Witnessing the Rise of the Sharing Economy: Empirical Observations of Airbnb

Abstract

Peer-to-peer markets, collectively known as the sharing economy, have emerged as alternative suppliers of goods and services traditionally provided by long-established industries. Hosts offering short-term accommodations on Airbnb, for example, act as hoteliers on a micro-entrepreneurial scale: they market their properties, set prices, manage their online reputation, and decide how much to invest in cleaning, customer service and upkeep. Moreover, they receive continuous public feedback in the form of ratings and reviews left by their guests.

With the unprecedented visibility enabled by datasets collected from sharing economy platforms, data scientists are busy investigating research questions ranging from racial discrimination to reputation management strategies to the economic impacts on incumbent firms. I will discuss our research on Airbnb's differentiated impacts on the hotel industry in the state of Texas. We estimate that in Austin, where Airbnb supply is highest, the causal impact on hotel revenue is in the 8-10% range; moreover, the impact is non-uniformly distributed, with lower-priced hotels and those hotels not catering to business travelers being the most affected. We also find that by enabling supply to scale -- a differentiating feature of peer-to-peer platforms -- Airbnb has significantly crimped hotels' ability to raise prices during periods of peak demand, such as during SXSW.

Joint work with BU/CS Ph.D. alumni, Davide Proserpio and Giorgos Zervas, now Assistant Professors of Marketing at USC and BU, respectively.

Bio: John Byers is a Professor of Computer Science at Boston University, which he joined in 1999. He is also founding Chief Scientist of Cogo Labs, a technology incubator in Kendall Square, where he has held an executive role since 2005. Professor Byer's academic research centers on data-analytic and algorithmic challenges in two disciplines: the empirical study of Internet platforms and the science of computer networking. His recent research studies the effectiveness of e-commerce platforms such as Groupon, the utility of rating and review sites such as Yelp and TripAdvisor, and the broader impact of sharing economy firms such as Airbnb. His research has been covered in the New York Times, The Economist, in TIME magazine, on NPR, and on Bloomberg TV.

Dr. Byers received his B.A. from Cornell University and his Ph.D. in Computer Science at the University of California at Berkeley.