Are Airbnbs Cheaper Than Hotels? What the Numbers Show

23.05.2024 - 04:27 / skift.com / Jan Freitag / Brian Chesky / Dennis Schaal

Are Airbnbs cheaper than hotels? Airbnb said recently that its global average daily rate in March for a one-bedroom was $114 while CoStar reported that the equivalent rate for a hotel room was $140.16.

On that basis, Airbnbs were clearly cheaper.

That is important to Airbnb: After all its original tagline, according to co-founder and CEO Brian Chesky, was “a cheap, affordable alternative to a hotel.”

But let’s unpack some of the ways those numbers may be skewed.

“If somebody is just looking to book something based on price, they might go for an economy (hotel) room,” said Jan Freitag, national director of hospitality analytics at CoStar Group. “That’s 70 bucks versus what Airbnb is talking about, which is $114 for a one bedroom.”

To be precise, CoStar found that that average global nightly rate for an economy class room in March, the latest statistics available, was $64.70 and it was $73.70 for a midscale class hotel room. So bargain hunters in those cases might find a hotel room as more affordable.

Freitag said you can look at the “plain average” Airbnbs versus hotels globally, but it’s more interesting to look at the use cases, whether it’s a couple looking to splurge on a weekend getaway or a consultant seeking to be as frugal as possible.

“It depends on the market, it depends on the time of year, it depends on the month,” said Freitag. “They (Airbnb) obviously have high demand around the world in certain markets, versus the soft season for a lot of other markets. So it’s hard to make a blanket statement about what’s more affordable. It depends on who it is and what you’re looking for.”

A couple of years ago, many Airbnb guests complained that cleaning fees had become excessive and that stay prices were rising. Airbnb introduced several measures to convince hosts to lower prices.

Chesky brought up the topic of Airbnb’s affordability versus hotels in the company’s earnings call in early May. “Now one-and-a-half years ago, we noticed that there was a lot of concern about Airbnb prices increasing,” Chesky said. “And so we created a whole team to identify a series of initiatives to modulate our prices, and they are working.”

It’s important to note that hosts set the prices of a stay – not Airbnb.

In late 2022, Airbnb began displaying the total price before taxes in regions where it wasn’t already showing them, and 300,000 hosts have trimmed or eliminated cleaning fees, according to the company. At the end of 2023, 60% of Airbnb hosts charged a cleaning fee and 40% didn’t.

In another prod to lower prices, Airbnb introduced a tool for hosts to show which rates in their neighborhoods are attracting bookings, and which aren’t. Hosts might use the tool to see if their rates are too high to generate