Are Neighbors Friends or Foes? Assessing Airbnb Listings’ Agglomeration Effect in New York City

Abstract

This study investigates the agglomeration effect of Airbnb listings in New York City (NYC) and answers two research questions: (a) Does agglomeration benefit or hurt the performance of individual Airbnb listings? (b) How does the effect of agglomeration vary by hosts regarding their operational experience (measured by their capacity and tenure on Airbnb)? A series of econometric analyses using large-scale data of Airbnb in NYC reveal that agglomeration positively affects the revenue performance of each Airbnb listing. In addition, such an effect is strengthened as host tenure spans but mitigated as host capacity expands, indicating a nonsymmetric agglomeration effect across service providers. This research contributes an important but less researched perspective to the home-sharing literature. Managerial implications on leveraging agglomeration for improved revenue performance are provided to Airbnb and its hosts, as well as the hotel chains that want to combat Airbnb’s negative impacts or have already entered the short-term residential rental market to compete head-to-head with Airbnb.

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