Impact of COVID-19 on Airbnb occupancy rate in Bandung, Indonesia

Abstract

The emergence of sharing economy, especially accommodation platform has enable people to rent and capitalize on their private properties by renting to others. However, with the covid-19 pandemic and proximity to first-tier city it is crucial to examine how these sharing accommodation properties survives.

The paper investigates how urban neighbourhoods, Airbnb characteristics and urban mobility restrictions determine rental occupancy rates in Bandung, a second-tier city, during the COVID-19 pandemic. This paper examines; (i) the dynamics of determinant factors of occupancy rates before and after the pandemic and (ii) the impact of mobility and spatial proximity to first-tier city on sharing accommodations’ occupancy rates. This study uses econometric and spatial analysis with more than 2200 Airbnb property listings registered between 2016 and 2020 in Bandung city.

Our study found a shift of preferences in a more urban direction and electronic word-of-mouth (eWOM) variables continuing with a slight decline in the pandemic. Comparison between before and during the pandemic suggests the persistent of high occupancy rate concentration only in in private listings, and located near to tourist attractions and a variety of amenities. Our finding calls for urban policies that limits the geographical distribution of short-term rental (STR) properties to avoid wider gentrification, safety risks, and pressure to the local housing supply.