Cleanliness is Next to Income: The Impact of COVID-19 on Short-Term Rentals

33 Pages Posted: 2 Dec 2020 Last revised: 4 Dec 2020

See all articles by Lily Shen

Lily Shen

Department of Finance, Clemson University

Sean Wilkoff

University of Nevada, Reno

Date Written: November 27, 2020

Abstract

The short-term rental market provides a close to real time signal of how events of regional and national importance can affect the demand for housing. We use Airbnb data from Austin, Texas to empirically investigate the impact of the onset of Corona Virus Disease 2019 (COVID-19) on the short-term rental market. Specifically, we employ a machine learning algorithm to create an extensive cleanliness dictionary to detect whether an Airbnb unit is clean. We use a difference-in-difference specification to value the change in income related to reviewer perceived cleanliness during the COVID-19 pandemic. We find the following results: first, available listings declined by 25% once the pandemic hit and those that remained lost 22% of their income and had occupancy decrease by 20%. Second, properties that were perceived to be clean increased their income by 17.5% and their occupancy by 16.5\%, mitigating the negative shock due to COVID-19. Third, rental prices for clean Airbnb listings did not increase after COVID-19.

Suggested Citation

Shen, Lily and Wilkoff, Sean, Cleanliness is Next to Income: The Impact of COVID-19 on Short-Term Rentals (November 27, 2020). Available at SSRN: https://ssrn.com/abstract=3740321 or http://dx.doi.org/10.2139/ssrn.3740321

Lily Shen (Contact Author)

Department of Finance, Clemson University ( email )

Clemson, SC 29631
United States

HOME PAGE: http://https://sites.google.com/g.clemson.edu/lily-shen

Sean Wilkoff

University of Nevada, Reno ( email )

1664 N. Virginia St
Reno, NV 89557
United States

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