The effect of COVID-19 on the peer-to-peer rental market

Abstract

Based on fine-grained data on short-term accommodations for the city of Barcelona, we review the uneven impact of the pandemic on the short-term market, differentiating the supply by type of accommodation: single room versus entire flat/house, and type of host: professionalized versus non-professionalized. Using a fixed effects approach at property level, we estimate an average decrease in prices of 11.3% in entire flat/house and 4.7% in single rooms. For professionalized supply, the effect arrived to 13.6% and 9.8%, respectively. Finally, a growth in minimum stay was experienced by all types, but with a stronger effect on professionalized accommodations. We suggest that the supply adaptation strategy to accommodate the decreasing demand, especially by professionalized hosts, was to attract a more stable demand coupled with lower prices and longer stays. In addition, the type of short-term supply that experienced the strongest drop in occupancy was the non-professionalized segment, loosing around 41% of their bookings between April 2020 and January 2021.