Introduction from part A
Since 2008, Airbnb has helped guests and hosts to travel in a more unique, personalized way. The company went from a single air mattress for rent to global cooperation valued at more than 30 billion dollars all thanks to its energetic founder- Brian Chesky. 2020 was supposed to be the golden year for Airbnb as it would go public and issue the worlds’ most sought after stocks. Tragically, Coronavirus happened. The travel sector was gutted by the pandemic. Airbnb now faces burning cash, angry hosts and an uncertain future as 2000 employees could potentially be discharged from their positions and the billion dollars debts with a high-interest rate that is being built to refund their customers. (Grind, 2020)
Nonetheless, things start to look up as June arrived. Airbnb reported having more nights booked for US listings between May 17 and June 3 than the same period last year. There was also a similar growth in domestic travel in countries that are successful in combating the virus: Germany, Portugal, South Korea, and New Zealand. Other companies, like Expedia and Booking.com also witnessed a jump in domestic vacation rental reservations. Months of pent-up demand is leading to a rush of summer reservations as more and more people are looking to escape their home coronavirus refuge. Now, Airbnb has more listings than it did before the crisis, focusing on exclusively traditional vacation rental markets top destinations in America. They are Big Bear Lake in Southern California, the Smoky Mountains, along the Tennessee-North Carolina border, and Port Aransas in Texas. (Carville, 2020) Still, any rebound is coming from a very low base with Chetsky said that he expected revenue this year to each half of 2019’s level in May’s live conference call announcement. He said going public this year is still an option but he will wait for the market to stabilize before making the final decisions.
As a previously trained hotelier who is living in Seattle, I want to do an analysis project on the current situation of Airbnb in Seattle in two parts. Part A will focus on the comparative study between two cities: Seattle and Washington DC. Seattle and Washington DC areas at the two ends of America that are widely known for different reasons: technological and cultural powerhouse vs political center, respectively. In addition, they share a similar population size (just over 700,000) and a number of listings (8740 and 9369). Then, in part B we will have a deeper look into Seattle’s market from perspectives of a governmental position and a traveler to recommend solutions that can benefit not only Airbnb but also the city and its citizens
In part B, we will create some visualizations, interactive maps and dive into natural language processing with the Airbnb 2020 Listings dataset of Seattle. Besides the standard ones, we introduced more libraries dedicated to creating maps (folium, geopandas), visualizations (plotly, cufflinks), natural language processing (re, nltk).
On top of the listings.csv and listings_details.csv that are mainly used for the analysis, we also employed ‘calendars’ and ‘review_details’ dataset in order to help us. As we mentioned in Part A, listings is basically the id of the advertisement. There were 7237 Airbnb listings in Seattle on April, 2020. The ‘listings’ contains 15 features while ‘listings_details’ contains 96. Instead of using all the columns that might be irrelevant, we selectively joined the number of variables that are useful to us for part B’s analysis. We also stripped “%“ off the “host_response_rate” feature.
Downtown is the epicenter of all commercial and professional activities of Seattle (1250 listings), which explains why it has the second-highest amount of listings besides the Other neighborhood outside of the city. Other areas near downtown Seattle does not appear to be that popular either as there are only 775 listings in Capital Hill and 600 for the Central Area, the rest stays below 500. One theory suggests that the reason why travelers decided to stay outside of Seattle is due to the skyrocketing price of the city’s current real estate. We will unfold how this interesting fact affects other listings’ factors like price and customer’s perception of their Airbnb stay. For the interactive map, you can zoom in on the clusters to eventually find the individual locations of the listings (Github code below)
2) Room types, Property type, & Number of people per booking
CBRE Hotels’ American Research has stated that approximately 80% of Airbnb’s revenue in Seattle comes from entire home listings and the revenue generated by hosts with multiple entire home listings nearly doubled between 2015 and 2016. (Seattle City Council, 2017) Commercial enterprises like to utilize online rental platforms to market multiple units in different locations that could potentially worsen the housing crisis time bomb that heading towards Seattle as you will see later on in the report. Unfortunately, the situation is not better in 2020 with Entire home/apt accounts for an overwhelming majority of listings (5700 in total), 3 times higher than that of Private room. Yet, Seattle is slow to pass any substantial laws, unlike New York, which aggressively prohibits any listings from being rented out more than 30 days a year as up 2017. (Dalton, 2017)
It is noteworthy to know that there are different property listings, but not all of them are widely beloved. In order to eliminate the non-popular property types, we created an additional column called “total” to count the listings for each property type according to the room types and select those that have more than 100. After that, I dropped the ‘total’ column to get normal results. Houses and Apartments are the most common type of properties. It seems that Houses are less popular property type for Entire home/apt listings compared to Apartment, but they are more preferred when it comes to Private room renting.
