Price Determinants of Shared Accommodation Properties in Rio de Janeiro: How Airbnb Reflects City Transformations
Publication: Journal of Urban Planning and Development
Volume 149, Issue 4
Abstract
Shared accommodation platforms, such as Airbnb, have changed the way investors appraise urban properties, especially in touristic destinations. In these cities, touristic neighborhoods drive daily facilities to be more attractive, adapting the urban environment to the dynamics of the tourism market. The moment derives from the following: Properties in touristic destinations are preferably designed for shared accommodation instead of housing rental or trading. The knowledge of what drives the shared accommodation demand makes urban planners manage the balance between housing availability (and affordability) and the increasing tourism demand. In developing countries, this phenomenon triggers rational real estate because there is no guideline to detect what property factors increase shared accommodation preference rather than rental or trading properties. Therefore, this study investigated how location and listing attributes affect Airbnb prices in Rio de Janeiro, Brazil. We modeled 2,936 listings by using ordinary least squares and quantile regression approaches to assess the price-setting performance across less and more expensive properties. Our results show that properties near SugarLoaf Mountain have higher price settings, followed by other touristic landmarks such as the Corcovado, the Museum of Tomorrow, and the Copacabana Fortress. In contrast, the farther from the airport, the more expensive Airbnb prices are. The higher income per capita also increases Airbnb prices. Surprisingly, properties located in Brazilian slums (favelas) increase rental prices because Airbnb users seek diverse experiences, a phenomenon that derives from the slum tourism paradigm. In the listing attributes, more availability and more reviews decrease Airbnb prices. Because of regulatory differences in Brazil, the minimum stay rule was unimportant, and private accommodation had behaved a different set of rules in less and more expensive properties. The research contributions relate to urban regulation of rental housing in devalued areas; shared accommodation effects on city transformations; and mutual and unique patterns of Airbnb market performance in a Latin-American context.
Practical Applications
This study investigates what city- and property-related factors drive Airbnb pricing in Rio de Janeiro, Brazil. The main findings suggest that properties closer to tourist landmarks increase Airbnb prices. Surprisingly, properties placed in Brazilian slums (favelas) increase rental prices because Airbnb users seek diverse experiences, paying more for them. This study also showed that the minimum stay of an Airbnb listing is not an important price-increasing attribute in Rio de Janeiro, because Brazilian condominiums are legally pressured to stay by the regulations of Airbnb. Studies about shared accommodation in tourist destinations are scarcer in developing countries; those consequences for local planning remain unclear. Our study brings novelty in exploring a Latin American case study, which sheds light on how shared accommodation is impacting real-estate markets and urban development in these regions. Our study assists real-estate investors to choose and design properties that increase Airbnb listings in touristic destinations. This study also helps urban planners to understand how city dynamics affect Airbnb prices, to eventually avoid the harm that Airbnb does to housing availability and affordability.
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Data Availability Statement
The data set and the do-files of statistics used in this study are available from the corresponding author upon reasonable request.
Notation
The following symbols are used in this paper:
- B0
- regression constant;
- Bn
- regression coefficient of the nth regressor;
- e
- natural logarithm base;
- β(θ)
- regression coefficient at a given quartile;
- ɛ
- regression error; and
- θ
- regression quartile.
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Published In
Journal of Urban Planning and Development
Volume 149 • Issue 4 • December 2023
Copyright
© 2023 American Society of Civil Engineers.
History
Received: Sep 17, 2022
Accepted: Aug 16, 2023
Published online: Sep 29, 2023
Published in print: Dec 1, 2023
Discussion open until: Feb 29, 2024
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