Airbnb’s business is booming – in business

Data Methodology

We gathered data on common companies not exhibiting major swings in activity for an eight quarter window from Q3 2014 through Q2 2016. This two-year window and controlled set of companies allows us to track changes over time that are not influenced by growth of Concur’s business, demo/test companies, or ramp up and ramp down customers. This Airbnb data set represents $77M in total spend and over 320 thousand Airbnb expenses (average of $242 per expense). An analogous data set for several major hotel chains was gathered for a growth comparison.

Concur sees 32% jump in business spend on Airbnb in Q2

Airbnb usage is growing at a global scale among businesses of all sizes. The number of organizations using Airbnb increased by 32% and overall spend increased by 42% year-over-year, from Q2 of 2015 to 2016 Q2.

Airbnb has drawn the majority of its business revenue from travelers in the technology and academia sectors. In Q2 2016, eight of the top 20 spenders on Airbnb are technology companies, whose employees might flock faster to sharing-economy services than others, and six of the top 20 Airbnb spenders are universities, which may require employees to find more cost-efficient accommodations than some hotel chains offer.

As a comparison, business usage of major hotel chains grew year-over-year during the eight quarter window, but, not surprisingly, at a substantially lower rate than Airbnb. In Q2 2016, total business travel spend on major hotels was more than 250 times greater than business spend on Airbnb, according to Concur’s data set.


Table 1 - Global year over year percentage growth in Airbnb usage.

Spend Expenses Users
2015-2016 Q1 51 69 63
2015-2016 Q2 42 50 44
2014-2015 Q3 110 101 98
2014-2015 Q4 74 71 77
42%

YoY growth in spend on Airbnb from Q2 2015 to Q2 2016

San Francisco and London consistently top-expensed cities for Airbnb

According to Concur data, from Q3 2014 through Q2 2016, businesses consistently spent more money on Airbnb stays in San Francisco than in any other city. London held steady at #2 in terms of business dollars spent on Airbnb stays in the two-year timeframe, although at less than 1/3 of that spent in San Francisco during the same period.

The popularity of Airbnb among business travelers booking in San Francisco could reflect a few factors. As the founding city of Airbnb and a technology hub, San Francisco likely has embraced the digital and sharing economy rapidly, perhaps offering more options for business travelers than other cities. In addition, business travelers might see Airbnb as an opportunity to explore many of the city’s scenic neighborhoods that are beyond walking distance from major hotels. Exploring neighborhoods likely plays a large factor in the appeal of Airbnb to business travelers booking in London, as well.

The next eight cities ranked, in terms of dollars spent on Airbnb over the eight quarters, represent major cities in the U.S., Europe and Australia and showed more volatility in rankings through time. New York, for example, ranked #3 throughout the two-year period with the exception of Q1 2015 and Q1 2016, when it was surpassed by Austin, TX.


Figure 2 – Quarterly City Rank


Popular events in cities affect business spend on Airbnb

While Austin is ranked #3 globally during Q1 of 2015 and 2016, it ranks significantly lower for every other quarter in the two-year window. The high rankings for Austin during Q1 correspond directly with major conference activity in Austin, namely South by Southwest, the annual film, interactive media, and music festivals and conferences held in Austin every March.

Similarly, looking at daily volume of Airbnb expenses, Concur sees dramatic anomalies in Airbnb usage in San Francisco during the yearly Salesforce.com-hosted Dreamforce conference in October 2014 and 2015 (Figure 3.1). Airbnb usage was 600% of average activity during the 2015 Dreamforce conference.

The popularity of annual events such as Dreamforce or South by Southwest might result in hotel room saturation in the host city, forcing business travelers to book alternative accommodations such as Airbnb rentals. In peak times, the flexibility of alternative accommodations, in comparison to the rigidity of hotel supply, could be attractive to business travelers. The rise in Airbnb usage during events also could reflect the rise of “bleisure,” i.e., combining vacation and business trips, which may prompt a business traveler to find a more authentic local experience or accommodations at lower cost than a major hotel chain may offer.


Figure 3 – Daily Expense Transactions in San Francisco (average of $253 per expense)


While the average Airbnb expense transaction across all cities was $242, San Francisco saw a slightly higher cost per expense at $252, although not a substantial increase from the global average. Average cost per expense in Chicago ($151) was significantly lower than in other major cities (New York City - $271, Los Angeles - $244). (See appendix for charts on New York City, Chicago and Los Angeles.)

Daily expense transaction counts for Chicago, Los Angeles, New York City and San Francisco show seasonal fluctuations and a general trend of increasing Airbnb usage despite vastly different magnitudes of transactions per day.

Small and mid-sized business increasing use of Airbnb

Small and midsized businesses (SMB) – organizations employing up to 1,000 people – are increasingly adopting Airbnb as an accommodation alternative, possibly to suit budget constraints and needs for more unique and flexible lodging. The amount spent on Airbnb among the SMB organizations in our common companies data set (i.e., Concur’s data sample) grew by 38% increase year-over-year in Q2.

On average, an SMB company spent $2,808 in Q2 2016 on Airbnb accommodations. Although some SMBs spent more than $20k in the quarter, the vast majority spent much less, the median spend being $1,106 (Fig. 4.1).


Figure 4 - Spend Per SMB Company in Q2 2016


Table 4.1 - SMB year over year growth in Airbnb usage

Spend Expenses Users
2015-2016 Q1 52 74 66
2015-2016 Q2 38 52 43
2014-2015 Q3 100 91 111
2014-2015 Q4 92 97 84

Table 4.2 - Average amount spent and number of expenses per SMB organization

Spend ($) Expenses (#)
Mean 2,808 11
Median 1,116 4

Appendix

New York City

Average of $271 per expense


Figure A.1 - Daily Expenses in New York City

Chicago

Average of $151 per expense


Figure A.2 - Daily Expenses in Chicago

Los Angeles

Average $245 per expense


Figure A.3 - Daily Expenses in Chicago

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