Growing the Economy, Helping Families Pay the Bills Analysis of Economic Impacts 2014

FINDINGS REPORT | MAY 2015 Executive Summary

Growing the economy through visitor spending

Supporting neighborhoods in all five boroughs

Making more affordable for more families

HR&A Advisors, Inc. Airbnb, an online marketplace that allows people to list and book rooms and homes, supported substantial economic activity in NYC in 2014. Airbnb properties in NYC $1.15B TOTAL ECONOMIC ACTIVITY

$301M $844M TO HOST HOUSEHOLDS TO NYC BUSINESSES

10,580 TOTAL JOBS SUPPORTED

Note: All analysis is based on reservation data for January – December 2014 and a survey of NYC guests and hosts who were active in 2014. Economic activity includes $915M in direct spending and $230M in indirect and induced spending according to IMPLAN analysis. Jobs supported include jobs supported by $1.15B in total economic spending as well as the 2.1% of hosts who stated that Airbnb was their primary source of income. See Appendix for more detail.

HR&A Advisors, Inc. EXECUTIVE SUMMARY| 2 Airbnb supports the City of New York’s efforts to create an economy that benefits all New Yorkers through the following three goals:

Growing the Economy, Helping Families Pay the Bills

1. Growing the 2. Supporting economy through neighborhoods in visitor spending all five boroughs

3. Making New York more affordable for more families

HR&A Advisors, Inc. EXECUTIVE SUMMARY| 3 GROWING THE ECONOMY THROUGH VISITOR SPENDING

The number of Airbnb visitors in NYC continues to grow rapidly.

Airbnb visitors 767,000

416,000 304,000 84% INCREASE 37% INCREASE 2012 2013* 2014

* 2013 numbers represent the period from August 2012 to July 2013.

HR&A Advisors, Inc. EXECUTIVE SUMMARY| 4 GROWING THE ECONOMY THROUGH VISITOR SPENDING Since studies conducted in 2012 and 2013, Airbnb economic activity has more than doubled, reaching over $1B in 2014. Total economic activity Total jobs supported $1.15B 10,580

$632M 4,575 $428M 81% 3,285 131% INCREASE INCREASE 48% 39% INCREASE INCREASE

2012 2013* 2014 2012 2013* 2014

* 2013 numbers represent the period from August 2012 to July 2013.

HR&A Advisors, Inc. EXECUTIVE SUMMARY| 5 GROWING THE ECONOMY THROUGH VISITOR SPENDING

Airbnb attracts visitors who spend more time and money in NYC.

Airbnb visitors Hotel visitors 5.8 3.9 AVERAGE NIGHTS STAY AVERAGE NIGHTS STAY

$1,450 $1,370 TOTAL TRIP SPENDING TOTAL TRIP SPENDING

HR&A Advisors, Inc. EXECUTIVE SUMMARY| 6 GROWING THE ECONOMY THROUGH VISITOR SPENDING

Airbnb attracts a new type of visitor to NYC.

87% 81% 82% OF GUESTS USE AIRBNB OF GUESTS USE AIRBNB OF GUESTS USE AIRBNB BECAUSE THEY WANT TO BE BECAUSE THEY WANT TO BECAUSE THEY WANT MORE FINANCIALLY CONSCIOUS EXPLORE A SPECIFIC AMENITIES THAN HOTELS NEIGHBORHOOD OFFER

HR&A Advisors, Inc. EXECUTIVE SUMMARY| 7 SUPPORTING NEIGHBORHOODS IN ALL FIVE BOROUGHS Airbnb visitors prefer to stay outside of traditional hotel neighborhoods and spend money at local businesses.

$235M 83% 42% OF AIRBNB PROPERTIES OF GUEST SPENDING ECONOMIC ACTIVITY IN IN NEIGHBORHOODS IS IN THE OUTER BOROUGHS OUTSIDE OF MAJOR NEIGHBORHOOD HOTEL AREAS WHERE THEY STAYED

Note: “Traditional hotel neighborhoods” refers to Mid- between 14th and 59th Streets, where 60-70% of hotel rooms are located.

