Property management technology adoption in the short‐term housing rental market

Sophia Göppinger, Jaime Luque and Gianluca Marcato

Real Estate Economics, 2024, vol. 52, issue 5, 1197-1225

Abstract: We show evidence of the impact providing information on market conditions (supply growth, demand patterns, pricing trends, and competitor rates) on pricing in the short‐term rental market. Using a sample of 2196 housing units over 18 months available on Airbnb in Madrid, Spain, we observe property managers' adoption of this technology at different points in time for 16% of our observations. Our propensity score matching estimates support the evidence of greater market transparency obtained through the adoption of this technology, with a significant increase in revenues obtained through a reduced average daily price and increased occupancy. Our results are robust to several model selections dealing with a potential endogeneity issue. We also show some preliminary evidence of property managers increasingly engaging in dynamic pricing after adopting this technology. Mainly, revenue growth seems to be generated through a small price drop leading to a rise in occupancy at the top end of the price distribution rather than at the bottom end, where a significant and much higher price drop is not able to generate the necessary occupancy growth to obtain an overall increase in revenues.

Date: 2024
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https://doi.org/10.1111/1540-6229.12504

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