Airbnbfication of Lisbon: Effects of short-term rentals on Lisbon
Author(s): Felipe Ferri de C. Paes, Faculty of Economics, University of Coimbra
Case study type: Airbnb and alternatives
Keywords: Airbnb; Sharing economy; Gentrification; Spatial Analysis; Rental pricing
Airbnb is becoming increasingly a phenomenon within the peer-to-peer market concept of house sharing. The platform works as an intermediary between hosts, the ones whose provide the property for renting and users, the ones who are looking to stay in a Short-Term Rental. As a conceptual peer-to-peer platform, Airbnb has been created under the Sharing Economy umbrella. Hosting may involve either students or people who have a spare room on their property, thereby using it to earn extra money or even in the social sense to get to know new people. However, what recent academic studies are unveiling is that Airbnb is not following Sharing Economy premises but is rather a firm situated in the regular economy. Nevertheless, the real effects caused by Airbnb and Sharing Economy are still unknown and in need of deeper analysis. Thus, the objective of this research is to explore and then better understand the causes and effects of the platform’s growth. To realise this aim, we conducted a variety of spatial analysis through the ArcGIS software. This work analyses how Airbnb is affecting Lisbon in terms of effects on housing stock, renting price, regulation and policy, gentrification, and the touristic environment of the city. The data was gathered by web scraping the Airbnb website with a scrawl tool. Furthermore, the last census tract made in Portugal has been used as a reliable source of demographic data. Finally, metrics of calculating the estimated the host gross revenues, the availability of houses listed on the platforms, the inequality among hosts, and then correlated to the touristic flow of Portugal and Lisbon as variables to one another and used as premises of analysis.
Over the last years, Portugal is undergoing a touristic boom, according to the INE the tourism is increasing playing an important role in the country economic environment and practically account for more than 10% of the Portuguese economy. There are many people struggling to find out those fairer manner to improve the life of individuals as well as there are many people that use this fair path to reach personal interest only, that is one principle of this study, mainly, regarding the sharing economy discourse. Beyond that, as consequence of the 2008’s crisis, many people lost their dwellings as a crisis’ aftermath and the portuguese are not accounted out of this math. Gentrification got my interest over the economic opportunities provided by this phenomenon to people with more economic purchase power as well as governments backing them on this non-fair game. (August & Walks, 2018; Kayzar & Derickson, 2015; Lees, Slater, & Wyly, 2007; Quintana, 2018). Likewise, Airbnb has the power to take out houses of the market as Wachsmuth, Chaney, Kerrigan, Shillolo, & Basalaev-Binder (2018) has proven in their report of consequences of the STR market in New York City, moreover, the platform has already faced communities’ outcry of its displacement power around many cities of Europe as Coimbra, Barcelona, Lisbon, Porto, among others.
Methodology: Data collection and tools
In order to have reliable data to analyse and work with, this study relies on two main data sources of Airbnb which they are the Tom Slee17 and Insideairbnb.com18, both serving as database websites. Beyond, the data afforded by the National Statistics Institute of Portugal (INE), articles, reports and news.
A spatial analysis is applied through the software ArcGIS, specifically, by utilizing the tool ArcMap, in which is possible to make geographic studies by inputting database sheets and map shapefiles, having a large view that along with the data collected is possible to shape and tailor the information towards the interest of the research by doing a scrutiny. This study aims at Airbnb entire home’s offers as an economic and gentrification tool, as such, this type of listing will be the main subject of analysis.
Calculation. Host gross revenue estimation calculation platform for each listing the formula Ry=(ry∗1.30)∗ppn∗2,4 has been used in this study (Picascia, Romano, & Teobaldi, 2017); Estimation of Long-term rental earnings; Calculation of Gini Index; Platform listing availability;
The term Airfication or Airbnbification of cities (Celata, Stefania, et al., 2017; Picascia et al., 2017) were mentioned to determine how the Airbnb is taking over great cities, bringing out many themes to discussion and to be analysed as the platform’s growth, its density around the city, regulation, commercial opportunities, inequality and gentrification agents. Therefore, to have an overview on the Airbnb’s business model, the analysis will explore whether the platform follows concepts of sharing economy or it is aiming to the current economy, its evidences of a business for-profit, its business growth stressing its hotel-like modelling by listing entire homes on the platform, its correlation to tourism and even with the astonishing ramp up of housing prices in Lisbon.
Findings and conclusions
Following the tourist’s explosive wave in Portugal, Airbnb is growing in stride around the country, the platform has increased by 192% the overall number of listing and by 144% entire home listing along the spanning time of analysis, rising throughout the historic centre and expanding to the surroundings as a gentrification tendency.
The platform shows its power of taking off the housing stock of the city, having a considerable number of properties constantly available as a market flipping behaviour of investors who now realise the profitable opportunity of STR over LTR contract model.
Another consequence of the Airbnb and a gentrification subject is the renting prices rocketing over the last four years, in which the tourism has an impulsive role as well. Recently, the renting prices of the city have reached a plateau out of the reality of the Portuguese standard where the minimum wage value may be charged for a single room. These consequences caused either by the tourism expiation or by the renting price have straightforward correlation to people displacement and downsize the overall life quality, once individuals need to look for a new place to live, usually, far away from their workplace or a house with lower conditions.
In the economic regard, the Airbnb presents a huge inequality among its hosts, in Lisbon about 10% of the hosts earn astonishes 63% of the whole estimated gross revenue on the platform as well as a considerable high Gini index by 0,623 in 2018, the double of the country’s Gini index for the adult people accounted by 32,6% in 201733. Among them many are commercial players, having more than one property listed on the platform thus representing a marketplace opportunity for investors.
The city of Lisbon is backing the STR market by making policies to adequate the Airbnb into the city rules, harnessing the Airbnb’s expansion throughout the city to charge fees and generate more income to the district. It is a policy that goes in confront against the dwelling’s issue that Lisbon faces and a right ensured by the Portuguese Constitution.
The question remains: Will Lisbon citizens withstand the rental prices ascension? Is the life quality of the individuals in Lisbon worsening?
Link to publication: Airbnbfication of Lisbon - Effects of the Short-Term Rentals in Lisbon. Master's Thesis (PDF Available on ResearchGate) DOI: 10.13140/RG.2.2.32908.87685