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Case study of Airbnb listings in Berlin

Hedonic pricing approach to measuring demand for tourist accommodation characteristics

Written by L. Haubeltova

Paper category

Term Paper

Subject

Economics

Year

2018

Abstract

Term Paper: Sharing economy Accommodation sharing economy can be simply defined as sharing excess capacity (Barron et al., 2017) in exchange for economic compensation, services or goods. According to economic theory, efficiency increases as underutilized capacity decreases. The characteristics of suppliers in the sharing economy market are different from other economic sectors. Since the sharing economy is usually limited to peer-to-peer transactions, suppliers are usually small units. Therefore, the intermediary between consumers and suppliers is a key assumption for the development of the sharing economy. The contact between suppliers and consumers is often carried out on the Internet through a dedicated Internet platform. According to Selloni (2017), the greatest growth in the sharing economy, including Airbnb shared accommodation, began in 2008 and was related to the world financial crisis. At this time, the necessary technical foundation has been laid, and the loss of the population's purchasing power and growing environmental problems can help change consumer behavior (Selloni, 2017). 2.2. Previous research As Airbnb began to grow on a large scale, the attention of analysis turned to it. The current discussion strongly reflects competition and even conflicts of interest in the accommodation, rental and housing markets. With the popularity of Airbnb tourist accommodation, it may reduce the occupancy rate of hotels; some owners may switch from long-term rentals to short-term rentals, and the reduced supply in the long-term rental market may push up residential prices. From the perspective of third parties such as hotels and local residents, Airbnb is even seen as a disruptive innovation (Guttentag, 2015). In particular, start to analyze the impact from the perspective of tourists and hosts: What motivates tourists to choose shared accommodation instead of traditional tourist accommodation (Forno and Garibaldi, 2015)? What are the key drivers for choosing specific Airbnb listings (Chen and Xie, 2017)? Which landlord’s behavior patterns can be identified (Lampinen and Ikkala, 2014)? • Third party: How does the supply of Airbnb affect hotel revenue (Zhu et al. (2017), Zervas et al. (2017))? How does Airbnb affect the long-term rental market and residents (Schäfer and Braun (2016), Barron et al. (2017))? • Macroeconomics: Guttentag (2015) discusses the potential impact on destination development. The two main methods are represented-qualitatively and quantitatively-in previous studies in this field. Research problems and methods used are correspondingly different. The focus of qualitative research is to understand the background of shared economy accommodation. On the other hand, quantitative research is usually based on previous qualitative research, taking over the identified attributes that affect Airbnb accommodation prices, and trying to provide evidence for previous conclusions. In addition, they use statistical methods and modeling (such as hedonic pricing models) to quantify the marginal effects of these attributes. In recent years, some studies have focused on the hedonic pricing of Airbnb listings (Chen a Xie (2017), Dogru and Pekin (2017), Gibbs et al. (2018)). The conclusion of qualitative research is that in the context of shared economy accommodation, Airbnb does not necessarily have to compete with traditional accommodations that provide hotel experiences, and is not subject to urban regulations. Airbnb can provide different services to target new groups of tourists. In addition to traditional accommodation attributes, there are additional sources of utility. These attributes can be divided into the following categories: • Characteristics of Airbnb listings: Previous research has shown that Airbnb listings are a complex set of attributes that affect demand. Chen and Xie (2017) summarized them as room-specific attributes and household facilities. • Perceived risk: According to So et al. (2018) The trust between the host and the tourist is one of the key aspects. The host needs to provide a good image through the number of comments and good ratings. Communication: Lampinen and Ikkala (2014) suggest that in the case of exchanging intangible goods such as accommodation, the process may be more important than the accommodation itself. Chen and Xie (2017) believe that the difference between Airbnb and hotels lies in the interaction with the host and the establishment of social relationships. However, the conclusions of the quantitative research do not completely accord with these findings. Chen and Xie (2017) pointed out that the results show that consumers' perceived value is mainly adjusted by the same intrinsic attributes as hotel accommodation. They do not support the assumption that the popularity of shared economy accommodation lies in social interaction. Austin (Chen and Xie, 2017) and Calgary, Montreal, Ottawa, Toronto and Vancouver (Gibbs et al., 2018). On the other hand, they show that the landlord’s efforts can have a positive impact on the price of the listing. Since the author chose different variables and variables of different specifications, it is impossible to compare the marginal effects, so the results are correspondingly different. Both studies used bathroom, bedroom, number of accommodations, room type, room type, super landlord index and evaluation rate as independent variables. Read Less