Where are the hosts? An analysis of the Airbnb ecosystem in Napoli, Italy
Being a digital nomad for the last 3 years, I’m no strange to Airbnb. But lately, I’ve been noticing something changed about it. The Airbnb which had been created to allow travellers to experience a deeper connection to the communities they visited was becoming more and more similar to a generic accommodation booking platform. The epitome of this change and the reason why I decided to take a deeper look into the data was my recent experience in Napoli, Italy.
Below, you will find my conclusions after analysing the data from all Airbnb listings in Napoli which was gathered from InsideAirbnb. If you’re a data geek such as myself and would like to more about the challenges and workarounds I did to get accurate insights from this data, feel free to check out this other article and my github page.
What seemed odd in my experience using Airbnb in Napoli?
In the last 3 months, I booked 4 entire homes in the city. During my search for listings and in my stays, I noticed 3 things that were not quite not right:
- Napoli seemed to have so many listings, but when looking at them individually, you’d generally find only one tier of price for 1 bedroom flats — regardless of location, quality of listings and review score. In fact, the map below shows the average price for 1 bedroom flats on Airbnb in Napoli. You can see that there’s very little variance even if some locations might be less desirable than others.
- 3 out of the 4 apartments I stayed in had issues with maintenance or cleanliness. The apartments just didn’t seem to be well looked after and some also lacked basic utensils in the kitchen — and I’m literally talking plates here. 2 of the apartments had no plates.
- Finally, for 2 out of 4 apartments, I simply never saw the host. Communication was done via Whatsapp and at times I’d receive answers from different people. Whenever there was an issue, the hosts for these apartments were very slow or inefficient to deal with it.
So, where did that deep connection envisioned by the Airbnb founders go? Why were the hosts often nowhere to be seen and why were my experiences so impersonal and below the standard of hospitality pushed by Airbnb?
Who are the hosts in Napoli?
For this analysis, a choice was made to focus on the group of hosts who had active listings in the historic centre of Napoli that were either 1-bed flats, 2-bed flats or private rooms. The full rationale and the analysis that led to that choice can be found in my other more data-focused article. You’ll also find there how I calculated the Earnings.
And here’s what the data told us:
The first thing that stuck out for me were the Hosts with 10+ Listings and the proportion of Earnings they make despite the relatively low amount of listings. These hosts had in total 174 listings spread across only 3 hosts — including the top host in terms of Earnings: Salvatore who manages an impressive 64 listings.
Comparatively, the group of hosts with 2–10 listings was formed by 309 hosts and 823 listings — and they are taking home approximatelly 50% of the overall Earnings made on Airbnb in Napoli. This means that the Hosts with 10+ Listings are making together half of their Earnings (approximately 25% of the total) with only a fifth of their number of listings.
Finally, there was the obvious group of hosts with only 1 listing. Perhaps, this is the group of hosts Airbnb was originally aiming for: the host who just wanted to make some extra income out of a spare property or room. This group was the largest with 730 hosts (and, obviously, 730 listings) but their Earnings were not proportional to the size of this group and only amounted to 25% of Earnings — the same proportion as the Hosts with 10+ Listings.
This led me to ask myself 2 questions:
- How could a group of hosts with 174 listings make the same amount of money as the 730 listings from the Hosts with 1 Listing?
- Also, as I mentioned, it seemed liked those 174 listings were being far more profitable than the others. What are these hosts doing?
Airbnb hosting: from a source of extra income to a business
Numbers are great and they can tell you a great deal of information but for this part I needed to get my hands dirty with some qualitative analysis. I looked into the hosts in the Hosts with 10+ Listings group and by accident I got introduced to the wonderful world of Airbnb Management Companies, or AMCs as we’ll call them from now on.
When looking at the Top 4 hosts making the most money on Airbnb in Napoli, 3 of them were part of the Hosts with 10+ Listings and the other had 5 listings only. But they all had one thing in common: they were not individuals, but companies which specialise in taking listings out of the hands of individual hosts and manage every aspect of them. They will take care of legal paperwork, renovations, taking lovely pictures of your place, dealing with check-ins, communicating with the guests and even leaving them a review on your behalf. They also analyse the competition and carefully draft a pricing strategy for these listings (more on that later).
Some of these companies were not based in Napoli and had listings in other parts of the country — and Europe — as well. One of them had received funding from a social impact fund and even owned some properties themselves. Another was enticing property owners to abandon the life of long-term contracts for locals and focusing on short-term stays for tourists.
It’s important to highlight that I could not find anything in the Airbnb policies which prohibited this type of hosting. As long as they are doing it with the consent of the owner of the property, the lights are all green for these 4 companies to take 25% of all money made on Airbnb in Napoli.
Going back to the 2 questions I asked earlier, it’s now clear how these hosts can manage up to 64 listings with one profile. These are companies with dedicated teams that deal with every aspect of the guest experience. It’s also not hard to imagine that they get good deals from cleaning companies and laundry services due to the amount of business they can offer. So not only their earnings per listing are better than the other hosts but their expenses per listing are likely to be lower as well.
