How do Airbnb and hotel room supply influence hotel performance? Evidence from a mature and seasonal destination

This study analyzes the association of Airbnb listings and hotel room supply on three hotel performance metrics -revenue per available room (RevPAR), average daily rates (ADR), and occupancy rates (OCR)- in the city of Montevideo, Uruguay, from October 2016 to November 2019. A fixed effects panel data model with individual and temporal adjustments was used, supported by panel cointegration tests to rule out spurious relations. The results show that Airbnb listings were negatively associated with hotel revenue (RevPAR) and occupancy rates (OCR). No statistically significant association was found between Airbnb listings and average daily rates (ADR). Hotel room supply was negatively associated with ADR and positively with OCR. No statistically significant association was found between hotel room supply and RevPAR. These results suggest that, in mature and seasonal destinations where both the number of Airbnb listings and the supply of hotel rooms are increasing, competition is intensifying, causing hotel occupancy to decline in some cases and rise in others, while average room rates fall. Relevant implications for academics and practitioners were discussed.