At times when hotel rates would normally rise — say, during a major event — Airbnb absorbs some of that demand.

“The Airbnb effect is more pronounced for longer stays than for your typical corporate guy who pops in Tuesday, Wednesday pops out,” said James Stockdale of Jones Lang LaSalle Inc. “It’s more a function on the leisure side of things and more a factor for the (longer-term) customer.”

Stockdale added, “Airbnb to hotels is definitely not what Uber and Lyft are to taxis.”

Alan Reay, president of Atlas Hospitality Group, said if not for Airbnb, hotel rates might be even higher than they are now.

Bruce Baltin, a managing director at CBRE Hotels Consulting, agreed. “Airbnb does not have a huge impact on occupancy,” he said. “What it’s changed is average rate.”

Hotel market booms

Most of the hotels under construction nationally are luxury properties that charge higher nightly rates, according to a recent JLL report. Only 2.5% of hotels being developed nationally were budget hotels, the report found.

That’s largely driven by the high price of development, especially in L.A., experts said.

“The cost of land and the cost of construction — you are not going to see anyone building budget hotels,” Reay, of Atlas, said. Airbnb “fills in that gap” in price points right now, he added.

As new hotel rooms come online, experts say the market will adjust.

“The construction pipeline is slowing down a little bit,” said CBRE’s Baltin. “We added a lot in 2017 and 2018. The hotel industry is very strong right now in terms of occupancy and average room rate.”

L.A. has “seemingly boundless new supply, particularly downtown, and I think that’s okay,” said Bob Rauch, chief executive of San Diego-based Rar Hospitality Inc., who manages the Wave and Crimson hotels in Manhattan Beach. The company is also building a Tru by Hilton in Inglewood.

“L.A. is one of several destinations in the U.S. that has shown a significant improvement in its ability to perform,” Rauch said. “There are no places in L.A. that are not booming right now.”

Said Stockdale: “As long as the economy continues to grow, the hotel industry should be fine.”

Next

For reprint and licensing requests for this article, CLICK HERE.