NDLI: The Impact of the Sharing Economy on the Hotel Industry: Evidence from Airbnb's Entry Into the Texas Market

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The Impact of the Sharing Economy on the Hotel Industry: Evidence from Airbnb's Entry Into the Texas Market

Content Provider	ACM Digital Library
Author	Proserpio, Davide Zervas, Georgios Byers, John W.
Abstract	Spurred by technological advancement, a number of decentralized peer-to-peer markets, now colloquially known as the sharing economy, have emerged as alternative suppliers of goods and services traditionally provided by long-established industries. A central question surrounding the sharing economy regards its long-term impact: will peer-to-peer platforms materialize as viable mainstream alternatives to traditional providers, or will they languish as niche markets? In this paper, we study Airbnb, a sharing economy pioneer offering short-term accommodation. Combining data from Airbnb and the Texas hotel industry, we estimate the impact of Airbnb's entry into the Texas market on hotel room revenue, and study the market response of hotels. To identify Airbnb's causal impact on hotel room revenue, we use a difference-in-differences empirical strategy that exploits the significant spatiotemporal variation in the patterns of Airbnb adoption across citylevel markets. We estimate that each 10% increase in Airbnb supply results in a 0:37% decrease in monthly hotel room revenue. In Austin, where Airbnb supply is highest, the impact on hotel revenue exceeds 10%. We find that Airbnb's impact is non-uniformly distributed, with lower-priced hotels, and hotels not catering to business travel being the most affected segments. Finally, we find that affected hotels have responded by reducing prices, an impact that benefits all consumers, not just participants in the sharing economy. Our work provides empirical evidence that the sharing economy is making inroads by successfully competing with, and acquiring market share from, incumbent firms.
Starting Page	637
Ending Page	637
Page Count	1
File Format	PDF
ISBN	9781450334105
DOI	10.1145/2764468.2764524
Language	English
Publisher	Association for Computing Machinery (ACM)
Publisher Date	2015-06-15
Publisher Place	New York
Access Restriction	Subscribed
Subject Keyword	Impact Hotels. Sharing economy Airbnb
Content Type	Text
Resource Type	Article

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