HR&A Advisors, Inc. EXECUTIVE SUMMARY| 8 MAKING NEW YORK MORE AFFORDABLE FOR MORE FAMILIES Airbnb helps NYC residents pay the bills in the face of the City’s rising housing costs.

Change in Median NYC Income and Rent (2000-2012)

80% RENT IN 2012 NEARLY 70% 60% 55% 50% OF ALL NYC RENTAL HOUSEHOLDS WERE RENT BURDENED. 40% (AN 11% INCREASE SINCE 2000) 30%

20%

10%

0%

-10% INCOME MEDIAN RENT MEDIAN INCOME Note: Rent burdened households spend 30% or more of their household income on rent. Source: Office of the NYC Comptroller, The Growing Gap, 2014; City of New York, Housing New York: A Five-Borough, Ten-Year Plan, 2014.

HR&A Advisors, Inc. EXECUTIVE SUMMARY| 9 MAKING NEW YORK MORE AFFORDABLE FOR MORE FAMILIES Airbnb makes NYC more affordable and helps low- and middle- class residents stay in their homes.

Host households by income

22% ABOVE 29% 72% MIDDLE-INCOME LOW-INCOME OF HOSTS SAY THAT AIRBNB HAS HELPED THEM STAY IN THEIR HOMES 29% MIDDLE 19% INCOME MODERATE INCOME

Note: HR&A analyzed 1- and 2-person host households (73% of survey sample); adequate survey data was not available for Airbnb households containing more than two people. For 1- and 2-person households in NYC, HUD defines low-income as up to $47,032 - $53,768 annual household income respectively (80% AMI); moderate-income as up to $70,547 - $80,653 (120% AMI); and middle-income households up to $117,578 - $134,422 (200% AMI).

HR&A Advisors, Inc. EXECUTIVE SUMMARY| 10 Executive Summary

Growing the economy through visitor spending

Supporting neighborhoods in all five boroughs

Making New York more affordable for more families

HR&A Advisors, Inc. Growing\ the economy through visitor spending

NYC Context: In 2014, tourism supported 359,000 jobs and $21B in wages.

City projects that 67M visitors will come to NYC by the end of 2021.

Source:HR&A Advisors,NYC & Co. Inc. press releases, 2014 and 2015. AIRBNB: GROWING THE ECONOMY THROUGH VISITOR SPENDING| 12 Airbnb supported unprecedented economic activity in 2014. $1.15B 10,580 TOTAL ECONOMIC ACTIVITY TOTAL JOBS SUPPORTED

$301M $844M TO HOST HOUSEHOLDS TO NYC BUSINESSES

Note: Economic activity includes $915M in direct spending and $230M in indirect and induced spending according to IMPLAN analysis. Jobs supported include jobs supported by $1.15B economic spending as well as 2.1% of hosts who stated that Airbnb was their primary source of income. See Appendix for detail.

HR&A Advisors, Inc. AIRBNB: GROWING THE ECONOMY THROUGH VISITOR SPENDING| 13 Airbnb generated $844 million in spending to NYC businesses across many sectors. $844M TO NYC BUSINESSES

$301M $233M $197M $173M

$151M

$65M

Services Food & beverage Entertainment Transport Industry, manufacturing, and food processing

HR&A Advisors, Inc. AIRBNB: GROWING THE ECONOMY THROUGH VISITOR SPENDING| 14 Airbnb attracts more guests looking for affordable accommodations and experiences off the beaten .

Affordable accommodations Local experience

87% 81% OF GUESTS USE AIRBNB OF GUESTS WANT TO BECAUSE THEY WANT EXPLORE A SPECIFIC TO BE FINANCIALLY NEIGHBORHOOD CONSCIOUS

AIRBNB GUESTS PAY AN AVERAGE DAILY RATE OF $160 80% (46% LESS THAN AVERAGE HOTEL) OF AIRBNB VISITORS STAY OUTSIDE MID-MANHATTAN

HR&A Advisors, Inc. AIRBNB: GROWING THE ECONOMY THROUGH VISITOR SPENDING| 15 Airbnb guests stay longer and spend more per trip than hotel visitors.

