How is the sharing economy affecting the demand for hotel rooms? Helen Berhane and Konstantinos Gatis take Athens as an example

The battle between the sharing economy and the European hotel industry is in full swing. Earlier this year, Berlin began to clamp down on sharing economy platforms, while Barcelona and Paris have fiercely criticised the sharing economy’s poster child, Airbnb.

The allegations against Airbnb are multifaceted: unfair competition against hotels; disrupting the residential character of whole districts, leading to scarcity of residences; raising house rents; downgrading the tourist accommodation product; and public revenues leakage. Nevertheless, the sharing economy recently gained a very powerful supporter in the form of the European Commission, which said banning the likes of Airbnb and Uber should only ever be considered as a last resort.

In Greece, the sharing economy and over-taxation have been proclaimed as the main threats of the lodging industry by the president of the Association of Greek Tourism Enterprises (SETE). A Greek law passed in the autumn of 2015 fanned the flames, totally liberalising property rentals by private persons. According to a Grant Thorton study commissioned by the Greek Hotel Association, the Greek state loses almost €300m every year from tax evasion and hotels lose more than €500m in revenues each year due to alternative accommodation.

The main question of our research is: would an indifferent traveller choose a hotel room or an Airbnb lodging for a predetermined accommodation budget range? The fieldwork was planned through the eyes of a traveller, searching the internet ( and for the best in each category: ‘very good’ hotels with eight or more booking ratings and entire home Airbnb ‘superhosts’ (a badge of honour for Airbnb’s best renters). 

Based on our research, a substitution matrix has been compiled. Travellers’ reviews of Airbnb lodgings are also examined to gain insights into travellers’ profiles and what they appreciated most during their Airbnb experience.

The city of Athens in Greece is used as a case study. Almost all the tourist attractions are located in the city centre, an area of about 7.5sqkm. Moreover, the majority of hotels and alternative lodgings are located either in the same area or near its boundaries. 

According to the substitution matrix in table 1, the news for Athenian hotels is alarming, as Airbnb lodgings are an alternative in almost all budget bands. The most interesting discovery is that the alternative lodgings offer amenities of equal or even better quality compared with those offered by their competitive hotels. The ‘local experience’ provided by hosts comes as the ‘cherry on top’.

availability of very good hotels and airbnb superhosts per budget category

percentage of star rated hotels per budget category

Furthermore, the Airbnb dominance in the two lowest budget bands is amplified by the low percentage of ‘very good’ hotels in these bands, as presented in table 2. It should also be highlighted that the main bulk of Airbnb superhosts* inside the city centre offer their lodgings for €50-150 per night.

number of airbnb superhosts per period

Thus, taking into account only the quality of the lodgings’ amenities, 1-star and 2-star hotels are totally outplayed by Airbnb; 3-star and even some mid-4-star hotels are confronting a serious competitor and upper-class hotels do not seem to be much affected. However, the threat for each particular hotel varies.

hotels in athens city centre

Based on our research and traveller reviews, the strong points of the Airbnb lodgings are their location (the second most appreciated feature), the property’s quality, their view, their ample size and last, but not least, their price. 

The geography of the city centre and the condition of the local property market assist Airbnb to serve the real estate mantra of ‘location, location, location’. Large residential districts are located inside the boundaries and at the periphery of the city centre. In addition, the alternative accommodation providers spurn the restrictions for commercial land uses in the picturesque neighbourhood of Plaka, at the foot of the Acropolis.

“The strong points of the Airbnb lodgings are their location (the second most appreciated feature), the property’s quality, their view, their ample size and last, but not least, their price”

Thanks to its high vacancy rates, the old office district at the heart of the city centre also constitutes a big opportunity for hotel expansion (three reconstructed ex-office buildings in the current pipeline) and alternative providers. However, the latter have an advantage due to the fact that the majority of the buildings are condominiums. 

airbnb in athens

On top of the above, falling property prices, rents and households incomes constantly lower the barriers for home owners and entrepreneurs to offer, for about €60 per night, a 50sqm apartment of at least three-star-hotel quality, in a safe neighbourhood, near a metro station, located in short distance from Acropolis, even with a view of it. 

Without wishing to ‘bring new owls in Athens’ (an ancient Greek proverb meaning not saying anything new), the highlight for most Airbnb reviewers is how their host enhanced their ‘local experience’. This cannot be matched by ‘friendly staff’ of any hotel.

But how big is the threat? According to our findings, about 300 Airbnb superhost apartments are situated in Athens city centre. So, giving a rough approximation, this equates to three typical-size, four-star Athenian hotels of 100 rooms each. However, the supply is very elastic and there are more than 3,000 non-superhosts Airbnb rooms in Athens, according to Airdna.

Nevertheless, throughout our research two new traveller demands appear: accommodation as an integral part of the travelling experience, and the ability to seek enhanced value-for-money lodging alternatives. In particular, individual travellers do not like sterilised sleeping boxes any more: alternative accommodation providers serve these new needs and are not deemed the source of the problem.

It is up to individual hotels to define how they are affected by alternative accommodation, analysing its products, its target group, its pricing and the experience that it offers.  

Alternative accommodation fulfils such widespread needs that in the near future, according to Euromonitor, Airbnb may become the second-largest hospitality company in terms of room sales. In conclusion, it is evident that the lodging industry has to adapt to the demands of new travellers, otherwise market forces will determine its fate. 

Helen Berhane is senior research analyst at Society of Property Researchers, and Konstantinos Gatis is real estate valuer and researcher

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