As San Diego grapples with how Airbnb and HomeAway should be regulated, we at Beyond Pricing thought we'd take a look at the impact of short-term and vacation rentals on “America's finest city.”
So is Airbnb taking over the city, putting hotels out of business, and crowding residential neighborhoods with rowdy out-of-town guests?
It turns out that, like most other cities, homesharing serves largely to alleviate the pressure of major events and to serve tourists in areas away from the central hotel area.
For major events like Comicon in August, which attracts over 130,000 attendees, there are simply not enough hotel rooms to accommodate everyone. As a result, hotel prices go through the roof because of the inflexible supply of hotels. You can't simply add more hotel rooms to meet demand. That is not the case with Airbnbs and other short-term rentals, where owners can open up their home for a few days or months to accommodate the increased demand.
For events like Comicon, short-term rentals serve as way to alleviate the price pressure and offer affordable options for attendees. With Comicon almost 5 months away, we are already seeing a huge impact on the number of available units, especially in neighborhoods like the Gaslamp Quarter.
On average, however, occupancy for short-term rentals, while improving, is still relatively low compared to hotels in San Diego:
Source: Hotel data comes from PKF Consulting for San Diego County. Short-term rental data is from Beyond Pricing estimates for the greater San Diego market.
The greater San Diego area (including La Jolla and Carmel Valley but excluding the beach cities to the north) is home to approximately 3,100 Airbnbs. HomeAway lists around 4,700 for the whole of San Diego County and there is considerable overlap between the two sites. Compared to the number of hotels, short-term rentals are still a very small segment: less than 10% of all accommodation options.
And where are the majority of these short-term rentals?
It turns out the top neighborhoods for Airbnbs are not the top ones for hotels. The top 3 neighborhoods for Airbnb are Pacific Beach, Mission Beach, and La Jolla.
So what does this all mean for the San Diego accommodations market?
We think the takeaway for the city of San Diego is that short-term rentals play an important and complimentary role to hotels in the city, helping relieve pricing pressure during major events and peak season while also providing options for visitors in the underserved beach areas that attract groups and families.
Beyond Pricing works with short-term rental owners and homesharers in San Diego (and around the world) to help them make the most out of their listing through automatic, demand-based dynamic pricing. To see it in action, check out our demo for this fantastic San Diego property