Crunch Network

Bay Area Airbnb Hosts Get Less Than They Bargained For During The Big Game

Next Story

ZIRX Drops Its Consumer Valet Service To Focus On The Enterprise

As Super Bowl 50 draws near, some Airbnb hosts are hoping for a substantial payout. Crazy listings are popping up – this home is going for $6000 a night.

If that’s out of your price range, how about sharing a room for only $1300 per night?

The thought process seems solid – an estimated million people descending on the already housing-strained San Francisco Bay area. With such high profile demand, the obvious conclusion hike prices sky-high, and hope for a big payday. But will hosts get it?

superbowl2

Conventional Wisdom is Too Conventional

Probably not — let’s take a look at the data. In Santa Clara, where Levi’s Stadium resides, the average Airbnb price for booked rooms is only up 25% compared to nearby weekends. How can this be?

The answer lies in the good ol’ laws of supply and demand — unlike hotel rooms, the supply of sharing economy accommodations is elastic – the higher the price (or perceived price) goes, the more people put a place on the market. In the case of Santa Clara, there are 86% more Airbnbs listed for Super Bowl weekend than the surrounding weekends. There are so many properties available, that there’s actually excess supply for Super Bowl weekend, which has put a cap on the additional revenue a host could make.

Bay Area wide, the trend is the same. In only the past three months, Airbnb hosts with only one listing have grown from 9,627 to 13,732 – an increase of  42%. This elasticity is hidden from a would-be Airbnb host – if exposed, it may make people think twice about asking for crazy rents.

superbowl1

The Implications of Elastic Supply

Never before have we seen such an elastic supply, and it’s further evidence of the fundamental shift that our broader economy is going through.
Before Airbnb, Uber, and Lyft, you couldn’t just build more hotel rooms or put more taxis on the street. Supply was constrained, and you paid for it either via sky high prices (hotel rooms) or long wait times (taxis).
Although there isn’t a lot of evidence that the increase in Airbnb supply has had an effect on hotel prices for this event, in the long run, it surely will.
As more and more people using Airbnb (and similar services), peak demand for hotels will be moderated, and with it, their prices. It may not be a future that many hotel revenue managers want to face, but it’s a future that most consumers will surely enjoy.

Featured Image: Mike Windle/Getty Images