In general, the majority of listings usually like to hos less than 5 guests, with most of them being 2 (over 2700 listings). However, it is interesting to see that a party of 6 can easily find a suitable property for the night. It is due to the fact that unlike other cities like Amsterdam, Seattle does not have a short term rental’s maximum capacity restriction of 4 out of fear for possible noise complaints or fire hazards. Thus, if you want to throw a party, Seattle is the best city for such an option.
It is no secret that Airbnb has been accused of escalating the Affordable-Housing crisis in many cities across the world. (Shafroth, 2016). To prevent this from happening, Seattle’s Department of Finance and Administrative Services forced every Airbnb hosts to get short-term rental operator’s licenses before operating as up December 2019. (Airbnb, 2020) The license is about $75/ unit, renewed annually. Each short term contracts allows you to operate up to two dwelling units:
- Primary residence: “person’s usual place of return for housing as documented by motor vehicle registration, driver’s license, voter registration, or other such evidence.”
- Secondary residence: vacation home or second home
However, the guideline is not enforced upon all the listings, there are limited exceptions to the maximum number of units, including some exceptions for short-term rentals legally operated before Sept. 30, 2017. It is noted that if you operate a hotel or motel on Airbnb, the host will not be required to register for a short-term rental permit, but does need to claim a formal exemption.
1) Findings possibly illegal hotels
As Seattle’s law stated above, we can ignore the Entire home/apt value and go straight to the Private Room to see any extreme cases that have too many listings for just two residences. Bearing in mind, Airbnb does not give the address of the listings, although the field “street” is actually in the database. Because but as you can see these are certainly not full real addresses. Airbnb actively hides the listings’ addresses and only reveals them once you confirm your booking. Therefore, one cannot say if these listings are in fact in the same house.
By running the first 20 values out of 53 Dario’s properties can be categorized into 4 different groups according to his listings’ names
- 10 min drive to downtown
- 5 min drive from Downtown
- 3 blocks to Seattle Center
- private rooms
Additionally, when you check the actual Longtitude and Lactitude themselves, they are highly similar to each other with a slight difference. Pictures of rooms, facilities on Airbnb’s listings cannot be distinguished from one to another:
From a respective point of view, it seems like he is running a boutique hotel but classify as short-term rental’s license, which was designed especially for Airbnb, from the city center. If all the listings are legal, Dario could likely be running a hotel which would be subject to different regulation as stated above or belong to the ‘exemption’ group that signed up before Sept. 30, 2017. If not, Airbnb or the city council should have a look into the situation and investigate whether Dario is violating the rule or not. Not only Dario but also other hosts like Vera, Seyed, Shannon, Lee, etc. should be inspected.
2) Unwanted effects of professional hosts
At the moment, Seattle has no rule in place to prevent professional hosting activities. Such shortcoming opens the door for the possibility that Airbnb outsources their platform to professional hosts (third party real estate companies). Right now, 80% of the hosts have fewer than 5 listings. We assume that hosts with just a couple of more listings than 1 are likely to also be the host for a couple of friends. But there are extreme cases (312), which raises our suspicion that they are doing it professionally.
Below, we display the hosts with more than 20 listings. If one has a look at their listings on Airbnb, they can be blown away by the standardization and professionalism of each listing that belongs to the top 3. Thus, we can safely say that these are professional hosts.
A deeper look into the top 3 allows us to find out more about the way Airbnb operates. It seems that on top of unprofessional listings by conventional hosts who would like to collect some side income, Airbnb also frequently establishes partnerships with mid to small scale real estate companies. Airbnb allows these local companies to register their rental properties as normal listings on the platform to generate more web traffics in exchange for commissions. The terms and degree of companies’ involvement vary from one arrangement to another as the table below illustrates:
“We are a passionate team running a modern tech-enabled corp housing co that believes nicely furnished high end homes should be consistent, affordable and easy to book.”
