Are Airbnbs Cheaper Than Hotels?

In the ever-evolving landscape of travel accommodations, the question of whether Airbnbs are cheaper than hotels remains pertinent for many travelers. Recent data highlights some interesting statistics that shed light on this comparison. In March, Airbnb reported a global average daily rate of $114 for a one-bedroom listing. In contrast, CoStar indicated that the equivalent rate for a hotel room was $140.16. This initial comparison suggests that Airbnbs are indeed cheaper than hotels. However, there are several factors to consider to get a complete picture.

Understanding the Pricing Dynamics

The lower price advantage for Airbnb stems from how the rates are calculated. Airbnb’s average daily rate includes the total price before taxes, encompassing cleaning fees. On the other hand, hotel rates do not include additional fees such as resort fees. This difference in what the rates cover can make Airbnbs appear more affordable at first glance.

Another crucial aspect to consider is the geographical coverage of the data. CoStar’s hotel data includes figures from China, a market Airbnb withdrew from in 2022. This discrepancy can skew the comparison, as the inclusion of China may affect the overall average hotel rates.

Group Travel and Affordability

When it comes to group travel, Airbnbs often hold a significant advantage. Larger groups can book a single listing, accommodating everyone under one roof, which tends to be more economical than booking multiple hotel rooms. This factor contributes to Airbnb’s appeal for families and groups of friends traveling together.

Comparing Across Categories

It’s essential to delve deeper into the categories of accommodations. The averages provided include all types of rooms, from luxury to economy. For travelers on a budget, comparing within specific categories can be more insightful. For instance, CoStar found that the average global nightly rate for an economy class hotel room in March was $64.70, and $73.70 for a midscale class room. In these cases, budget-conscious travelers might find hotel rooms more affordable than the $114 one-bedroom Airbnb.

Use Cases and Market Conditions

The choice between Airbnb and hotels can also depend on the specific use case and market conditions. Whether it’s a couple looking for a luxurious weekend getaway or a business consultant seeking the most economical option, the affordability can vary. Market demand and the time of year also play significant roles in determining which option is more cost-effective.

Addressing Affordability Concerns

In recent years, Airbnb has faced criticism for rising prices and excessive cleaning fees. In response, Airbnb has introduced several measures to address these concerns and enhance affordability. For instance, in late 2022, Airbnb started displaying the total price before taxes in regions where it wasn’t already doing so. Additionally, 300,000 hosts have reduced or eliminated cleaning fees, making stays more affordable. By the end of 2023, 60% of Airbnb hosts charged a cleaning fee, while 40% did not.

Airbnb has also introduced a tool for hosts to compare their rates with those in their neighborhood, encouraging competitive pricing. Moreover, many hosts offer discounts for longer stays, with two-thirds providing weekly or monthly discounts. These initiatives have contributed to a 2% year-over-year decline in the average rate for a one-bedroom Airbnb to $114 in March, while hotel prices increased by 1.6% to $140.16.

The Importance of Reliability

While affordability is trending positively for Airbnb, reliability remains a challenge. Unlike hotels, which offer a standardized experience, Airbnb properties and hosts can vary significantly. Despite measures such as introducing superhosts and removing fake reviews and listings, the inconsistency in guest experiences persists.

Airbnb has introduced initiatives like Guest Favorites to highlight reliable properties, but the platform still grapples with this issue. According to Airbnb, in 2023, the company removed 59,000 fake reviews and 157,000 bogus listings to improve the overall experience.

Conclusion

While Airbnbs can be cheaper than hotels, the affordability largely depends on various factors such as the inclusion of fees, group travel dynamics, specific accommodation categories, and market conditions. Airbnb has made significant strides in addressing affordability concerns and enhancing the reliability of its listings. However, travelers should consider their specific needs and preferences when choosing between Airbnb and hotel accommodations. As Airbnb continues to refine its offerings, it remains a viable and often cost-effective alternative to traditional hotels.


Barb is the president of NASTRA and has spent her professional career in hospitality and real estate. After acquiring her first short-term rental in 2018, Barb moved her focus to legal advocacy after she sued the city of Nashville over a permit issue. Over the last three years, she has mentored more than 2,800 new STR hosts and is the Community Leader for Airbnb in Nashville, as well as an Airbnb “Ask a Superhost” Ambassador. Barb has appeared on numerous radio broadcasts, television shows, and podcasts to talk about her love of hosting. She also manages and co-hosts a number of short term rentals across Tennessee and Arkansas. Barb and her husband Pat own a hotel brokerage, development and consulting company. Look for her upcoming podcast series, “Women of Airbnb.”

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