Remember when world travel cost indexes used to be based on hotels? Hotels were the measure of accommodation costs. Well, these days Airbnb has become such a game-changer in the accommodation space that it warrants its own extensive surveys and price comparisons.
Enter the just-released 2017 Bloomberg World Airbnb Cost Index, which ranks the cost of Airbnb rentals in over 100 cities. The index is based on the average daily cost of a private dwelling for two people, and forms a separate data set to the Bloomberg World Hotel Index.
So which cities ranked as the most expensive this year? And what does it all mean for you?
The most costly cities for Airbnb rentals.
According to Bloomberg’s lodging index, the most expensive city for Airbnb rentals is Miami. Boston, San Francisco, Chicago, L.A and Washington were other US cities that crept into the top 10.
Dubai made second place (tied with Boston), while Reykjavik in Iceland came in at number five. Edinburgh and Sydney made 8th and 9th place respectively.
While some of the cities on the list are typically expensive, others are surprise entries. Reykjavik, for example, has experienced a huge tourism boom in the past year or so, with visitor numbers hitting record levels. Turns out Game Of Thrones has a lot to answer for: fans are seeking out Iceland in droves. Bloomberg speculates this has lead to both economic growth and a surge in the value of Iceland’s currency, as well as a hike in accommodation pricing.
Airbnb compared to hotel pricing.
What’s interesting about the index isn’t just which cities are commanding more from short-stay rentals, but also how those rentals compare to traditional hotel accommodation. Miami, though topping the Airbnb index, comes in at number 7 on the hotels list. Wellington, New Zealand, is 30th most expensive for Airbnb but 50th most expensive for hotels, meaning the gap between pricing of the two types of accommodation is minimal. In other words, you’d only pay marginally more, on average, to stay at a hotel in Wellington compared to an Airbnb.
Bloomberg’s surveys also show that, on the whole, the Airbnb price advantage is shrinking. Developing Asia contracted the most, with the discount dropping from 48% to 34% in the space of a year.
Despite this, Airbnb rentals are still overwhelmingly cheaper than hotels across the world, and the sharing economy has far from lost its price advantage.
What all this means for you as a guest.
If you’re a traveller, there’s little you can do about Airbnb pricing other than to book early and avoid peak times or busy seasons. Though if you have flexibility on where to travel, and price is an issue, you might like to avoid the cities at the top of the index and check out flights to those places that are more budget-friendly. Some of the cheaper cities on Bloomberg’s list — rounding out rankings 45 to 50 on the list — are Helsinki, Madrid, Beirut, Berlin and Lisbon.
What all this means for you as a host.
If you’re an Airbnb owner and/or host, the index may be useful as a way of getting to understand where pricing is currently at in your city, where it’s heading, and how your city compares to others. The hotels index can also give an idea of how much of a competitive advantage your Airbnb pricing has (an advantage you'll want to maintain).
If you’re new to Airbnb hosting and looking to get started in making a profit, all of this pricing business might be giving you a headache — in which case you might find it beneficial to hire an Airbnb property manager since they will already have background knowledge on the pricing landscape in your area and how to price competitively for maximum return on investment. The most important thing is, ultimately, finding that sweet spot between what guests are willing to pay and what your property is really worth.