Understanding Peer-to-Peer, Two-Sided Digital Marketplaces: Pricing Lessons from Airbnb in Barcelona

Abstract

Peer-to-peer, two-sided digital marketplaces are reshaping the way in which consumers exchange products and interact with brand value propositions, particularly in the travel and tourism industry. Within the dynamics of these marketplaces, pricing approaches are of the utmost importance; yet, in contrast to conventional digital marketplaces, prices are set by non-professional vendors who are also consumers. We contribute to research on the topic by examining pricing within a single peer-to-peer, two-sided marketing platform: Airbnb. We use a large dataset covering accommodation listed by non-professional hosts in Barcelona, Spain. We identify a range of intrinsic and extrinsic attributes of the value propositions of Airbnb peer-to-peer accommodation, which enables us to explain differences in price levels. The paper offers evidence that higher accommodation prices are best explained by guests’ preference for the intrinsic functional qualities of the value proposition; and that the systematic interaction of valence and volume of online reviews can produce a crucial impact on pricing.

Investigating the Impact of Professional and Nonprofessional Hosts’ Pricing Behaviors on Accommodation-Sharing Market Outcome

“…Hence, we suggest that the platform firm should make managerial decisions to enlarge the differentiation in positioning for the two types of hosts and segment tourists. This suggestion is consistent with a recent stream of research [27,39].…”

“…The role of price is frequently debated in economics [21,25,26]. Particularly in the field of hospitality and airline transportation management, price is the most important criteria across hospitality choices [22,27]. The importance attributed to pricing decisions mainly arises from the intrinsic nature of the tourism product as a perishable and unstorable service [26], considering the near-zero marginal cost [28].…”

Analyzing the influence of short-term rental platforms on housing affordability in global urban destination neighborhoods

“…Questions have been raised about whether Airbnb’s supply distribution is related to proximity to cities’ tourist attractions but also transport and educational infrastructures (Morales-Pérez et al, 2020) or to other socioeconomic factors, such as a young population (Dudás et al, 2017), a large proportion of single-person households (Ki and Lee, 2019) or even the attractiveness of lifestyle consumption (neo-bohemia) (Ioannides et al, 2018). In fact, studies such as those by Benítez-Aurioles (2018), Gibbs et al (2018), Li et al (2019) and Lladós-Masllorens et al (2020), have established a close link between the location of Airbnb’s supply and the attractiveness and perceived value of these places for potential tourists. More recently, Lagonigro et al (2020) stated that the main factors explaining the spatial development of Airbnb listings have mainly been socioeconomic: residents’ family income and education level, and dwelling sizes in these spaces.…”

Value Co-creation in Non-profit Accommodation Platforms

“…Their results showed "worrying indicators" regarding the economic and social sustainability of the city's tourist model. In addition, Lladós-Masllorens et al (2020) studied the pricing strategy of listings in Airbnb in Barcelona and found that a systematic interaction of valence and volume of online reviews can produce a crucial impact on the listings' pricing. Other authors have found, through Airbnb reviews in Barcelona, that the location of the accommodation strongly influences the online travel review (OTR) narrative, which may affect the destination's image, tourist satisfaction, and loyalty (Marine-Roig, 2021).…”