“Home away from home” in pandemic times: how has COVID-19 changed the Airbnb market in Melbourne?

Abstract

Purpose This study aims to investigate how the COVID-19 pandemic has impacted and changed Airbnb market in the Greater Melbourne area in terms of its temporal and spatial patterns and identify possible shifts in underlying trends in travel activities. Design/methodology/approach A panel data set of Airbnb listings in Melbourne is analysed to compare temporal patterns, spatial distribution and lengths of stay of Airbnb users before and after the COVID outbreak. Findings This study found that the COVID disruption did not fundamentally change the temporal cycle of the Airbnb market. Month-to-month fluctuations peaked at different levels from pre-pandemic times mainly because of lockdowns and other restrictive measures. The impact of COVID-19 disruptions on neighbourhood-level Airbnb revenues is associated with distance to CBD rather than number of COVID cases. Inner city suburbs suffered major loss during the pandemic, whereas outer suburbs gained popularity due to increased domestic travel and long stays. Long stays (28 days or more, as defined by Airbnb) were the fastest growing segment during the pandemic, which indicates the Airbnb market was adapting to increasing demand for purposes like remote working or lifestyle change. After easing of COVID-related restrictions, demand for short-term accommodation quickly recovered, but supply has not shown signs of strong recovery. Spatial distribution of post-pandemic supply recovery shows a similar spatial variation. Neighbourhoods in the inner city have not shown signs of significant recovery, whereas those in the middle and outer rings are either slowly recovering or approaching their pre-COVID levels. Practical implications The COVID-19 pandemic has significantly impacted short-term rental markets and in particular the Airbnb sector during the phase of its rapid development. This paper helps inform in- and post-pandemic housing policy, market opportunity and investment decision. Originality/value To the best of the authors’ knowledge, this is one of the first attempts to empirically examine both temporal and spatial patterns of the COVID-19 impact on Airbnb market in one of the most severely impacted major cities. It is one of the first attempts to identify shifts in underlying trends in travel based on Airbnb data.