Individuals' capabilities in pricing their offering in commercial sharing systems
School of Business | Master's thesis
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Information and Service Management (ISM)
AbstractThis study seeks to shed light on the capability and preparedness of individual sharing economy users to price their offering and adjust the pricing based on changes in demand. Central to the topic are the concepts of revenue management, yield pricing and price determinants identified in hotel industry and Airbnb price determination. The chosen research approach is to use statistical data analysis based on open source data from Insideairbnb.com and Trivago hotel price indices. This allows for drawing conclusions based on host pricing behavior during 2015-2017 in five Europeans cities, five North American cities and two Australian cities. All twelve are major cities with thousands of Airbnb listings available each month. Previous research has not sought to examine pricing in sharing economies in this way. Previous research has identified that user characteristics influence participation in sharing economy and findings in the empirical section of this study would suggest that a majority of users do not actively pursue higher profits through revenue management that is comparable with the hotel industry in magnitude. Additionally, this study showed that due to the different nature of rented space on Airbnb to hotels, prices may be cheaper closer to the actual stay rather than several months beforehand. This study does not suggest that Airbnb hosts should pursue higher profits and do business with their apartments. Hosts should be aware of the limitations that regulation sets on their rentals and applicable taxation practices. Should future business models be dependent on individuals pricing their own offering, based on the findings in this study, considerations should be made not only from the view of the viability of the business for the individual and platform provider, but also the regulatory point of view to avoid unleveled playing fields and predatory pricing.
Thesis advisorMerikivi, Jani
sharing economy, revenue management, dynamic pricing, Airbnb, hotel industry, business model, predatory pricing, price determinants, price evolution