Strip resorts may have lost out on as much as $150 million in revenue last year as more visitors to Las Vegas book accommodations through Airbnb, according to a new report.
Strip resorts will likely lose out on even more revenue this year as Airbnb growth remains strong, said Brian McGill, an analyst at Telsey Group Advisory, which published the report earlier this week.
McGill expects the number of visitors staying at Airbnb accommodations in Las Vegas to approach 1 million this year, up from 718,000 last year.
“Over the past few years, Airbnb has seen explosive growth in Las Vegas and the recent Google search trends suggest this will only continue in the near-term,” he said in an April 10 research note.
Higher Strip costs including resort fees are pushing visitors to seek out cheaper alternatives, he said. Visitors can find attractive Airbnb accommodation near the Strip for $100 or less.
Strip hotels charge $100 to $200 before resort fees that can range from $30 to $50. Airbnb accommodations don’t charge resort fees.
While the percentage of travelers to Las Vegas using Airbnb is only 1.7 percent, it is nonetheless impacting resorts’ revenue per available room, McGill said.
“This is a major problem during periods of peak demand that seems to have impacted the rates during CES,” Super Bowl weekend and other events, McGill said in his note.
Caesars Entertainment Corp. spokesman Rich Broome said the Airbnb inventory isn’t enough to impact pricing. Airbnb has about 6,500 rental homes in Nevada, most of them in the Las Vegas Valley, whereas the Strip has about 100,000 rooms. A spokesperson for MGM Resorts International declined to comment.
The advent of ride-hailing options — such as Uber and Lyft — has brought down the travel costs of staying at Airbnb accommodations off the Strip, McGill said.
Airbnb is likely attractive to millennials driving in from California or Arizona, said Ted Newkirk, founder of Access Vegas. Southern California accounts for about a fifth of all visitors to Las Vegas.
“Airbnb is a winner for the drive-in customer who is tired of nickel-and-diming. They avoid resort and parking fees, they can ride-share to the Strip or park at one of the free garages, grab supplies at a local store and eat in local restaurants. The combination of those savings really adds up,” Newkirk said.
Issue for county
Clark County has been beefing up its enforcement of short-term rental laws, joining many other cities and towns around the country.
Unlicensed rentals for fewer than 30 days are forbidden in residential areas of unincorporated Clark County. Short-term rental businesses must be licensed and pay an annual $300 licensing fee and a short-term lodging tax.
In February 2018, the county began using six code officers, including a supervisor and an administrative support staffer, to focus “exclusively” on short-term rental enforcement Fridays and Saturdays. The county recently hired four more code officers, boosting its total to 20.
“The short-term rentals is certainly an issue that we hear from a lot of residents about,” county spokesman Dan Kulin said, “folks that have these in their neighborhoods.”