Airbnb visitors Hotel visitors 5.8 3.9 AVERAGE NIGHTS STAY AVERAGE NIGHTS STAY $1,450 $1,370 TOTAL TRIP SPENDING TOTAL TRIP SPENDING $390 ACCOMMODATION SPENDING $600 ACCOMMODATION SPENDING

$1,060 DAYTIME SPENDING $770 DAYTIME SPENDING

HR&A Advisors, Inc. AIRBNB: GROWING THE ECONOMY THROUGH VISITOR SPENDING| 16 Airbnb accommodates many international guests, who stay longer and spend more than domestic visitors.

Airbnb visitors Overnight NYC visitors

17% INTERNATIONAL 40% DOMESTIC 60% 83% INTERNATIONAL DOMESTIC

HR&A Advisors, Inc. AIRBNB: GROWING THE ECONOMY THROUGH VISITOR SPENDING| 17 By capturing a different visitor segment, Airbnb likely attracts substantial visits and spending that would not occur otherwise.

New visitorsNew visits New spending 51,390 79% 36% OR 6.7% OF GUESTS, SAY AIRBNB MAKES THEM MORE SAY THEY WOULD NOT HAVE WOULD NOT HAVE STAYED IN NYC LIKELY TO RETURN TO NYC STAYED AS LONG WITHOUT AIRBNB WITHOUT AIRBNB

Note: When asked “If Airbnb had not been available, what would you have done?” 6.7% of guests stated they would not have come to NYC.

HR&A Advisors, Inc. AIRBNB: GROWING THE ECONOMY THROUGH VISITOR SPENDING| 18 Airbnb helps solve an accommodation bottleneck, enabling NYC to accommodate more people who want to visit.

$290 $295 $273 $281 $261 Hotel average daily rates and $237 occupancy rates continue to climb $160 despite 240 new hotels opening $142 $145 $144 between 2006-2014. $126 $132

2009 2010 2011 2012 2013 2014 Hotel ADR Airbnb ADR

Current 88% average occupancy rate means hotels are full during peak seasons.

Note: Because the 88% occupancy rate is an annual average (for 2014), during peak travel seasons, the occupancy rate is much higher, with hotels almost completely full. A 77% occupancy rate is the industry standard to induce new hotel development, indicating supply must expand to meet demand. Source: NYC & Co., STR, HVS Forecast, HR&A analysis.

HR&A Advisors, Inc. AIRBNB: GROWING THE ECONOMY THROUGH VISITOR SPENDING| 19 Executive Summary

Growing the economy through visitor spending

Supporting neighborhoods in all five boroughs

Making New York more affordable for more families

HR&A Advisors, Inc. Supporting neighborhoods in all five boroughs

NYC Context: Economic development in the outer boroughs supports the growth of jobs closer to where many New Yorkers live.

Employment grew 15% 2004-2013, outpacing Manhattan’s 10%.

Source: City of New York, Department of City Planning, Population ProjectionsHR&A Advisors, by Age/Sex Inc. & Borough, 2010-2040, 2013. AIRBNB: GROWING THE ECONOMY THROUGH VISITOR SPENDING| 21 Most Airbnb guests stay outside main hotel areas throughout NYC.

Airbnb properties Hotel rooms 83% 60-70% OF PROPERTIES OUTSIDE OF OF HOTEL ROOMS ARE MID-MANHATTAN IN MID-MANHATTAN

Note: Size of each dot on hotel map indicates the estimated number of rooms for each hotel. “Mid-Manhattan” refers to Manhattan between 14th and 59th Streets.

HR&A Advisors, Inc. AIRBNB: SUPPORTING NEIGHBORHOODS IN ALL FIVE BOROUGHS| 22 Airbnb guests spend substantially at local neighborhood businesses.

THE AVERAGE VISITOR SPENDS THE AVERAGE VISITOR SPENDS 42% $600 OF VISITORS’ SPENDING IN THE NEIGHBORHOOD OCCURS IN THE NEIGHBORHOODS WHERE THEY STAY WHERE THEY STAY

HR&A Advisors, Inc. AIRBNB: SUPPORTING NEIGHBORHOODS IN ALL FIVE BOROUGHS| 23 Airbnb visitors create significant economic activity in the outer boroughs.

