Price determinants of tourist accommodation rental: Airbnb in barcelona and Madrid

Abstract

The emergence of Airbnb in many of the most populated destinations for tourism and leisure has disrupted the market for rental accommodation. Despite pricing is one of the most critical factors in the evolution and success of the accommodation industry, only a few researchers have focused on the main factors determining prices in these digital platform for non-hotel accommodation. We have analyzed the activity in two principal Spanish cities, which are also object of an intense tourist activity: Barcelona and Madrid. The research has been carried out differently for non-commercial and multi-hosting (or commercial) hosts. Different dimensions of pricing had been analyzed: location, host’s characteristics, property attributes and quality signaling factors. In addition, we also focus on the role of trust and reputation because traditional hotels have a clear competitive advantage in reducing risks through standardization, business reputation and safety regulations. The results show that site-specific characteristics, property qualities and online reviews explain most of pricing in Airbnb, with hosts also capitalizing their good reputation and professional status. Finally, the interaction of these accommodations with the evolution of rents in both cities has been also investigated. The results do not seem to confirm the complementary nature of the platform.