Airbnb is increasingly becoming an ingrained part of searching for a place to stay when away from home — just look at the companies very rapid growth rate as an indication.
One common belief held by travellers is that an Airbnb rental is usually cheaper than staying at a hotel. A quick glance at the prices shown in GoEuro’s Accommodation Price Index, suggests this statement would appear to hold some weight.
Are Airbnb rentals really cheaper?
Methodology
To draw up a list of cities I turned to GoEuro’s “Accommodation Price Index” published in 2016 (using data from 2014). This list of 150 cities consists of the top tourist destinations chosen based on several factors including hotel availability and size of hospitality industry.
I then turned to Airdna for data on Airbnb rentals. I examined the average nightly cost of “Entire place” studio and one bedroomed rentals on Airbnb (house and apartment) during the month of Feb 2016 for the cities collected from GoEuro. Airdna had data for 87 of the 150 cities. I chose 1 bedroomed and studio rentals as I deemed them the closest equivalent to hotel rooms.
Results
Airbnb vs hotels
I found Airbnb rentals are on average $7.29 USD cheaper then hotels.
In 26 of the 88 cities I analysed hotels were cheaper, compared to 60 cities where Airbnb’s were cheaper. 2 cities had no price difference, Riga and Warsaw.
40 of the 60 cities that were cheaper for Airbnb rentals, were only slightly cheaper ($0 USD – $15) than hotels.
Top 10 cities where hotels are cheaper (by actual price difference)
| Rank | City | Hotel-Aibnb diff USD | EM Hotel Ave 2014 USD | Airdna Median Entire Home Studio 1br Feb16 USD |
|---|---|---|---|---|
| 79 | Frankfurt, Germany | (13.75) | 62.00 | 75.75 |
| 79 | Shanghai, China | (13.75) | 41.00 | 54.75 |
| 81 | Boston, USA | (14.33) | 147.00 | 161.33 |
| 82 | Mexico City, Mexico | (14.67) | 42.00 | 56.67 |
| 83 | Reykjavik, Iceland | (15.75) | 85.00 | 100.75 |
| 84 | Chicago, USA | (16.75) | 97.00 | 113.75 |
| 85 | San Francisco, USA | (22.00) | 141.00 | 163.00 |
| 86 | Ibiza, Spain | (27.75) | 71.00 | 98.75 |
| 87 | Manchester, UK | (31.25) | 100.00 | 131.25 |
| 88 | Singapore, Singapore | (38.00) | 94.00 | 132.00 |
In the cities where hotels are cheaper, the best savings by choosing a hotel can be found in Singapore ($38 USD cheaper then Airbnb rentals).
Top 10 cities where Airbnb rentals are cheaper (by actual price difference)
| Rank | City | Hotel-Aibnb diff USD | EM Hotel Ave 2014 USD | Airdna Median Entire Home Studio 1br Feb16 USD |
|---|---|---|---|---|
| 1 | New York, USA | 95.50 | 246.00 | 150.50 |
| 2 | CancĂčn, Mexico | 70.00 | 134.00 | 64.00 |
| 3 | Bruges, Belgium | 63.00 | 131.00 | 68.00 |
| 4 | Miami, USA | 62.50 | 167.00 | 104.50 |
| 5 | Rio de Janeiro, Brazil | 45.00 | 99.00 | 54.00 |
| 6 | Cape Town, South Africa | 40.00 | 99.00 | 59.00 |
| 7 | Seoul, South Korea | 33.50 | 85.00 | 51.50 |
| 8 | Paris, France | 33.25 | 117.00 | 83.75 |
| 9 | Montreal, Canada | 30.00 | 82.00 | 52.00 |
| 10 | Venice, Italy | 28.50 | 146.00 | 117.50 |
In New York you can save on average $95 by choosing an Airbnb over a hotel. The city is a popular with Airbnb hosts with 16648 Active Rentals (3rd highest worldwide). Perhaps an oversupply of rentals is pushing down prices for guests allowing for such a large saving?
Did you know? The cities with the most Active Rentals in February 2016 were: 3. New York (16648), 2. Paris (29344), 1. London (29718).
Price difference between hotels and Airbnb’s by region (by actual price difference)
On a regional level, Airbnb rentals are generally cheaper everywhere. It is interesting to note that savings in Europe, which I would assume to be the companies second largest market, are relatively low ($1.95 USD).
Top 10 cities where hotels are cheaper (by % price difference)
| rank (actual price diff) | rank (% price diff) | City | EM Hotel Ave 2014 USD / Airdna Media Entire Home Studio 1br Feb16 USD |
|---|---|---|---|
| 84 | 79 | Chicago, USA | 85.27% |
| 83 | 80 | Reykjavik, Iceland | 84.37% |
| 76 | 81 | Dusseldorf, Germany | 83.90% |
| 79 | 82 | Frankfurt, Germany | 81.85% |
| 78 | 83 | Rotterdam, Netherlands | 81.70% |
| 87 | 84 | Manchester, UK | 76.19% |
| 79 | 85 | Shanghai, China | 74.89% |
| 82 | 86 | Mexico City, Mexico | 74.12% |
| 86 | 87 | Ibiza, Spain | 71.90% |
| 88 | 88 | Singapore, Singapore | 71.21% |
When looking at percentage price differences, Singapore hotels are over 28% cheaper than Airbnbs. Singapore also has the largest actual price difference between hotels and Airbnb rentals ($38 USD).
Top 10 cities where Airbnb rentals are cheaper (by % price difference)
| rank (actual price diff) | rank (% price diff) | City | EM Hotel Ave 2014 USD / Airdna Media Entire Home Studio 1br Feb16 USD |
|---|---|---|---|
| 2 | 1 | CancĂčn, Mexico | 209.38% |
| 3 | 2 | Bruges, Belgium | 192.65% |
| 5 | 3 | Rio de Janeiro, Brazil | 183.33% |
| 16 | 4 | St. Petersburg, Russia | 170.89% |
| 6 | 5 | Cape Town, South Africa | 167.80% |
| 7 | 6 | Seoul, South Korea | 165.05% |
| 1 | 7 | New York, USA | 163.46% |
| 4 | 8 | Miami, USA | 159.81% |
| 9 | 9 | Montreal, Canada | 157.69% |
| 14 | 10 | Istanbul, Turkey | 151.96% |
Whilst New York had the largest actual price difference where Airbnbs were $95 USD cheaper (hotels were 63% more expensive than Airbnbs), Cancun has the largest percentage price difference between hotel and Airbnbs (hotels are over 109% more expensive!).
A developing market
A number of savvy Airbnb hosts increase their pricing to match high demand, much like most hotels do. Requiring significant effort by hosts, many have previously missed out on opportunities for increased revenue as a result. Similarly during quieter periods static prices for rentals often leave potential guests looking elsewhere because they are set unusually high for the time of year.
Airbnb’s pricing tool that debuted publicly in November 2015 is likely to remove much of this burden from hosts. It is too early to tell if more dynamic pricing will increase or decrease the cost difference between hotels and Airbnb rentals.
Improvements
Having to use aggregated city data for both hotels and Airbnb rentals is not the best way to compare prices. If I was able to compare specific hotels and Airbnb rentals that were more closely matched (location, quality, etc) would result in higher accuracy of analysis.
tl;dr
Airbnb rentals are typically cheaper than hotels.