Contestable Markets: Is AirBNB cheaper than a hotel?

The platform economy business AirBNB has had a major effect on the hospitality sector of numerous cities around the world. The widespread assumption is that AirBNB offers cheaper accommodation than full service hotels - is this true?

Data produced here suggests that AirBNB is indeed significantly cheaper in most locations. In part the price differential is the result of AirBNB properties not facing the higher overhead costs of running a hotel. But perhaps the difference is also a reflection of the monopoly rents that hotels can charge in popular city-centre locations where people are prepared to pay a premium nightly rate to avoid the inconvenience of getting the key to an AirBNB property and (perhaps) having to engage in conversation with locals / hosts!

Here is a supplementary chart showing how the average price of an AirBNB property varies by city in the UK. Bath and London - both hugely popular with overseas visitors - top the rankings.