Impacts of COVID-19 on the Airbnb Market in Edinburgh

The presence of Short-Term Lets (STL) has grown considerably in the UK in recent years, particularly through the Airbnb platform. Edinburgh has the highest concentration in Scotland and one of the highest in the UK, with an estimated 10,000 lets in total.

This has been a source of considerable concern due to the impacts on residents and neighbourhoods, with many Airbnbs accused of operating unlawfully. Before the coronavirus crisis hit, the Scottish Government had published plans to introduce some control on the sector and had introduced new licensing powers for local authorities. In this blog, UBDC researchers and data scientists explain how the Airbnb market in Edinburgh can be studied using new forms of data and share their initial findings on the impact that lockdown has had on this lucrative business model.

How can we study the impacts of lockdown on the Edinburgh market?

We are using monthly data from Inside Airbnb, an independent Airbnb analytics site, to estimate the magnitude of the disruption by comparing the pattern of visits for December 2019 – March 2020 with the same period of 2018-19. We can track the number of advertised properties to look at changes in the stock(1), but this can be misleading as a guide to activity as listed properties may not be let. Airbnb does not make available data on actual lettings, so we use the number of reviews posted on the platform as a proxy for actual rentals or visits, in line with other studies(2).

How has the Airbnb market in Edinburgh changed over time?

The Airbnb market in Edinburgh has seen strong growth in recent years. In December 2019, there were over 12,500 listings, a rise of 8% compared to December 2018. Entire home listings dominate, representing 64% of the stock in 2019. Also, in December 2019, Edinburgh listings received over 4,600 customer reviews, a 6% increase from December 2018 which roughly reflects the growth in the stock.

The market has clear seasonal trends. Accommodating the Hogmanay (New Year) celebrations, December usually shows a peak in listings. In 2018-19, there is a decline in listings from December to January, rebounding in February and March (hollowed line in Figure 1). This is the pattern we would expect following Hogmanay and in the run-up to Easter. In 2020, the stock also declines slightly but changes remain negative through March without the expected growth before Easter.

Figure 1. Monthly Percentage Change of Listing Stock in Edinburgh comparing 2019 and 2020

However, changes in the number of listings may give a very misleading impression of the state of the market as hosts may be slow to remove listings. Changes in the number of reviews may, therefore, be much more informative.

In early 2019, we see a small rise for January reviews (following Hogmanay) before a drop in February and a rise again in March. In early 2020, the trend is a continuous downward one. By March 2020, reviews were down 40% on December 2019 (2,776 reviews), the lowest level, observed since July 2018.

Figure 2. Monthly Percentage Change of Reviews on listings in Edinburgh comparing 2019 and 2020

What conclusions can we draw from the latest data?

Our research shows that, while listings remained relatively stable, bookings appear to have dropped by 2% by March 2020, compared with December 2019. The recently released Inside Airbnb data allow us to track changes in the Airbnb market up to the end of March when the impacts of the travel restrictions were beginning to bite. Airbnb agreed to suspend new bookings from the 9th of April until the 18th of April, but the decline is likely to have continued through this month regardless.

Data released by Airbnb in April and scraped by UBDC will allow us to provide a more complete picture of the changing impacts in the coming months. We will also update our findings in future blogs as well as providing a more in-depth analysis.

The decline in customer reviews suggests a sudden loss of revenue for the Airbnb hosts. This will no doubt add to the economic pressure on a city that is highly dependent on tourism and already facing the cancellation of its summer festivals.

Notes

1. We focus on accommodation types of 'Apartment', 'Condominium', 'Loft', 'Bungalow', 'Townhouse', 'House', 'Villa', 'Castle'. We exclude rentals such as tents or caravans.
2. “Number of reviews” received by a listing is a good indicator for occupancy and have been used in studies informing the policy such as the Executive Summary of Amendments Relating to Short-Term Rentals report for San Francisco Planning Department.

Project Team

Research team (and the authors of this blog): Dr Yang Wang; Dr Mark Livingston; Dr David McArthur; Professor Nick Bailey

Data science team: Nikos Ves; Dr Andrew McHugh