• Investing Insights & Exclusive Offers → Get Our FREE “Market Brief”
    Sign-up for our free weekly newsletter. Get unparalleled investing insights and exclusive Summer Sale discounts on Hedgeye research.

    Disclaimer: By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails. Use of Hedgeye and any other products available through hedgeye.com are subject to our Terms Of Service and Privacy Policy

Editor's Note: Below is an excerpt from recent Gaming, Lodging & Leisure (GLL) research from our analyst team. For more info on our institutional research email sales@hedgeye.com

Airbnb --> A Lingering Threat to Las Vegas? - zsd

We’ve rarely mentioned the threat of Airbnb to the Las Vegas Strip (even when we were bearish on the Strip). That’s partly due to the fact that there were so many other ongoing issues from 2017-most of 2018 (weak convention calendar, stealth pricing issues, leisure demand woes, competition from other markets). 

Given that things are now looking up in Las Vegas, we figured we’d take a look and see how Airbnb is trending in the market. 

Per our latest checks, Airbnb listings are steadily growing at a high single digit clip, which is slightly above the pace seen in the rest of the Top 25 markets, but Airbnb is also significantly less of a presence in Las Vegas vs. its Urban market competition. 

As the charts on the below indicate, Airbnb Density (active listings / hotel inventory) for Las Vegas is just barely 5%, which pales in comparison to the Top 25, which show density of around 17%.  The difference here however is that given the slightly higher growth rate in listings in Las Vegas, density is still expanding on a YoY basis while density is pretty much flat YoY in the Top 25. 

Since Airbnb maintains such a small presence in the market, even if we assume all listings are always available for booking (very aggressive assumption), Airbnb would have only brought market wide supply to +0.8% in 2018 vs. +0.1% reported by LVCVA.  A more realistic assumption would be that Airbnb has added close to 20-30bps of supply growth to Las Vegas, because active listings are most often not available to book every night (unlike a hotel). 

Conclusion, do we think Airbnb is having an outsized impact on Las Vegas RevPAR growth?  Probably not, but it could have had a small impact on leisure bookings.  Could that change? Yes, it definitely could in the future if listings growth continued to shoot higher, but the Las Vegas Strip area is mostly dominated by hotel inventory, not apartments and condos (like other major markets), which creates somewhat of a natural barrier for meaningful listings growth. 

Airbnb --> A Lingering Threat to Las Vegas? - zcv