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Tug of war: Airbnb vs Swiss hotel industry

Tug of war: Airbnb vs Swiss hotel industry

Switzerland has become a hotspot for Airbnb, the website for people to list, find, and rent lodgings.

The company has doubled its properties in the country over the course of just one year. 

Airbnb now makes up 23% of the overall Swiss hotel capacity according to the study of Wüest & Partner, a Zurich-based real-estate consultant firm.

Asset managers however have split opinions on the new player's impact on the traditional hotel industry and real estate in the country.  

Alexander Selegenev, the director of the technology investment firm TMT Investments, said AirBnB is a perfect example of how the sharing economy forces such traditional industries like hotel or hospitality to adapt.

He said this is an especially interesting development in Switzerland as hotel chains are not very standardised.

'There are many stand-alone properties in the country like family homes or guest houses, which used to be the only, and often most well-known accommodation in a particular village,' said Selegnev. 

‘Suddenly these players find that regular people are renting out their chalets and homes. Instead of having just two competitors they have twenty now and this is affecting their rental strategies,’ he added. 

However Citywire AAA-rated Eleanor Taylor Jolidon, a Swiss equity fund manager from UBP, said hospitality is pretty irrelevant to the Swiss publically quoted universe.

‘Some very small companies have limited exposure to the sector, but it is not something which drives company performance and certainly not something which drives the Swiss equity market,’ said Taylor Jolidon.

Meanwhile she said Airbnb may contribute to the growth of tourism in Switzerland, which is a positive influence for the overall economy.

‘To a limited extent the Swiss economy is a driver of the Swiss market’s performance, therefore a small positive influence can stem from an increase in tourism,’ said Taylor-Jolidon.

Menno Sloterdijk, the fund manager of the PARVEST Real Estate Secur Europe fund said another strong Airbnb effect can be seen in the housing market in cities with a significant amount of visitors.  

‘As local residents are able to create additional income by renting out their properties, there can be a positive effect on house price values. But since housing markets in general are highly regulated and protected, policy makers are focused on the interests of all the stakeholders,’ said Sloterdijk.

No fit for businessmen

Citywire A-rated Igor de Maack, a property-focused fund manager at DNCA, said Airbnb is clearly a game changer in the tourism business. However he doesn’t agree that it might disrupt the hotel and catering industries  in developed countries.

He said the recent releases from big hotel groups like a French-based Accorhotels, which also has offerings across Switzerland, are telling a more optimistic story.  

‘The revenues per room are well oriented in Europe for the Accor group. Airbnb is offering a new service for individuals and families which is not comparable to hotel rooms and are cheaper lodging in general,’ said Maack.  

Sloterdijk on the contrary sees the effect of Airbnb on hotel chains is a negative one.

‘This is especially the case on “compression nights”, for example during major events, when there is considerable demand for rooms. In this case hotels have been able to ask significantly higher prices than normal before, whilst Airbnb offerings put a cap on what they can ask,’ said Sloterdijk.

However both Maack and Sloterdijk said the accommodation website cannot beat the competition in the business segment yet.

‘American, Chinese or Russian businessmen will not use Airbnb. Security problems are also key for tourists coming to European cities. Is Airbnb capable of responding to that challenge? I am not sure,’ said Maack.

'Do not bury too quickly traditional businesses and especially hotels as they are definitely a different experience for flat renting,’ said Maack.

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