Effects of regulations on the Airbnb market in Geneva

Abstract

This study examines the impact of regulations on the supply and performance of Airbnb rentals in Geneva by focusing on the role of substitution effects between fully rented accommodations and individual rooms. A difference-in-differences approach is used in combination with logit and count data models with fixed effects for properties. The data consists of monthly Airbnb listings in the 10 largest Swiss cities for the period 2017–2018, with around 220,000 observations on 16,600 properties (60 per cent of which were being let as entire properties). The estimates show that the performance of Airbnb accommodations decreases significantly after the introduction of regulations in terms of bookings, days reserved, occupancy, and revenues. The performance of single rooms let within private properties, meanwhile, benefited from the new regulation in some cases, suggesting that there may be a substitution effect between the two groups. The magnitude of the impact of regulation is considerable, with monthly revenues of fully let Airbnb accommodations decreasing by an average of 15 per cent.