Airbnb, Hotels, and Localized Competition

Maximilian Schaefer and Kevin Ducbao Tran ()
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Kevin Ducbao Tran: University of Bristol, School of Economics, 12 Priory Road, Bristol BS8 1TU, United Kingdom

No 23-04, Working Papers from NET Institute

Abstract: We analyze competition between hotels and Airbnb listings as well as the effect of Airbnb on consumer welfare, hotel profits, and Airbnb host surplus. For this purpose, we use granular daily-level data from Paris for the year 2017. We estimate a random coefficient logit model of demand. We extend prior research by accounting for the localized nature of competition within districts of the city. Our results suggest that demand is segmented by district as well as accommodation type. Based on these demand estimates, we estimate separate supply-side models for hotels and Airbnb, to account for differences in price setting we observe in the data. Using the estimated models, we assess how Airbnb affects hotel profits and consumer welfare and how much Airbnb hosts value the platform. Our simulations imply that Airbnb increases average consumer surplus and decreases hotel profits substantially. Airbnb hosts seem to value the platform moderately.

Keywords: hotel industry; short-term rentals; localized competition; consumer welfare; sharing economy; peer-to-peer markets; Airbnb (search for similar items in EconPapers)
JEL-codes: D4 D6 L1 Z38 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2023-09
New Economics Papers: this item is included in nep-com, nep-ind, nep-pay, nep-reg, nep-tur and nep-ure
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Working Paper: Airbnb, Hotels, and Localized Competition (2020)
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