Price Determinants of Shared Accommodation Properties in Rio de Janeiro: How Airbnb Reflects City Transformations

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.

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