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Working Paper
The Airbnb Effect on the Hotel Industry: Evidence from Korea

October 21, 2019

PDF
Working Paper
The Airbnb Effect on the Hotel Industry: Evidence from Korea

October 21, 2019

PDF
    1 Introduction

    2 Data and Descriptive Statistics

    3 Airbnb Effect on Hotel Performance

    4 Airbnb Effect on Hotel Service Quality

    5 Concluding Remarks

    Figures and Tables

    Appendix

    References
With rapidly increasing volume of sharing economy transactions, the existing business has shown growing concerns over how the market will be affected. This study examines the issue empirically in the context of accommodation sharing using the data directly obtained from Airbnb and the website data collected by AirDNA during 2010-2014 in Korea. We first examine how hotels' revenue and operations are affected by the introduction of Airbnb in Korea using a reduced-form analysis and find a negative impact on revenue and room rate, but not a significant effect on occupancy rate. We then estimate a structural model of the demand for accommodation and find that hotels become relatively less attractive with the increase of Airbnb supply. However, an additional analysis of hotel review ratings shows no significant change in the quality of hotel services with Airbnb growth, rebutting the argument that hotel accommodation quality may be lowered as a response to competitive pressure from cheap options available on Airbnb. Overall, we conclude that hotels have responded to Airbnb growth by lowering prices, resulting in the decrease in revenue, but they do not appear to have degraded their service quality.
 
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Office of Global Economy
Providing Economic Forecast and Macroeconomic Policy Direction, the Groundwork for a Brighter Future

The Department of Macroeconomics is conducting researches on the macro economy and macroeconomic policy, particularly focusing on suggesting the analysis of macroeconomic trends and current status of the economy at home and abroad, the economic forecast, and the policy direction of the macro economy. The Department is also in charge of establishing, sustaining and maintaining various econometric models, based on which it analyses policy effects and develops a long-term economic forecast.

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  • Economic trend analysis, short- and long-term forecast
  • Policy study on macroeconomic management
  • Basic structural analysis on macroeconomic areas
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Department of Macroeconomic Policy
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    Director, Division of Analysis and Evaluation

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  • CHO, Byungkoo On leave

    Director and Vice President, Department of North Korean Economy

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  • LEE, Jongkyu

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    Research Associate

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  • KIM, Seulki

    Research Associate

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  • CHUN, Eunkyung

    Research Associate

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