$235M 2,860 Airbnb visitors by where they stayed TOTAL ECONOMIC ACTIVITY JOBS SUPPORTED IN IN OUTER BOROUGHS OUTER BOROUGHS 5,300 3,300 BRONX (1%) (<1%) $4M $911M BRONX 42,000 MANHATTAN QUEENS 149,200 (5%) MID-MANHATTAN (19%) 243,000 $30M (32%) 324,000 $199M OUTSIDE BROOKLYN MID-MANHATTAN $2M (42%) STATEN ISLAND

HR&A Advisors, Inc. AIRBNB: SUPPORTING NEIGHBORHOODS IN ALL FIVE BOROUGHS| 24 Airbnb guests visit both typical tourist destinations and traditionally less-visited outer boroughs. Percentage of Airbnb visitors who visited each neighborhood:

Midtown 79% Downtown 79% Uptown Manhattan 99% visited Manhattan 77% Financial District 54% Harlem 24% Upper Manhattan 24% North Brooklyn 26% Downtown Brooklyn 22% 45% visited Brooklyn Central Brooklyn 13% South Brooklyn 8% West Brooklyn 7% East Brooklyn 5% 16% visited Staten Island Staten Island 16%

7% visited Bronx 7% West Queens 5% 6% visited Queens Outer Queens 2%

HR&A Advisors, Inc. AIRBNB: SUPPORTING NEIGHBORHOODS IN ALL FIVE BOROUGHS| 25 Case study: Bedford-Stuyvesant, Brooklyn

39,895 990 AIRBNB GUESTS HOSTS $30M TOTAL DIRECT LOCAL SPENDING

$10.2M TO LOCAL RESIDENT HOSTS AND $19.8M IN SPENDING AT LOCAL BUSINESSES

HR&A Advisors, Inc. AIRBNB: SUPPORTING NEIGHBORHOODS IN ALL FIVE BOROUGHS| 26 Case study: Harlem, Manhattan

59,660 1,765 AIRBNB GUESTS HOSTS $43.2M TOTAL DIRECT LOCAL SPENDING

$17.0M TO LOCAL RESIDENT HOSTS AND $26.2M IN SPENDING AT LOCAL BUSINESSES

HR&A Advisors, Inc. AIRBNB: SUPPORTING NEIGHBORHOODS IN ALL FIVE BOROUGHS| 27 Case study: Astoria, Queens

16,290 495 AIRBNB GUESTS HOSTS $10.6M TOTAL DIRECT LOCAL SPENDING

$4.0M TO LOCAL RESIDENT HOSTS AND $6.6M IN SPENDING AT LOCAL BUSINESSES

HR&A Advisors, Inc. AIRBNB: SUPPORTING NEIGHBORHOODS IN ALL FIVE BOROUGHS| 28 Case study: South Bronx

1,500 25 AIRBNB GUESTS HOSTS $900,000 TOTAL DIRECT LOCAL SPENDING

$300,000 TO LOCAL RESIDENT HOSTS AND $600,000 IN SPENDING AT LOCAL BUSINESSES

HR&A Advisors, Inc. AIRBNB: SUPPORTING NEIGHBORHOODS IN ALL FIVE BOROUGHS| 29 Executive Summary

Growing the economy through visitor spending

Supporting neighborhoods in all five boroughs

Making New York more affordable for more families

HR&A Advisors, Inc. Making New York more affordable for more families NYC Context:

In 2012, almost 55% of all rental households were rent burdened, spending more than 30% of annual income on rent. Low-income renters paid an average of 41% of their income on rent, 11% more than they did in 2000.

Source: City of New York, Housing New York: A Five-Borough, Ten-Year Plan, 2014; OfficeHR&A ofAdvisors, the NYC Inc. Comptroller, The Growing Gap, 2014. AIRBNB: GROWING THE ECONOMY THROUGH VISITOR SPENDING| 31 78% of Airbnb hosts are low-, moderate-, or middle-income.

Host households by income

22% ABOVE 29% MIDDLE-INCOME LOW-INCOME

29% 19% MIDDLE INCOME MODERATE INCOME

HR&A Advisors, Inc. AIRBNB: MAKING NEW YORK MORE AFFORDABLE FOR MORE FAMILIES| 32 The typical host occasionally rents out the property in which he or she lives.

