to lower supply while the demand remained strong. In Prague and Barcelona, occupancy of hotels remained stable. A rise of around 2 percentage points was seen in Vienna and Budapest.

Legal Standpoint

Operating a tourist accommodation establishment could be a regulated business in most countries. The operator must be a registered entrepreneur or an organization. There’s an obligation to accommodates a strict set of rules starting from hygiene, through fire safety, to registration obligation, just to say some. These businesses even have to pay taxes and charges like VAT, revenue enhancement and tourism fees.

P2P accommodation platforms (mostly Airbnb) were established as a representative of the shared economy to enable people to supply their spare rooms to travellers through a platform to earn some money. it’s evolved over time into a platform, which is now employed by many not only to utilise unused parts of their own homes but it’s accustomed offerwhole apartments, which are getting used solely for this purpose, to tourists. 

This trend of doing business is closer to operating a hotel than to the principles of shared economy. The rapid increase within the number of apartments which used this fashion poses a haul for cities because it may have a bearing on growing property prices and lower affordability of housing. Moreover, P2P accommodation hosts are often not registered hospitality operators, in order that they avoid paying taxes and charges for his or her activities.

Source: Deloitte, Prague Hospitality Report, November 2019