Short-Term Booking and Rents Cycles: Evidence from Asia-Pacific Cities

This study examines the daily time series data of the short-term rental market, including Airbnb room bookings, rental supply, and asking rents, from 2015 to 2022 in 16 Asia-Pacific cities. The analysis employs a Vector Error Correction Model (VECM) approach to investigate the causal relationships among the variables and to estimate the short-run and long-run dynamics of the market. The study reveals that the short-term rental market exhibits a high degree of volatility, with considerable fluctuations in rental supply and asking rents across the cities and over time. Furthermore, the study shows that Airbnb bookings have a significant impact on rental supply and asking rents, indicating the importance of the platform in the market. The findings also suggest that the COVID-19 pandemic has had a substantial effect on the short-term rental market, with reduced bookings, supply, and rents during periods of strict pandemic control measures. The study provides insights into the dynamics of the short-term rental market in the Asia-Pacific region over an extended period, highlighting the importance of considering both short-term and long-term factors, including pandemic-related effects.