=> Despite being registered as ‘Corp Condos & Apts on the system, all the listings are owned by Barsala Barsala is a mid-scale real estate company that focuses on providing good-value-for-money lease contracts in the West coast. There is not much information about the relationship between Airbnb and Barsala
“Zeus is reinventing corporate housing. We do this by providing a unique, hassle-free, and high-quality housing experience in each of our 1,400+ homes throughout the San Francisco Bay Area, Los Angeles, Washington” Zeus has become a permanent partner with Zeus “
=> As Airbnb absorbs more and more of the demand for housing, it’s exploring how to monetize opportunities beyond vacation rentals. A marketplace for longer-term corporate housing could be a huge business, but rather than building it by themselves, Airbnb has strategically invested in cooperation with one of the market leaders in properties’ longer-term rentals called Zeus Living”. It is an ingenious combination: Zeus’s available properties and Airbnb’s global promotion platform (Constine, 2019)
“Stay where it counts. When you book a Loftium, you’re contributing to the local community. Each Loftium is home to a local resident who hosts and lives right on-site, making sure your experience is a delightful one. All spaces are designed with your comfort in mind! We’ve made check-in and communication a breeze, and each home provides a beautiful and cozy place to rest your head during your travels. Every Loftium home and host is unique, and you’ll always get a true neighborhood experience during your stay. Visit a new community and book a Loftium in any of our cities: Seattle, Portland, Denver, San Diego, Phoenix, Chicago, Atlanta, Dallas, Charlotte, or Orlando. We can’t wait for you to visit!”
=> From renting room solely with Airbnb, the founders decided to build up their own property renting app to rivals and partner with Airbnb at the same time. Their business approach is to give ridiculous discounts to potential renter/buyer at pricey areas if they agree to become hosts for Airbnb. Hannah Exner and Sam Joselyn scored a magnificent apartment at the Westlake for 1000USD/month at Westlake neighborhood where prices reach above 1500USD/month (Levy, 2019)
Besides the obvious pondering of what effective measures that the government of Seattle will take to make sure all these business partnerships do not exacerbate the crisis, it is the question of realness and products’ differentiation. As a company prides itself on providing an authentic experience and local hidden gems, which elevated its images above fellow hospitality competitors in customers’ eyes, introducing such cookie-cutter, polished listings from real estate agencies might diminish the company’s unique value proportion. (Lalicic & Weismayer, 2017). As time flies, even most diehard Airbnb enthusiasts might seek “authenticity” somewhere else
1) Per neighborhood’s Average daily price, Review score and Safety index
In this part, we compared the average daily rate for two (ADR) and review scores according to neighborhoods. We expected the distance to the city center is the most important factor since all Seattle landmarks locate downtown. There might be a strong correlation between the distance and the review score. Other factors that might affect the review score and ADR include:
- Location’s safety index
- Noise. If a listing is located downtown but among the noisy bars, that should cost points on the location reviews.
- If the listings are located outside the city center but public transportation is well-connected, then they will get some bonus point (Seattle has developed train and bus system)
- Necessity and entertainments near the location (supermarket, bars, restaurants, etc.)
- Free parking included? Because it costs $20/ 2 hours on average to park downtown Seattle
It is interesting to see Queen Ann is significantly expensive compared to the rest (~$285/day). Then it is Downtown (~$165/day) followed by other neighborhoods. Surprisingly, the average review scores are above 9/10 regardless of the listings’ locations, so no matter which neighborhood you choose, maximum satisfaction is always guaranteed. We believe that is because Seattle is generally small in terms of size and population (1 million in total). The city is also well-connected so take around 30 minutes to travel to and away from downtown if they happen to stay in suburban areas
Despite not being less serious than San Francisco, Seattle still suffers heavily from the abundance of homeless and panhandlers. Most of them are harmless and will leave you alone. Nevertheless, it still negatively affects the public image and demotivates travelers to visit the city. In addition, visitors might experience property crime than violent crime, 7 times respectively. If you visit Seattle by car, you might experience break-ins even in parking lots. Like most cities, Seattle’s safest areas are outside of the downtown core and tend to be residential areas or residential with light commercial. Among the safest neighborhoods are Sunset Hill, Ballard, Magnolia, Alki, Magnolia, Lower Queen Ann, and Wallingford. Seattle Police department has a great map of areas of Seattle color-coded by the number of crimes committed. Dark blue areas mean more cases while Lighter areas have fewer
Taking into consideration both the ADR, review score and crime statistics, customers are advised to make their Airbnb bookings in West Seattle, Magnolia, Ballard, Rainer Valley, Central Area, Seaward Park, Beacon Hill, University District, Interbay and Northgate to receive low renting prices, maximum safety, and high satisfaction by the end. I am currently living in Rainer Valley/ Beacon Hill, 20 minutes away from downtown by car or 30 min by train, everything is very nearby. The area experiences a moderate amount of gentrification so it is both safe and local for people to book Airbnb experience. Barbecuing some mouth-watering grills on a beautiful Sunday in Beacon Hill is as luxurious as life can get.