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Remember When Airbnb Was Supposed To Kill The Hotel Business?


  • From 2013-2015, the financial media wrote countless obituaries projecting the impending death of the hotel business at the hands of the sharing economy’s newest darling: Airbnb.
  • At the time, Airbnb was raising capital at valuations that exceeded the market capitalization of the entire hotel REIT industry. We questioned Airbnb’s actual appeal to the mass market.
  • Entering 2016, the consensus opinion on hotel REITs was overwhelmingly negative on fears of oversupply, weakening demand, and this severe threat from Airbnb.
  • Over the last 52 weeks, hotel REITs have outperformed the REIT index by 20%. Q1 2017 was the best year on record for the industry and Q2 looks stronger.
  • Using Google Trends data, we see that the growth of Airbnb is already decelerating. Regulation has caught up with the “illegal hotel” model of the commercial use of short-term Airbnb rentals.

REIT Rankings Overview

In our "REIT Rankings" series, we introduce and update readers to one of the thirteen REIT sectors. We rank REITs within the sectors based on both common and unique valuation metrics, presenting investors with numerous options that fit their own investing style and risk/return objectives. We update these rankings every quarter with new developments.

We encourage readers to follow our Seeking Alpha page (click "Follow" at the top) to continue to stay up to date on our REIT rankings, weekly recaps, and analysis on the REIT and broader real estate sector.

Hotel Sector Overview

Hotel REITs comprise roughly 4% of the REIT indexes (VNQ and IYR). Within our market value-weighted hotel index, we track seven of the seventeen hotel REITs within the sector, which account for roughly $30 billion of the total $40 billion in hotel REIT market value: Ryman (RHP), DiamondRock (DRH), Host Hotels (NASDAQ:HST), LaSalle (LHO), Pebblebrook (PEB), RLJ Lodging (RLJ) and Sunstone (SHO).

Outside of our coverage, but among the top twelve largest hotel REITs, we also monitor Ashford (AHT), Apple Hospitality (APLE), Felcor (FCH), Hersha (HT) and Summit (INN).

Above we show the size, geographical focus, and quality focus of the seven hotel REITs we track. Like other REIT sectors, hotel REITs tend to have a specialized strategy focus. In general, public REITs tend to be naturally biased towards the higher-quality end of the quality spectrum and own primarily full-service hotels in coastal urban markets or resorts. Only one REIT we track, RLJ Lodging, owns primarily limited service hotels. The United States has the largest tourism industry in the world. On any given night, roughly 4.5 million Americans are staying in one of 55,000 hotel properties throughout the country. Of the five million available hotel rooms, roughly 60% of hotel stays are leisure-oriented, while 40% are business-oriented.

This article was written by

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Visit www.HoyaCapital.com for more information and important disclosures. Hoya Capital Research is an affiliate of Hoya Capital Real Estate ("Hoya Capital"), a research-focused Registered Investment Advisor headquartered in Rowayton, Connecticut. 

Founded with a mission to make real estate more accessible to all investors, Hoya Capital specializes in managing institutional and individual portfolios of publicly traded real estate securities, focused on delivering sustainable income, diversification, and attractive total returns. 

Collaborating with ETF Monkey, Retired Investor, Gen Alpha, Alex MansourThe Sunday Investor, and Philip Eric Jones for Marketplace service - Hoya Capital Income Builder. 

Hoya Capital Real Estate ("Hoya Capital") is a registered investment advisory firm based in Rowayton, Connecticut that provides investment advisory services to ETFs, individuals, and institutions. Hoya Capital Research & Index Innovations is an affiliate that provides non-advisory services including research and index administration focused on publicly traded securities in the real estate industry.

This published commentary is for informational and educational purposes only. Nothing on this site nor any commentary published by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. This commentary is impersonal and should not be considered a recommendation that any particular security, portfolio of securities, or investment strategy is suitable for any specific individual, nor should it be viewed as a solicitation or offer for any advisory service offered by Hoya Capital. Please consult with your investment, tax, or legal adviser regarding your individual circumstances before investing.

The views and opinions in all published commentary are as of the date of publication and are subject to change without notice. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Any market data quoted represents past performance, which is no guarantee of future results. There is no guarantee that any historical trend illustrated herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that any outlook made in this commentary will be realized.

Readers should understand that investing involves risk and loss of principal is possible. Investments in real estate companies and/or housing industry companies involve unique risks, as do investments in ETFs. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes.

Hoya Capital has no business relationship with any company discussed or mentioned and never receives compensation from any company discussed or mentioned. Hoya Capital, its affiliates, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and additional important disclosures is available at www.HoyaCapital.com.

Analyst’s Disclosure: I am/we are long VNQ, SHO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

All of our research is for educational purpose only, always provided free of charge exclusively on Seeking Alpha. Recommendations and commentary are purely theoretical and not intended as investment advice. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. For investment advice, consult your financial advisor.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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