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The impact of Airbnb on the domestic accommodation market and its implications

Author Park, Moonsoo; Lee, Sunhak Date 2020.11.26 Issue No

With the spread of shared accommodation, efforts are being undertaken to improve shared accommodation systems, such as legislation of relevant laws and the application of a regulatory sandbox. However, conflict with existing traditional accommodation businesses and controversy over the side effects of the shared accommodation system have persisted. Hence, this study aims to conduct an empirical analysis of the impact of shared accommodation on traditional local operators by using domestic Airbnb data. Based on this, it presents policy directions to relieve conflict between existing operators and shared accommodation operators. The results of this empirical analysis showed that an expanded supply of Airbnb accommodations will have a negative effect on the performance of existing operators, which is in agreement with studies in the extant literature. An analysis based on the classification of hotels according to their grades found that non-luxury hotels are affected negatively while five-star luxury hotels are not impacted by increased Airbnb supply. This suggests travelers regard non-luxury hotels and Airbnb as substitutes. Thus conflicts of interest between new market entrants and traditional operators will continue to intensify. Accordingly, through a close examination of exemptions issued by the regulatory sandbox and cases overseas, an ecosystem that ensures co-prosperity needs to be established to lessen conflict between existing businesses. In addition, a policy aimed at strengthening the competitiveness of small and medium-sized lodging businesses, which are inferior in terms of marketing, facilities investment, and taxes, needs to be developed.