Fourth International Conference on Tourism and Leisure Studies

Abstract

As Airbnb has rose in popularity so to has the literature’s interest in understanding the economic impact of this new technology. Up to this point the literature has largely focused on the disruptive effects Airbnb has had on the hotel industry and housing market. However, the proliferation of Airbnb has also resulted in the redistribution of tourists within cities which has the potential to impact the development of businesses in the entertainment and service sectors within a city neighborhood. As businesses respond to the changing demographics of the area, an increase in tourism, and therefore an increase in demand for entertainment and consumption, a neighborhood can quickly become an agglomeration of bars, restaurants, and other tourist attractions, more commonly known within the literature as tourism gentrification. The goal of this paper is to analyze the relationship between the intensity of Airbnb usage with a neighborhood and local business development. Two conjectures are drawn from a theoretical model based on a Krugman style model of trade, and then empirically tested using a collection of novel data sources. The results suggest an increase in Airbnb usage leads to an increase in the number of entertainment sector firms within the area, but has no statistically significant effect on the number of firms in the service sector.