THE AVERAGE HOST 90% ACCOMMODATES AIRBNB GUESTS OF HOSTS RENT THEIR PRIMARY RESIDENCE ON AIRBNB 5 NIGHTS PER MONTH

HR&A Advisors, Inc. 33 More hosts are reporting that Airbnb helps them to afford high housing costs.

More hosts are saying that Airbnb has helped them stay in their homes A TYPICAL HOST’S AIRBNB INCOME COVERS compared to 2012 21% 62% 72% OF THEIR ANNUAL RENT OF HOSTS IN 2012 OF HOSTS IN 2014

Note: A Median Rent of $1,337 has been calculated from 2013 ACS 1-year estimates as a weighted average of median rent by borough to reflect the distribution of hosts. Average annual Airbnb income per host is $3,515.

HR&A Advisors, Inc. AIRBNB: MAKING NEW YORK MORE AFFORDABLE FOR MORE FAMILIES| 34 Hosts also use their earnings for other important expenses and some extra spending. $7,770 ANNUAL AIRBNB INCOME PER LISTING

$3,515

$1,185 $1,035 $865 $465 $435 $270

Rent/mortgage Vacation Other regular Extra spending Long-term Other Cleaners for household money savings Airbnb hosting expenses

Note: Airbnb income represented is before taxes and does not reflect income tax or other taxes that host may pay on this income.

HR&A Advisors, Inc. AIRBNB: MAKING NEW YORK MORE AFFORDABLE FOR MORE FAMILIES| 35 While hosts most frequently refer to housing costs as the primary use of their Airbnb income, they also cite other uses.

When survey respondents answered “what do you use your Airbnb income for?” the most common words were:

HR&A Advisors, Inc. AIRBNB: MAKING NEW YORK MORE AFFORDABLE FOR MORE FAMILIES| 36 Airbnb also supports the 36% of hosts with unsteady income: many are freelancers, part-time workers, or students.

Hosts by work status 1% 2% NOT SPECIFIED UNEMPLOYED 8% RETIRED 4% STUDENT 64% FULL TIME WORKER IN CONTRAST, ONLY 16% FREELANCER 6% OF ALL NYC RESIDENTS ARE SELF-EMPLOYED 5% PART TIME WORKER

Source: Economic Modeling Specialist Intl. (EMSI) 2014

HR&A Advisors, Inc. AIRBNB: MAKING NEW YORK MORE AFFORDABLE FOR MORE FAMILIES| 37 Airbnb supports small business entrepreneurs.

24% 11% SUPPORT THEMSELVES WHILE SUPPORT THEMSELVES WHILE FREELANCING LAUNCHING A NEW BUSINESS

“[Airbnb] funds a 501(c)(3) charity that I started to help women artists and entrepreneurs.”

“I am a self-employed personal trainer, and without Airbnb I could not keep my apartment.”

“Airbnb helped me furnish my new apartment and paid for initial expenses of my entrepreneurial business for much-needed equipment and supplies.”

“I own a business, but it is struggling. For me to keep my business open, I rent out my apt. If I didn't have this I would probably close my business and be in a position where I might not be able to keep my apt.”

“I'm a freelance designer so often between jobs I rely on Airbnb to make ends meet. However, when I have contract work, I tend to use the income for more leisurely activities.”

HR&A Advisors, Inc. AIRBNB: MAKING NEW YORK MORE AFFORDABLE FOR MORE FAMILIES| 38 Airbnb also provides affordable short-term housing to new New York residents and workers, making it easier to move to NYC.

16,110 visitors USED AIRBNB TO INTERVIEW FOR A JOB OR AS TEMPORARY HOUSING WHEN RELOCATING TO NYC

Note: 2.1% of survey respondents stated they used Airbnb to interview for a job or as temporary housing when relocating to NYC in the past year.

HR&A Advisors, Inc. AIRBNB: MAKING NEW YORK MORE AFFORDABLE FOR MORE FAMILIES| 39 Appendix

HR&A Advisors, Inc. Methodology

DATA SOURCES

Historic Airbnb booking data HR&A analyzed data on completed bookings in NYC for a 12-month period (January 2014 – December 2014).

