Abstract

http://ssrn.com/abstract=2366898
 


 



The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry


Georgios Zervas


Boston University School of Management, Marketing Department

Davide Proserpio


Boston University - Department of Computer Science

John Byers


Boston University - Department of Computer Science

February 12, 2014

Boston U. School of Management Research Paper No. 2013-16

Abstract:     
Airbnb is an online community marketplace facilitating short-term rentals ranging from shared accommodations to entire homes that has now contributed more than ten million worldwide bookings to the so-called sharing economy. Our work addresses a central question facing the hospitality industry: to what extent are Airbnb stays serving as substitutes for hotel stays, and what is the impact on the bottom line of affected hotels? Our focus is the state of Texas, where we identify Airbnb's impact by exploiting significant spatiotemporal variation in the patterns of adoption across city-level markets. Using a dataset we collected spanning all Airbnb listings in Texas and a decade-long panel of quarterly tax revenue for all Texas hotels, we develop a nuanced estimate of Airbnb's material impact on hotel revenues. Our baseline estimate is that a 1% increase in Airbnb listings in Texas results in a 0.05% decrease in quarterly hotel revenues, an estimate compounded by Airbnb's rapid growth. To further isolate Airbnb's impact, we employ hotel segments that consumers are less likely to substitute for Airbnb stays as additional control groups. We find that the impacts are distributed unevenly across the industry, with lower-end hotels and hotels not catering to business travelers being the most affected. Finally, by simulating various regulatory interventions informed by current events, such as limiting Airbnb hosts to a single listing, we find only a moderate mitigating impact on hotel revenues.

Number of Pages in PDF File: 37

Keywords: sharing economy, Airbnb, hotels, competition

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Date posted: December 14, 2013 ; Last revised: November 29, 2014

Suggested Citation

Zervas, Georgios and Proserpio, Davide and Byers, John, The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry (February 12, 2014). Boston U. School of Management Research Paper No. 2013-16. Available at SSRN: http://ssrn.com/abstract=2366898 or http://dx.doi.org/10.2139/ssrn.2366898

Contact Information

Georgios Zervas (Contact Author)
Boston University School of Management, Marketing Department ( email )
United States
HOME PAGE: http://people.bu.edu/zg
Davide Proserpio
Boston University - Department of Computer Science ( email )
Boston, MA
United States
John Byers
Boston University - Department of Computer Science ( email )
Boston, MA
United States
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