The Rise of the Sharing Economy: Measuring the impact of Airbnb on Hotel Performance: Davide Proserpio

10:00 am on Friday, June 21, 2013
12:00 pm on Friday, June 21, 2013
MCS 137
More than four million people have rented accommodation from a service that offers over 300,000 rooms in 30,000 cities in 192 countries. They chose their rooms and paid for everything online. But their beds were provided by private individuals, rather than a hotel. This service is Airbnb. Since its launch in 2008, Airbnb has experienced very rapid growth, passing from a few hundreds nights booked in 2008 to over ten million nights of cumulative bookings worldwide at the end of 2012. In this paper we aim to investigate the consequences of the rise of Airbnb as seen by the local economy. In particular, we are interested in quantifying the impact of Airbnb on the local hotel industry. To explore this research question, we leverage a dataset of room stays that we have collected from Our initial results suggest that Airbnb's entry is associated with a negative impact on hotel revenue. Specifically, our model provides evidence that lower price hotels, i.e., budget category, are experiencing a decrease in Revenue Per Available Room (RevPAR), a common metric used in the hotel industry to measure hotels performance. Joint work with John Byers, Flavio Esposito and Giorgos Zervas