We all know about Airbnb, a ‘community marketplace’ where hosts can list accommodations and travelers can find a place to stay. I read an article the other day about an Airbnb host who made $41,879/year. In the article, he talks about how based on his experience of two years as an Airbnb superhost, he was able to attract people to his listing. I thought this would be a perfect opportunity for a data analysis and visualization.
The questions I decided to answer:
- What factors affect the availability of home rentals?
- What can we learn about the opportunity for rentals if we model listing data?
- Which variables can provide the greatest value to hosts in the Austin area?
Exploring the dataset earlier showed that though the extremely high-value rentals may sometimes be actual mansions or whatnot for rent, for the most part, they’re scalpers setting unrealistic valuations. These will throw off our model if we include them, by a lot. Exploring Price showed that a price ceiling of around $1000 per day was reasonable, so I just used that. Here is an example:
Austin Tarry Town F1 Weekend Estate $10000/night (link)
Let’s take a look at the market in terms of bedrooms and bathroom provided. Below is a heat map showing the number of BnBs of various Bathroom/Bedroom configurations.
I tried a simple linear regression classifier to AirBnB prices for rentals in the Austin market, keeping in mind predictor variables that were important while exploring prices.
- The number of listings by one host have an impact on price listing.
- According to my model, every additional bedroom will cost $49, also it was very interesting to see that every additional bathroom will cost additional $88.
- Renters going through Airbnb, by and large, are people looking for a relatively cheap short-term place to stay
- Each additional bed is just $5 dollars, and each additional accommodation is $16.
- Surprisingly, the number of reviews decreases price by 69 cents.
- Host review ratings increase price by $2
Amenities are an interesting case.
- On a face level, more amenities are always better: Hence on an individual level, there’s an incentive for a host to list irons, hot tubs, kitchens, the works.
- So the effect of amenities in our model should be interpreted not as a fungible good but as a social signal. Every additional amenity available at a location will theoretically be a big plus for people who actually want it and a not-negative for those who don’t (you can choose, after all, whether or not they make use of it).
- A price penalty for including a kitchen, hangers, or Internet access makes sense, with the magnitude of the effect corresponding with the strength of what that signals about the “class” of the rental.
- As a host, three easy things you can do to increase the price you can charge: Provide a washer/dryer, Free parking, Elevator in the building, doorman, pool, hot tub.
- Providing carbon monoxide detector is a plus, but having a smoking detector and fire extinguisher will decrease the price.
- It is also very interesting to see that heating is a plus, but air conditioning is not. Mainly because everyone things every household will have that, same with hangers and other essential items. As shown in the graph below.
An upward trend in pricing was found during major events like ACL and SXSW. As shown in the graph below. Realtors can really up their game during these seasons.
- Rentals downtown, availability of essential amenities, affluent neighborhoods, number of bedrooms/bathrooms will drive a greater demand + price of rentals.
- Major events such as ACL and SXSW have a large impact on bookings.
- Even though model’s predictive accuracy is comparatively low (due to outliers in imperfect public data), it definitively points to a large number of interesting facts about the vast opportunity in the Austin market.
- Hosts must follow the nuanced traveler demands illustrated in order to maximize profit.