Can Hosts “Catch” the Right Price in Airbnb’s Algorithm with the Help of the European Union Legislation?

Abstract

—Digital platforms have an increasingly important role in modern economies. Business models based on internet and data-driven software with declining marginal costs and increasing returns have contributed to the success of Airbnb and similar digital platforms. The ranking of properties and their visibility in search results on Airbnb and other platforms have an important impact on small businesses’ revenues. Most studies about Airbnb have not focused on algorithms determining search results and pricing suggestions from the perspective of a host. This research contributes to answers in this respect. The research finds that a host, accommodation provider and business user of Airbnb’s services, despite new European Union legislation regulating digital markets, cannot “catch” price set by the Airbnb in its dynamic pricing algorithm.