Furthermore, these companies also have a very specific pricing strategy and this is another driver for their good performance on Airbnb.
The pricing strategy for AMCs
I continued my analysis by focusing on average price and occupancy for the listings of each segment group — always focusing on 1 bed flats, 2 bed flats and private rooms. As per the previous analysis, AMCs stood out from the rest of the hosts who actually had a very similar princing strategy.
The average price for the listings under the management of AMCs is quite a bit higher than those of Hosts with Multiple Properties and Single Property Hosts. Still, the higher price was not stopping them from obtaining higher levels of occupany which explains why they manage to make such a considerable portion of the earnings with few listings.
In terms of strategy, I analysed how they altered their prices in high-demand dates versus the other types of hosts. Due to limitations of the data — more on that in that separate data-focused article — I could not look at an entire high season, like Summer, for example, without compromising on accuracy. Therefore, I focused my analysis on New Years Eve 2021.
The data shows us that the AMCs had higher average prices for the pre-NYE days of December. Not only that, but when the NYE period came, the AMCs also raised their prices way above what the other hosts were asking for. For the post-NYE period, the low season of January, the AMCs kept their prices above average.
This aggressive pricing strategy is helping AMCs to make more money for their listings and is not stopping them from getting bookings. But another curious thing I noticed when digging through their listings on Airbnb was that they often had several active listings for the same property with different prices. I am not able to precise what that means in terms of numbers because these are hard to consistently spot in the data, but I can’t help but wonder whether this is also a strategy to attract tourists with a wide range of budgets.
You may be thinking that if they’re charging higher prices than average and are still getting bookings, they must be offering excellent experiences. Let’s look into that.
Are Airbnb Management Companies offering good experiences on the platform?
Whether this may surprise you or not, this is what the data is showing us:
The experiences offered by AMCs are rated lower by guests than those offered by the hosts who manage multiple properties on their own or those who have only 1 property on the platform. This poorer performance is consistent across all of the 6 aspects Airbnb asks guests to review. Particular points of attention are Accuracy, Cleanliness and Value. Communication and Check-in are also below the other listings. Location seems to be better — which makes sense given that all these hosts have listings in similar locations.
What’s going on in the Airbnb ecosystem in Napoli: my 3 considerations
In terms of Airbnb policy, these AMCs are not doing anything wrong and it’s not my intention here to shame them for their work. If anything, they could use this analysis to show what a great job they’re doing with their listings. However, I would like to raise a discussion on whether they should be allowed to exist within the Airbnb ecosystem and what are the effects of their presence inside and outside the platform.
Considering all the data I exposed above, I would like to expose 3 points:
Firstly, it seems like AMCs could be causing an imbalance within the Airbnb environment. Their ability to manage multiple listings at the same time gives them a potentially unfair competitive advantage against the rest of the hosts who are managing listings on their own. By allowing this type of host within the platform, Airbnb could be favouring companies over the average local individual who is looking to make some extra income out of a spare property and show off their beautiful city to their guests. Even worse, some of these companies are not even based in the local community and receive funding from partner companies.
Secondly, it became quite clear from the data that these companies are offering worse experiences compared to rest of the hosts — and in all aspects. Guests are going to Airbnb to find authentic, unique experiences and a connection to the local community and what they’re getting are properties that are not well maintained or as described and hosts who are nowhere to be seen. Going back to that deeper connection envisioned by the Airbnb founders — the data shows that AMCs are not offering that.
Finally, it’s impossible to discuss the impact of Airbnb without touching upon housing. I’m by no means an expert in the housing situation in Napoli, but this article, this one and this one all feature local groups speaking of the housing issues in Napoli and Italy (the articles are in Italian but can be translated using Google Translate, don’t be lazy).
Amongst other issues, these groups mention that the excessive amount of short-term lets in the centre of the city is leading to a lack of properties for long-term rental and an increasing price for those that remain — which is virtually forcing local citizens to live in the outskirts of the city.
Currently, some local property owners may favour long-term contracts over turning their property into Airbnb listings due to the security of having rent paid to them every month and not having to deal with check-ins, cleaning, answering messages from potential guests, dealing with reviews, etc. However, AMCs are taking all these hassles from them and making short-term rentals almost too attractive to refuse. From an Airbnb and tourism standpoint, as we saw, this doesn’t necessarily translate into great experiences for the guests and are causing prices to go up. From a housing perspective, it encourages property owners to turn their properties that could be housing locals into accommodation for tourists. And also, the AMCs completely remove the need for the host to be present and allows people from other cities and even countries to profit from acquiring properties in Napoli and listing them on Airbnb in spite of potential effects this may have on housing.
I feel like these are all good reasons for Airbnb to start thinking about regulating the presence of AMCs in the platform — if not preventing them from being there at all. But this is also something to be considered by the local government if they want to take care of the sustainability of tourism in Napoli and the future of housing in its historical centre.
