Location, location and professionalization: a multilevel hedonic analysis of Airbnb listing prices and revenue

Hedonic modelling techniques have frequently been used to examine real estate valuation, and they have recently started to be applied to short-term rental valuation. Relying on a web-scraped data set of all Airbnb transactions in New York City (NYC) between August 2014 and September 2016, this paper presents the first hedonic regression model of Airbnb to take into account neighbourhood effects and to predict both average price per night and revenue generated by each listing. The model demonstrates that locational factors - above all, transit accessibility to jobs - and neighbourhood variation have a large impact on both price per night and monthly revenue, and further reveals how professionalization of the short-term rental market is driving more revenue to a narrower segment of hosts. Further, the findings suggest that Airbnb hosts earn a significant premium by converting long-term housing in accessible residential neighbourhoods into de facto Airbnb hotels. This premium incentivizes landlords and hosts with properties in accessible neighbourhoods to replace long-term tenants with short-term guests, forcing those in search of housing to less accessible neighbourhoods.