The Impact of Airbnb on the Hotel Industry: The Effect of Regional Differences and Private Lodging in Japan

ABSTRACT This paper uses market segmentation and multiple regression to estimate the impact of Airbnb on Japan's hotel industry. A theoretical framework for Airbnb's business model is presented: a three‐sided market platform consisting of guests, incumbent hotels, and private lodging. We find that Airbnb listings have had a negative impact on the profitability of incumbent hotels in most regions, with the magnitude of negative impact influenced by level of demand, hotel differentiation, and the size of Airbnb commissions. Private lodging businesses are found to positively impact incumbent hotel profitability, a discovery at odds with previous studies, as travelers often stay multiple nights in the same region, some nights at a private lodging and some at a hotel. Government promotion of differentiation among hotels and between private lodging and hotels and collaboration between private lodging businesses and incumbent hotels are recommended as means for increasing tourism demand and boosting regional economies.