It’s not all about price. The determinants of occupancy rates in peer-to-peer accommodation: A methodological contribution
International Journal of Contemporary Hospitality Management
ISSN: 0959-6119
Article publication date: 16 April 2020
Issue publication date: 22 May 2020
Abstract
Purpose
This paper aims to identify the key drivers of occupancy rates in peer-to-peer accommodation.
Design/methodology/approach
The applied methodology fits the specific characteristics of this market segment: the peculiar distribution of the occupancy rate (a ratio characterised by a large share of zeros) requires the adoption of a mixed discrete-continuous model; the insidious issue of price endogeneity is dealt with a control function approach; the econometric specification takes into account the monopolistic competition, the relevant market regime in the hospitality industry. The model is tested on Airbnb listings in the Balearic Islands (Spain).
Findings
The occupancy rate of peer-to-peer properties in the Balearic Islands strongly depends on their geographical location and online reputation. There is a qualitative difference between two groups: listings with positive occupancy rates, which demand tends to be inelastic, and listings with zero occupancy. The authors found that the price is a not a statistically significant determinant of the latter group membership.
Originality/value
This paper applies a zero-inflated beta model, never used in previous analyses of occupancy rates, to provide a benchmark for future studies. This procedure allows the estimation of unbiased marginal effects. It, thus, offers important technical and managerial implications, as a wrong understanding of how occupancy depends on price would deliver ineffective managerial decisions. This paper highlights the importance of methodological choices, as coefficients are highly sensitive to misspecifications of the model.
Keywords
Acknowledgements
The authors thank the participants to the 6th IATE Conference, Rimini (Italy) and to the T-forum Conference, Palma de Mallorca (Spain) for their useful comments. The authors gratefully acknowledge the grant agreement between ATB (Agència de turisme de les Illes Balears) and the University of the Balearic Islands.
Citation
Leoni, V., Figini, P. and Nilsson, J.O.W. (2020), "It’s not all about price. The determinants of occupancy rates in peer-to-peer accommodation: A methodological contribution", International Journal of Contemporary Hospitality Management, Vol. 32 No. 4, pp. 1693-1711. https://doi.org/10.1108/IJCHM-05-2019-0464
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited