Hartford Business Journal

8 Hartford Business Journal • May 22, 2017 www.HartfordBusiness.com FOCUS TOURISM CT's lodging industry copes with Airbnb competition By Patricia Daddona pdaddona@HartfordBusiness.com H otels, cottages, inns and bed-and-breakfasts have long had a stranglehold on a lodging indus- try aimed at satisfying travelers' desires to stay someplace special — that is, until Airbnb came along. The online marketplace that allows people to rent their homes or apartments has taken business away from traditional lodging establishments, attracting 64,000 guests in the Nutmeg State last year alone. The presence of Airbnb, and other online home- sharing marketplaces, has forced some Connecticut hoteliers to adjust, not only in pricing, but also in their market- ing efforts, insiders and state experts say. Airbnb is also gen- erating some pushback from those who want the company's hosts to face tougher oversight, similar to what traditional hotel establishments must endure. Win Smith III, who manages his mother's Morris boutique cottages nestled in the Litchfield Hills village, said the recession and pressure from Airbnb com- petitors have forced him to lower prices for some customers. "[Clients] would often com- pare us [to Airbnb] and say, 'Why don't we rent a house in the area instead? We'll come to you one day for lunch instead,' " Smith said. "It definitely affected my rates and occupancy level." Airbnb accounted for 5.4 percent of the country's lodg- ing room stays in 2016, up from 3.6 percent in 2015, according to Goldman Sachs. Jan Freitag, senior vice presi- dent at hotel industry research firm STR, said even with the added competition, there is enough demand to satiate all lodging industry players. He said it's hard to determine Airbnb's impact since hotels in the U.S. hit record occupancy and room rate levels in 2016. In Connecticut, however, that wasn't the case. Of the 41,000 hotel rooms at 400 properties here in 2016, guests stayed over for 9.3 million room nights, yielding $10.8 billion in business sales, according to the American Hotel and Lodging Association. But hotel occupancy rates here were flat at 61 percent from 2015 to 2016, and up slightly from 59 percent in the two years before that, state tourism documents show. While some local hotels say they haven't experi- enced much direct impact, there is no denying Airbnb is absorbing market share in Connecticut. In Febru- ary, Airbnb said this state's 2,400 active hosts earned over $11 million in supplemental income in 2016 by welcoming approximately 64,000 visitors. Some lodg- ing executives agitate over that — while using Airbnb to market their business. The Nehemiah Brainerd House in Haddam obtained three recent bookings by listing rooms on Airbnb's web- site, says Jeff Muthersbaugh, co-owner of the bed-and- breakfast with his wife, Maryan. "It's one more platform to get your message out," he says of his practice of using Airbnb. "That's the app on [Millennials'] phones." As vice president of the Connecticut Lodging Associa- tion and head of its B&B committee, Muthersbaugh said Airbnb's services are legit, but he still believes some of its hosts unfairly compete with traditional hotels and B&Bs for business. Some in the lodging indus- try argue that Airbnb hosts run the equivalent of hotels out of residential buildings, said Troy Flanagan, a spokesman for the American Hotel and Lodging Association (AHLA). Unlike hotels and B&Bs, however, those hosts do not have to comply directly with fire and health codes and insur- ance requirements, creating an unfair playing field, AHLA said. Airbnb spokesman Peter Schottenfels said such concerns and criticisms are overblown. "We're happy to work with any local government to craft smart, sensible regulations that guarantee home sharing is an option for families looking to earn some extra money," he said, "and ensure that guests, hosts and neighbors have a safe experience." Schottenfels said the main attraction for Airbnb users is that it gives travelers a different experience. "On Airbnb, you can rent someone's couch in New Haven or mansion in New Canaan," Schottenfels said. "We're a home-sharing and experience-sharing platform. We want travelers to have a different experience, go to a place and live like a local, and we're confident Airbnb offers that experience." One area where Airbnb has faced tighter scrutiny in Connecticut is tax collections. Airbnb no longer sidesteps the state's 15 percent lodging tax, reaching an agreement in 2016 with the state Department of Rev- enue Services to collect and pay the hotel tax on behalf of homeowners who rent to the company's customers. Now, Department of