How the Sharing Economy Could Impact Hotels During Conventions
PHOTO: Cleveland, Ohio, site of the 2016 Republican National Convention. (photo courtesy of Thinkstock)
As hotel room rates climb in Cleveland and Philadelphia ahead of this month's upcoming Democratic and Republican National Conventions, more and more travelers are likely to turn to home-sharing services like Airbnb, HomeAway and others.
The availability, cheaper rates in some cases and resulting bookings on home-sharing platforms — Reuters reported Airbnb anticipates 5,400 bookings between the two conventions — is likely to put a squeeze on nearby hotels' compression period, when demand peaks.
Any impact is certain to be felt by hotels, considering compression periods can account for as much as 30 percent of hotels' annual profits, per Reuters.
Citing data from TravelClick, Reuters reported hotel rates in Cleveland and Philadelphia have risen by more than 20 percent for the 2016 convention months compared to the same time last year.
However some hotels have increased rates even more, with some doubling or tripling room rates in anticipation of an influx of guests.
Nonetheless the 20.7 percent average revealed by TravelClick is notably less than the 34.75 percent increase in Tampa, Florida, and Charlotte, North Carolina during the 2012 convention months, per CBRE Hotels.
Although older hotels are competing with new hotels and a slower economy, it appears that Airbnb and others are likely to limit or at the very least impact the industry's ability to raise room rates around big events that draw high demand.
While the growth of Airbnb and the sharing economy overall presents a significant challenge to the hotel sector and others within the travel industry, alternative accommodations undoubtedly benefit travelers, especially those seeking to take in big events — like the upcoming conventions — on a budget.
More by Patrick Clarke
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