Good fences make good revenue: An examination of revenue management practices at peer-to-peer accommodations

Abstract

While hotel revenue managers utilize tools such as pricing, market segmentation, rate fences, and forecasting to maximize revenue, hosts in peer-to-peer (P2P) accommodations often have limited knowledge and lack the sophisticated pricing tools. Despite online resources for revenue management available, there has yet to be an examination regarding how widely spread these practices are in the P2P accommodation segment. Based on daily best available rates and booking restrictions information for P2P accommodations listed on Airbnb from top 10 cities with highest room inventories in the United States, this study aims to shed light on the current state of revenue management adoption on Airbnb. Utilizing a total of 307,955 Airbnb property’s daily data for 32 months, this study found that there are significant differences in revenue management practices by host characteristics (multi-unit hosts vs. single-unit hosts: Superhosts vs. non-Superhosts) for three revenue management tactics: dynamic pricing, minimum night’s stay, and restricted cancellation, and the hosts practices changes as their experience accumulates.