Airbnb Community Impact Survey To gather quantitative data on Airbnb guests and hosts, HR&A developed a survey instrument that was distributed by Airbnb in January/February 2015 via Surveymonkey. The guest survey was sent to randomized groups of Airbnb users who had used Airbnb as guests in NYC in the past year; 345 guests responded. The survey was also distributed to all users who had hosted in NYC in the past year; 335 hosts responded. No financial incentive was given. These sample sizes provide a high level of statistical significance. With a universe of 767,000 guests who booked an NYC rental in 2014 and a sample size of 345, the guest survey achieved a 95% confidence level with a confidence interval of 5.27, meaning that with 95% certainty, survey results were within 5.27 percentage points, plus or minus, of the entire population. With a universe of 28,200 NYC hosts in the past year and a sample size of 335, the host survey achieved a 95% confidence level with a confidence interval of 5.32.

HR&A Advisors, Inc. APPENDIX| 41 Tourism industry data Custom data on international travelers was obtained from Office of Travel and Tourism Industries (OTTI) 2011 survey, and custom data on overnight domestic travelers was obtained from Longwoods International Travel USA 2011. A weighted average of overnight domestic and international visitors to NYC was used to create a profile of the average overnight NYC visitor and the average hotel visitor. Because visitor spending numbers were from 2010, visitor spending was adjusted upwards 4.5% per year to reflect estimated annual growth in spending per visitor from 2010-2014, and then adjusted to 2014 dollars. All data on NYC visitors includes overnight visitors only.

These custom data reports were supplemented by data on visitors and the hotel industry in NYC obtained from NYC & Co. reports from 2010-2013 and the Office of the Mayor from 2014 and 2015.

Hotel property data Hotel location data was derived from NYC Department of City Planning’s MapPLUTO tax lot database, 2012 and supplemented with various hotel development reports from NYC & Co. to include new hotels from 2012-2015. Hotel rooms were estimated by allocating the total number of hotel rooms in NYC to each lot based on commercial square footage.

HR&A Advisors, Inc. APPENDIX: METHODOLOGY| 42 ANALYSIS

Overview and definitions Using spending activities reported by guests and hosts on the Airbnb Community Impact Survey and the total number of Airbnb hosts and visitors in 2014, HR&A estimated that guests and hosts collectively spent $915M in the NYC economy. HR&A then calculated “spinoff” economic activity of $230M, for a total of $1.15B in gross local economic activity in 2014.

“Spinoff” activity is defined as: 1) indirect economic activity caused by additional business spending stimulated by direct economic spending and 2) induced economic activity stimulated by additional household spending due to wages from the direct and indirect activity. HR&A used the IMPLAN model to make these calculations, a standard economic analysis tool (see following page for more detail).

IMPLAN estimates that $1.15B in gross economic activity, combined with the 2.1% of hosts who state that Airbnb is their primary source of income, supported 10,000 jobs in NYC in 2014.

Gross economic activity does not exclude spending that would happen in the absence of Airbnb by guests who would have found alternative accommodations (in contrast to economic impact, which is comprised only of net new activity). While Airbnb clearly brings new economic activity to NYC – by bringing new types of visitors who stay longer and spend more – and distributes visitor spending to more neighborhoods, adequate data is not available to quantify Airbnb’s net new impact precisely.

HR&A Advisors, Inc. APPENDIX: METHODOLOGY| 43 IMPLAN model The IMPLAN model is used to conduct economic impact analyses by leading public and private sector organizations across the , including a number of federal and state agencies. IMPLAN traces the pattern of commodity purchases and sales between industries that are associated with each dollar’s worth of a product or service sold to a customer, analyzing interactions among 440 industrial sectors for a specific location, with assumptions about spending that takes place outside of the location. HR&A conducted its analysis with 2012 multipliers for the economy of New York City. Multipliers are the total production requirements in the local economy for all goods and services consumed by final users in 2012. This is the most recent data available.

The figure below illustrates the structure of economic impacts produced by the model. Multiplier or spinoff activity is comprised of two components: 1) indirect economic impacts caused by additional business spending stimulated by direct economic spending during construction and operating activities (e.g., supplier business operations) and 2) induced economic impacts stimulated by additional household spending due to wages from the direct and indirect activity.

