Are Neighbors Friends or Foes? Assessing Airbnb Listings’ Agglomeration Effect in New York City

Abstract

This study investigates the agglomeration effect of Airbnb listings in New York City (NYC) and answers two research questions: (a) Does agglomeration benefit or hurt the performance of individual Airbnb listings? (b) How does the effect of agglomeration vary by hosts regarding their operational experience (measured by their capacity and tenure on Airbnb)? A series of econometric analyses using large-scale data of Airbnb in NYC reveal that agglomeration positively affects the revenue performance of each Airbnb listing. In addition, such an effect is strengthened as host tenure spans but mitigated as host capacity expands, indicating a nonsymmetric agglomeration effect across service providers. This research contributes an important but less researched perspective to the home-sharing literature. Managerial implications on leveraging agglomeration for improved revenue performance are provided to Airbnb and its hosts, as well as the hotel chains that want to combat Airbnb’s negative impacts or have already entered the short-term residential rental market to compete head-to-head with Airbnb.

The 7 Ps marketing mix of home-sharing services: Mining travelers’ online reviews on Airbnb

“…Last but not least, we echo other researchers that the policymakers should pay close attention to the multi-unit hosts as they propose new policies to restrict the short-term residential rentals in a market (e.g., Horn and Merante, 2017 ; Kwok and Xie, 2019 ; Xie et al, 2020a - b ). Multi-unit hosts have already gained many operational advantages over other hotels or hostels because they normally need not follow the legal and safety compliances as what the regular hotels do.…”

“…Home-sharing websites provide a cyber marketplace where travelers can find alternative accommodation options from the residents living in a tourist destination other than hotels or hostels. Not only do home-sharing websites compete directly with hotels in the market by fulfilling the accommodation needs for travelers ( Xie et al, 2020b ), the business model of home-sharing websites also made disruptive impacts on the lodging industry.…”

“…For example, the idea of sharing underutilized space among friends and family members is not new ( Xie et al, 2020b ). The original intents of many home-sharing websites were to build a cyber marketplace to connect those consumers who want to earn some extra income from the under-utilized space they possess with the travelers who need a space to stay ( Guttentag, 2015 ).…”

“…Multi-unit hosts and single-unit hosts might end up offering a different experience to travelers, which will very likely reflect on the marketing mix of the services they provided. More importantly, multi-unit hosts may create even more significant threats to hoteliers because they can achieve higher revenues in the market through the effective use of pricing strategies (e.g., Gibbs et al, 2018 ; Kwok and Xie, 2018 ; Magno et al, 2018 ) and differentiated operational strategies (e.g., Xie et al, 2020b ). Along this line of research, Mauri et al (2018) also found that the number of connected accounts (i.e., the number of units that a host manages) has a significant negative impact on a listing’s popularity as measured in rating, the number of reviews, times saved to a traveler’s wish lists, and the likelihood of the host being categorized as a superhost.…”

Airbnb Host Scaling, Seasonal Patterns, and Competition

“…However, knowledge about the managerial differences among these two groups is very limited, despite the ability of the scaling effect to deeply change the hosts' business model [6]. Furthermore, the large majority of these studies simply distinguish between single and multi-listing hosts, without any additional segmentation.…”