The effect of short-term rentals on regional hotel efficiency

Abstract

Short-term rental accommodation is one of the biggest challenges facing the hotel sector. Despite the prevalence of short-term rental accommodation and its growing importance in the lodging industry, its effects on the efficiency of the hotel sector remain unexplored. This study examines the impact of short-term rental accommodation on regional hotel efficiency using a parametric stochastic frontier model. The analysis is based on data relating to Spain, a key destination in the global tourism sector. The study employs monthly panel data for the period 2008–2019 for hotels located in each of the 17 Spanish regions. The results show that hotels have low levels of technical efficiency, although all regions generally improved their performance over time. Interestingly, a higher number of short-term rentals is associated with greater technical efficiency of hotels. This finding suggests that each form of accommodation complements the other.