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Hotels benefit from stricter regulations on short-term rentals in European cities

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  • Martin Thomas Falk

    (University of South-Eastern Norway, Norway)

  • Yang Yang

    (Temple University, USA)

Abstract

The aim of this study is to examine whether the introduction of stricter rules on short-term rentals (STRs) in some European cities will have an impact on hotel overnight stays. The treatment group consists of cities with the strictest regulations in Europe (Amsterdam, Barcelona, Berlin, Paris and London). The coarsened exact matching method is used to select an appropriate control group consisting of cities where there are no similar regulations but which are of a similar size in relation to population and relevant tourist space. Weighted fixed-effect models are used to estimate the average treatment effect on the treated. The specification also includes variables controlling for accommodation prices, value-added tax (VAT) rate on accommodation, terrorist attacks, real income of the destination country and time. Results show that stricter regulations for STRs in the five cities lead to an average increase in overnight stays of around 9%. This suggests that STRs such as Airbnb are substitutes for hotel accommodations and thus strong competitors. In addition, terrorist attacks lead to a decline in overnight stays, while an increase in VAT on accommodation reduces hotel overnight stays.

Suggested Citation

  • Martin Thomas Falk & Yang Yang, 2021. "Hotels benefit from stricter regulations on short-term rentals in European cities," Tourism Economics, , vol. 27(7), pages 1526-1539, November.
    • Handle: RePEc:sae:toueco:v:27:y:2021:i:7:p:1526-1539
    DOI: 10.1177/1354816620918769
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    References listed on IDEAS

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    Cited by:

    1. Bobrovskaya, EV. & Polbin, A., 2023. "Econometric modeling of the demand for short-term rental housing: The case of Airbnb in Moscow," Journal of the New Economic Association, New Economic Association, vol. 59(2), pages 64-84.
    2. Joanna Kowalczyk-Anioł & Karolina Kacprzak & Ewa Szafrańska, 2022. "How the COVID-19 Pandemic Affected the Functioning of Tourist Short-Term Rental Platforms (Airbnb and Vrbo) in Polish Cities," IJERPH, MDPI, vol. 19(14), pages 1-23, July.
    3. Borowiecki, Karol Jan & Pedersen, Maja U. & Mitchell, Sara Beth, 2023. "Using big data to measure cultural tourism in Europe with unprecedented precision," Discussion Papers on Economics 5/2023, University of Southern Denmark, Department of Economics.
    4. Martin Falk & Miriam Scaglione, 2024. "Effects of regulations on the Airbnb market in Geneva," Tourism Economics, , vol. 30(3), pages 615-632, May.
    5. Boto-García, David & Balado-Naves, Roberto & Mayor, Matías & Baños-Pino, José Francisco, 2023. "Consumers' demand for operational licencing: evidence from Airbnb in Paris," Annals of Tourism Research, Elsevier, vol. 100(C).

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    More about this item

    Keywords

    cities; coarsened exact matching; difference-in-differences analysis; overnight stays; regulations on short-term rentals; terror attacks; VAT; JEL classifications: Z30; K20;
    All these keywords.

    JEL classification:

    • Z30 - Other Special Topics - - Tourism Economics - - - General
    • K20 - Law and Economics - - Regulation and Business Law - - - General

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