New Airbnb regulations will prove a welcome boost for London's hotel market

Earlier this month, Airbnb announced that from spring a policy will be in place to limit the number of days per year a full unit can be let in London and Amsterdam. Airbnb will be responsible for ensuring that hosts in these cities stick to their limits of 90 and 60 nights respectively.

Current regulations in London mean that Airbnb hosts can only let properties for a maximum of 90 nights. However, closer examination of current listings, using Inside Airbnb data, suggest that almost 60 per cent of entire properties listed on the site are available for more than 90 nights a year. Airbnb’s implementation of the city’s 90-day rule could therefore restrict availability across almost 14,500 active listings. 

The British Hospitality Association (BHA) has been lobbying the Government for some time, concerned that by using online platforms landlords are able to circumvent regulations that hotel operators adhere to such as tax and health & safety requirements. More recently it became apparent that online hosting sites were having an impact on the availability of rental accommodation – a major issue in London where the cost of renting has risen significantly in recent years. 

What does this mean for hoteliers? It has been difficult to ascertain the full impact of the sharing economy on the hotel market. Anecdotal evidence suggests the impact tends to vary across certain markets and at the lower price points. Airbnb can’t compete for those guests looking for the luxury hotel experience but a budget hotel in a location where there is a high concentration of Airbnb supply could experience a greater impact. 

A recent study by STR, the data and analytics specialists, concluded that Airbnb’s impact on hotels is perhaps less than perceived. Using data supplied by the online platform for seven US markets and six international markets (including London) it was clear that in areas with high occupancy Airbnb was accommodating excess demand and hotel occupancy levels remained intact. 

Even if the impact on London hotel performance is minimal, implementation of the 90-day rule on hosts is likely to be welcomed by hotel operators. The greatest benefit will probably be felt in Westminster, which has the highest concentration of Airbnb listings and hotel rooms in London.

The extended stay sector, including serviced apartments and apart-hotels, will also be assured. Their ‘apartment’ offer means that sharing platforms potentially pose a more direct threat, albeit their adherence to health & safety regulations means they continue to be the preferred choice for corporate travellers. 

Considering that the proposed implementation of the 90-day rule by Airbnb might reduce ‘daily’ availability, there may be greater onus on London’s hotels to meet the aspirations of the Airbnb generation. However, we will have to wait and see whether these limitations are enforced and what the final impact will be.

Further information

Read more: Savills Spotlight: The UK Extended Stay Market

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