How Do Reviews Impact Airbnb’s Prices? A Hedonic Approach

The travel accommodation sector within the sharing economy relies heavily on user-generated reviews. Drawing on data from insideairbnb.com for the Porto district from 2016 to 2020, this study examines the influence of online reviews from the standpoint of the sentiment expressed on accommodation prices, alongside other determinants such as locational attributes. The primary objective is to assess a broad set of factors affecting listing prices, with a particular focus on the degree and nature of sentiment expressed in online reviews. The dataset, comprising more than 250,000 reviews, was enriched with spatial and geographical variables, including key amenities, accessibility to public services, host characteristics, and locational indicators. A hedonic spatial regression model was employed to account for spatial dependencies. The findings reveal that sentiments expressed in user reviews exert a stronger influence on pricing than purely quantitative review metrics. Furthermore, host and listing characteristics, as well as geographical factors, play a substantial role in determining prices. The main contribution and novelty of this study lies in the joint analysis of sentiment and geographical attributes as drivers of accommodation pricing. Another contribution of this paper lies in the analysis of a broad geographical area encompassing both a historic city that is popular among European destinations and predominantly rural regions.