In addition to overall economic spending, the IMPLAN input-output model also produces estimates of the number Overview of Economic Impacts, Direct and Spinoff Effects of jobs supported and employee compensation. Compensation generated by the IMPLAN input-output model is based on a nationally recognized econometric model, customized for local economic conditions. It includes wage and salary income plus benefits and employer paid taxes. For each specific industry, IMPLAN also provides what percentage of total employee compensation corresponds, on average, to wages. This tool enables wage estimation using IMPLAN’s total employee compensation output. Source: HR&A Advisors, Inc.

HR&A Advisors, Inc. APPENDIX: METHODOLOGY| 44 Detailed methodology

HR&A used a conservative methodology to estimate the economic activity associated with Airbnb based on estimates of daily visitor spending in lodging, food service, groceries, shopping, entertainment and sightseeing, car rentals and local transportation, and other expenses. In order to estimate the average daily spending for Airbnb guests, HR&A analyzed spending distributions as reported by survey respondents and developed a ratio between spending on accommodations and other spending categories. HR&A then applied this ratio to the average daily spending on accommodations per guest derived from historic booking data to estimate average daily spending per guest across all spending categories. The resulting average spending per day was then multiplied by the total number of guest nights booked in the 12-month study period.

All spending categories but lodging were modeled in IMPLAN using their corresponding industry codes. Since lodging expenditures also correspond to host income, the impact of this spending was modeled according to how hosts reported spending their Airbnb income in the survey. Hosts reported that they spent 67% of their Airbnb income in categories with no economic impacts for NYC such as vacations, long-term savings and rent or mortgage payments. After taking out this spending, host revenues were modeled in IMPLAN to estimate the indirect and induced effects of guest lodging expenditures. The tables below shows Airbnb guests’ average daily expenditure per category and the total economic spending modeled in IMPLAN.

Average Daily Spending Category Modeled in Guest Spending Category Total Spending Source of Spending Spending per Guest IMPLAN Airbnb Accommodation $78 Food Service $184,343,986 Guest Food Service $41 Groceries $42,495,148 Guest Groceries $10 Shopping $291,194,296 Guest Shopping $65 Other Leisure Activities $145,967,603 Guest Other Leisure Activities $33 Transportation $59,073,454 Guest Transportation $13 Other Services $91,338,104 Guest Other Services $21 Other Regular Household Expenses $40,145,436 Host Extra Spending Money $33,445,537 Host Cleaners for Airbnb hosting $10,378,099 Host Other $16,862,162 Host

HR&A Advisors, Inc. APPENDIX: METHODOLOGY| 45 Detailed methodology: spending by borough

HR&A took a conservative approach to estimating total guest spending by borough. HR&A distributed the following three categories of guest spending to each borough: lodging, neighborhood daytime spending, and other daytime spending.

HR&A analyzed Airbnb booking data by borough to calculate the total amount guests spent in Airbnb lodging in each borough. This estimation is net of any Airbnb fees and includes the property base price and cleaning fees.

Survey results indicate guests spent on average 42% of their daytime spending in the neighborhood where they stayed; HR&A therefore allocated 42% of guests’ reported daytime spending to the borough where they stayed.

This methodology leaves 58% of guest daytime spending to be distributed among each borough. In order to produce a conservative estimate of outer borough spending, and given Manhattan’s status as the center of NYC’s cultural, shopping, entertainment and dining destinations, HR&A assumed most of the remaining daytime spending occurred in Manhattan, with the rest being spent at the borough in which guests stayed. Therefore, 90% of remaining daytime spending was allocated to in Manhattan, and 10% of residual ancillary spending was allocated to the borough in which guests stayed.

Total spending by borough results were then run through IMPLAN models for each borough to obtain the total economic impacts of guest spending by borough.

HR&A Advisors, Inc. APPENDIX: METHODOLOGY| 46 Photo Credits

Cameron Blaylock Rob Kalmbach Jacob Krupnick Julia Robbs David Vilder Lisa Warninger

HR&A Advisors, Inc. APPENDIX| 47