Purpose
The sharing economy has caught great attention from researchers and policymakers. However, due to the dearth of available data, not much empirical evidence has been provided. This paper aims to empirically assess the impacts of Airbnb on hotel performances in South Africa.
Design/methodology/approach
Using South Africa as a case study, the study measures the impacts of Airbnb on hotel performances on three key metrics, namely, room prices, occupancy and Revenue per available room (RevPAR). A difference-in-difference model is estimated using a population-based data set of 809 hotels from 2016 to 2018.
Findings
The results reveal that despite Airbnb significantly and negatively impacting on hotel occupancies it has a non-significant effect on hotel prices and RevPAR. Although from the theoretical perspective a disruptive innovation business model such as Airbnb can possibly have a negligible effect on hotel performances because it may attract a different group of customers and create a new market, the empirical findings of this study fail to support this theoretical hypothesis. Consequently, the findings diverge with newly developed knowledge in other markets and point to nuanced and contextual complementary effects.
Research limitations/implications
Although some interesting findings are revealed into his study, some caveats remain. For instance, the study relied on data from hotels not from Airbnb. If the data of Airbnb can become available, it would be interesting to further examine whether the aggregated RevPAR of Airbnb can compensate for the aggregated loss of hotel RevPAR. This type of analysis could provide a broader evaluation scope regarding the overall effect of Airbnb on hotel performances. Moreover, if a longer time series data set of hotels in the post-Airbnb time period could become available, it would be interesting to further investigate the time-varying dynamic effects of Airbnb on hotel performances.
Practical implications
While hotels have launched a campaign to portray Airbnb as being commercial operators looking to compete illegally with hotels for the same segment of customers, this study shows that the rhetoric has been exaggerated. Airbnb, and more broadly, vacation rentals do not represent a war with hotels. They represent an answer to a different need. Indeed, the study reveals that Airbnb’s offer is a mere supplement to the market contrary to media rhetoric that it is meant to substitute hotels. The study has several implications for practitioners. First, these results are important because they serve as evidence against news articles that claim Airbnb is driving hotels out of business. They also show that if current trends continue, employees in the hotel industry in South Africa do not need to be concerned about losing their jobs because of Airbnb’s emergence. It is also important information for investors who may be concerned that Airbnb is hurting the hotel industry’s bottom line. Second, as the share of Airbnb listings on the accommodation market varies dramatically between cities, it is likely that eventual regulations/restrictions should be introduced in the provincial levels, while most of the cities continue benefiting from the increasing number of Airbnb visitors.
Originality/value
To the best of the author’s knowledge, this study is the first in South Africa to provide empirical evidence that Airbnb is significantly changing consumption patterns in the hotel industry, as opposed to generating purely incremental economic activity.
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