The pricing of European airbnb listings during the pandemic: A difference-in-differences approach employing COVID-19 response strategies as a continuous treatment

The COVID-19 pandemic has been a major shock to the global tourism industry. Given its peculiarity, this paper analyzes one of the most intriguing questions in the Airbnb literature - the pricing of Airbnb listings - by taking advantage of a difference-in-differences methodology that largely draws on variations in country-level policy responses to the pandemic. Relying on a dataset containing weekly information from 130,999 continuously active listings across 27 European countries from 2019 to 2020, this study first investigates the exogenous impact of response policies (proxied by the COVID-19 Stringency Index) on demand. Secondly, accounting for the endogeneity of both demand and prices, this research analyzes pricing responses to demand variations. Results show that: i) increases in the COVID-19 Stringency Index cause significant declines in Airbnb demand; ii) in-creases in demand cause, on average, increases in Airbnb prices; and iii) pricing strategies between commercial and private hosts differ substantially.

Automated summary

This paper examines the impact of COVID-19 on the pricing of Airbnb listings using a difference-in-differences approach. The study finds that COVID-19 response policies significantly reduce demand for Airbnb, while increased demand leads to higher prices. Additionally, there are notable differences in pricing strategies between commercial and private hosts.