The spatial and quality dimensions of Airbnb markets

Abstract

Airbnb is now present in many tourist destinations worldwide. With the pricing power in the hands of the individual hosts, the assessment of competition is of great relevance. Despite the many studies on the drivers of Airbnb prices, there is no contribution yet on how quality affects the spatial dimensions of Airbnb markets. We aim to fill this gap with a case study of Bristol (United Kingdom). Using standard regression techniques, we find a quality-moderated spatial decay in the price effects of competition in local Airbnb markets. Thus, the price of a given listing is affected negatively by other listings within a set of radii that decrease with product differentiation. Beyond this local market boundary, the existence of other listings may increase prices, as demand is driven to the neighborhood- or city-wide markets because of the diversity of tourism accommodation.