On Location Experiences, Airbnb Impacting Super Bowl Ticketing & Hotel Businesses

JohnWallStreet

On Location Experiences (OLE) and Airbnb have had a profound impact on the ticketing and hotel businesses surrounding Super Bowl LIV. OLE controls +/- 10,000 Super Bowl tickets and with so much inventory, the company holds pricing power over the secondary market. As of Thursday evening, the get-in price for a pair of tickets to the Chiefs-49ers game Sunday was +/- $4,900 (over $6K with fees). While ticket prices are holding strong, the price of hotel rooms in Miami has cratered. The omnipresent nature of Airbnb in South Florida has decimated a market once controlled by a limited number of hoteliers and ultimately the league itself.

Howie Long-Short: One reason that ticket prices are holding steady is “On Location isn’t particularly motivated to sell all of their tickets.” Tony Knopp (founder and CEO, TicketManager) explained “their motivation is to make as much money for the NFL [on the allotment received as they can]. And if that means there are extra tickets at the end of the selling cycle, [the league] has no problem backdooring those seats to their sponsors and partners at face value.” Remember, when Endeavor bought OLE in early January, the deal “enhanced the NFL’s stake in the hospitality agency” from 16% to 30%. The league is more incentivized than ever to keep pricing at a premium. Don’t expect ticket prices to drop significantly as we get closer to Sunday.

To be clear, there’s nothing wrong with the league’s strategy to drive up the cost of seats on the secondary market. In fact, Knopp says he would advise them to do the same. Ultimately, keeping prices high will retrain the market “to buy earlier [in the cycle] and to buy from them.” 

Historically speaking, the league - through its hotel partners - “bought up blocks of rooms at all of the major hotels [in the city hosting the Super Bowl] four to five years in advance, so there just weren’t rooms available [for the average fan attending the game].” OLE would use the lodging shortage and their access to the rooms “to justify the price of their hospitality packages” (i.e. fans knew they were overpaying for their ticket, but would be getting a room at a fair price). But South Florida has “so many people with rental properties” that a huge glut of lodging inventory still exists and it's pushing pricing on last minute hotel rooms downward. Knopp said that “in 2010, hotels were able to charge $1,500/night with a four night minimum. Right now, a fan could book a room at the same hotel as the 49ers staff for $600/night. That concept would have been unfathomable just a decade ago.”

It's reasonable to expect Airbnb’s presence will negatively impact hoteliers in Super Bowl cities moving forward, at least for games played in “vacation destinations” (think: Tampa, Phoenix) where mature rental markets exist. The good news - at least for OLE - is that Knopp doesn’t believe many other sporting events will feel the effects of the unicorn startup. “A private rental market has existed for The Masters for at least 20 years, so while Airbnb has made it easier to facilitate transactions [for that event] it hasn’t been difficult to get lodging [in Augusta, GA] for some time. The Final Four is really the only other national event where [getting a] hotel room [has been] a problem and [like the Super Bowl], there will be a huge disruption in that market too.” If lodging is going to be commoditized, fans attending the Super Bowl or Final Four should not be buying ticket packages that include hotel rooms. 

Fan Marino: As of Thursday evening (1.30), the difference between the lowest priced upper bowl ticket and the lowest priced seat in the lower bowl was +/- $600. The nominal spread is indicative of the demand “just to get in.” Industry insiders aren't surprised considering the amount of “regular fans” - as opposed to corporate partners - making the trek from Kansas City to see the team’s first Super Bowl appearance in 50 years.

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