Price-Setting Behavior in a Tourism Sharing Economy Accommodation Market: A Hedonic Price Analysis of AirBnB Hosts in the Caribbean

This study investigated the price-setting behaviour of hosts in the tourism sharing economy in the Caribbean. Generally speaking, we find that site, reputation, convenience, personal and amenities attributes, along with country-level indicators significantly affect prices in the Caribbean. More specifically, most attributes have a positive effect on price-setting. Larger accommodations charge higher prices. Hosts with superior reputations charge higher prices. However, listings with a larger number of ratings are associated with lower prices. This may be an artefact of tourists’ preferences for cheaper sharing accommodations, resulting in a relatively higher volume of reviews for properties at the lower end of the price spectrum. Provision of Convenience options have an overall positive effect on prices, although there is evidence that some options can result in lower prices for tourists. The sole Personal attribute investigated is associated with higher price-setting behaviour. Virtually all amenities examined result in greater prices being charged for the space. Results indicate that geography has significant effects on price-setting behaviour. Listings in countries with greater economic and infrastructural development, greater biodiversity, but weaker exchange rates have higher prices. On the other hand, prices are lower in countries where there is more competition for customers.