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The Economic Footprint of Short-Term Rentals on local businesses: Evidence from Portugal

Author

Listed:
  • Ronize Cruz

    (Centre for Business and Economics Research, University of Coimbr)

  • Francisco Nobre

    (University of Surrey, School of Economics)

  • João Pereira dos Santos

    (Queen Mary University of London; ISEG - University of Lisbon, REM/ UECE; IZA)

Abstract

This paper examines the rapid rise in short-term rentals (STRs) in Portugal and their impact on the performance of local businesses. Using comprehensive firm-level data covering all private companies, we find that exposure to STRs increases the probability of business closures, particularly for low-performing firms. For surviving incumbent firms, we estimate a significant surge in sales for both resident- and tourist-oriented businesses, along with increases in employment, wage bill, and liquidity for the latter. In civil parishes with greater STR exposure, we observe a higher probability of new firm entry, reshaping the urban business landscape.

Suggested Citation

  • Ronize Cruz & Francisco Nobre & João Pereira dos Santos, 2024. "The Economic Footprint of Short-Term Rentals on local businesses: Evidence from Portugal," CeBER Working Papers 2024-04, Centre for Business and Economics Research (CeBER), University of Coimbra.
    • Handle: RePEc:gmf:papers:2024-04
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    File URL: https://bee.fe.uc.pt/working-paper/pdf/411b38c7ff6243d7996a306dd95e060a/wp-ceber-2024-04.pdf
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    More about this item

    Keywords

    Short-term rentals; Local businesses; Tourism; Portugal;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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