Host type and pricing on Airbnb: Seasonality and perceived market power

Abstract

The literature on short-term rental emphasises the heterogeneity of the hosts population. Some argue that professional and opportunistic hosts differ in terms of their pricing strategy. This study highlights how differences in market perception and information create a price differential between professional and non-professional players. Proposing an original and accurate definition of professional hosts, we rely on a large dataset of almost 9000 properties and 73,000 observations to investigate the pricing behaviour of Airbnb sellers in Corsica (France). Using OLS and the double-machine learning methods, we demonstrate that a price differential exists between professional and opportunistic sellers. In addition, we assess the impact of seasonality in demand on the size and direction of this price differential. We find that professionals perceive a higher degree of market power than others during the peak season and it allows them to enhance their revenues.

Reference

Georges Casamatta, Sauveur Giannoni, Daniel Brunstein, and Johan Jouve, “Host type and pricing on Airbnb: Seasonality and perceived market power”, Tourism Management, vol. 88, n. 104433, February 2022.