Revenue Services Commission- er Kevin Sullivan said he and lawmakers are working on a bill that would require all home-sharing companies — not just Airbnb — to collect and pay the lodging tax. n Q&A CT targets international travelers ahead of tourism season Q&A talks to Randy Fiveash, director of the Connecticut Office of Tourism, about the influence of foreign travelers in the state's tour- ism industry. Q: You were recently named board chair- man of Discover New England, a nonprofit destina- tion marketing organization that promotes New England tourism internationally. How popular of a destination is New England for overseas travel- ers? What are the top overseas markets for New England? A: New England is an increas- ingly desirable destination for international travel- ers. Oftentimes, it's one of the top three most popular U.S. destinations for over- seas visitors, includ- ing New York and Las Vegas. In fact, the number of overseas visitors to New Eng- land has increased by 25 percent since 2012, reaching 2.2 million in 2015. The top overseas visitor markets for New England are the UK, China, Germany, France and India. Q: How impor- tant are overseas travelers to Connecticut's tourism indus- try? Are there any specific ways tourist attractions here cater to foreign visitors? A: Overseas travelers are very important to Connecticut's tour- ism industry and the state's econ- omy. These travelers usually stay for longer periods of time, which helps fill hotels, inns and B&Bs mid-week, spend more money while traveling and are less depen- dent on the weather than domes- tic travelers. Together, overseas and domestic traveler spending has helped Connecticut's tourism industry grow to reach $14.7 billion in total business sales and directly support nearly 83,000 jobs. Many of Connecticut's tourist attractions have established rela- tionships with overseas tour oper- ators and planners, which help them cater their services accord- ingly. That could mean anything from offering their promotional materials in multiple languages, to hosting tour groups. Together with our industry partners, the Connecticut Office of Tourism is always looking for opportunities to strengthen our ties with the international community. We attend several international tradeshows in the U.S. and abroad every year, host familiarization trips for international media, tour operators and planners, and work with our marketing partners — including Discover New England and Bradley International Airport — to promote Connecticut to potential travelers. Q: What's the biggest chal- lenge for Connecticut in terms of attracting overseas tourists? Is being between New York City and Boston — two popular tourist destinations — an advantage or disadvantage for the state? A: Our location is a major advantage when it comes to attracting internation- al travelers. Cities like New York and Bos- ton are well known among overseas tour- ists, so we benefit by being a short car, train or bus ride away. We're constantly working to educate international audiences about Con- necticut and all of its offerings. Q: What impact is Aer Lin- gus' new trans-Atlantic flight having on international tour- ism in Connecticut? A: The new routes offered by Aer Lingus and Norwegian Air have made it even easier for travelers from around the world to experience the rich history, culture and beauty Connecticut has to offer. We're confident that the affordable flights, and our targeted international market- ing efforts, will mean more busi- ness and leisure travelers visiting Connecticut in the years to come. Q: As we head into the sum- mer tourism season in Con- necticut, are there any new trends to watch out for? A: More and more, travelers are looking for truly unique experi- ences that they can check off their bucket lists or capture and share with friends on social media. There's also a big interest in "culi- nary travel," which includes activi- ties like tastings, cooking classes, tours and foodie events. A recent AAA study found that an estimat- ed 22 million Americans expect to take a culinary-focused vacation within the next year. Connecticut is well positioned to respond to both of these trends. n RANDY FIVEASH Director, Connecticut Office of Tourism BY THE NUMBERS $119.7M The total Connecticut occupancy tax revenues collected in fiscal 2016, according to the state Department of Revenue Services. 46.5% The percentage of Airbnb room nights sold that were part of a seven-day or longer stay, according to a 2016 STR study. $11M The total revenues collected by the 2,400 active Airbnb hosts in Connecticut in 2016. I M A G E | C N N

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