Airbnb Hosts’ Revenue Maximizing Strategies in Tokyo: A Host-level analysis

The sharing economy challenges traditional industries by offering new opportunities and innovations. Digital platforms like Airbnb have emerged as significant players in the tourism and accommodation sectors, providing individuals with additional income opportunities and consumers with more diverse and economical options. This study examines the total revenue of an Airbnb host particularly in Tokyo, Japan, where regulatory frameworks limit annual operation days and require licenses for extended operations. Using quarterly panel data from Q2 2020 to Q4 2023, the study employs econometric modelling, specifically the Hausman-Taylor estimator, to identify key variables affecting Airbnb hosts’ revenue. This model is particularly useful for addressing endogeneity issues by allowing some variables to be treated as endogenous, providing a more robust analysis. This study proposes business strategies for revenue maximization. We find that past performance positively impacts current revenue, while high vacancy rates are linked to revenue declines. Additionally, spatial diversification strategy is shown to positively affect total revenue, whereas there is a negative relationship between hosts’ revenue and housing rental rates. These findings offer Airbnb hosts valuable insights for maximizing revenue, under regulatory constraints.