The Economic Footprint of Short-Term Rentals on local businesses: Evidence from Portugal

Ronize Cruz, Francisco Nobre and João Pereira dos Santos
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Ronize Cruz: Centre for Business and Economics Research, University of Coimbr
Francisco Nobre: University of Surrey, School of Economics
João Pereira dos Santos: Queen Mary University of London; ISEG - University of Lisbon, REM/ UECE; IZA

No 2024-04, CeBER Working Papers from Centre for Business and Economics Research (CeBER), University of Coimbra

Abstract: This paper examines the rapid rise in short-term rentals (STRs) in Portugal and their impact on the performance of local businesses. Using comprehensive firm-level data covering all private companies, we find that exposure to STRs increases the probability of business closures, particularly for low-performing firms. For surviving incumbent firms, we estimate a significant surge in sales for both resident- and tourist-oriented businesses, along with increases in employment, wage bill, and liquidity for the latter. In civil parishes with greater STR exposure, we observe a higher probability of new firm entry, reshaping the urban business landscape.

Keywords: Short-term rentals; Local businesses; Tourism; Portugal (search for similar items in EconPapers)
JEL-codes: L25 L83 R12 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2024-11
New Economics Papers: this item is included in nep-ent, nep-eur, nep-sbm and nep-ure
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