Sebastián Ansaldo
1. Summary
The expansion of Airbnb has transformed urban accommodation, introducing competition for traditional hotels, especially smaller ones. Its collaborative economy model, based on digital platforms, raises the question of whether it complements or replaces conventional hotels. Empirical evidence generally shows adverse impacts on hotel revenues and occupancy rates. While it offers accessible, flexible, and cheaper lodging options, it also generates negative externalities: increased rental costs, gentrification, and declining quality of life for residents. Various cities have responded with regulations. The challenge is to integrate innovation with governance through public policies that balance market freedom, digital inclusion, fair competition, and urban sustainability.
2. Introduction
The global tourism industry has undergone an unprecedented structural transformation over the last decade, driven primarily by the rise of the collaborative economy and digital intermediation platforms.
The growing incorporation of digital platforms associated with the collaborative economy—with Airbnb as its most prominent representative in the tourism sector—has profoundly reshaped the structure of urban accommodation. This phenomenon has gained significant relevance over the past decade, placing intense competitive pressure on traditional operators, especially small tourism accommodations, and has triggered complex economic and social urban externalities.
This article is based on applied research conducted by the author, using an Agent-Based Model (ABM) to simulate the operation of the tourism accommodation market in Santiago, Chile. The main objective is to quantify the competitive impact of Airbnb’s expansion on the revenues of small lodging establishments.
The analysis begins with the premise that competition introduced by platforms like Airbnb is not merely an expansion of the existing supply, but a paradigm shift that challenges the cost structures, regulations, and market strategies of traditional actors—especially smaller ones like hostels or guesthouses—which lack the financial backing of large hotel chains to withstand prolonged demand shocks.
This new competitive reality in Santiago is marked by a fundamental asymmetry: lodging supply is no longer confined to traditional commercial or tourist areas but is dispersed throughout the residential fabric of the city.
3. The Collaborative Economy and Its Disruptive Impact on Tourism
This paradigm is based on intensive use of technology platforms that allow individuals to exchange or temporarily rent underutilized goods and services, creating new forms of peer-to-peer economic interaction (Frenken & Schor, 2017).
Within this context, Airbnb has emerged as a central and paradigmatic player. Its business model is characterized by high scalability, low marginal costs for adding new listings, and a notable capacity to leverage idle residential assets. Unlike traditional hotels, which face high entry barriers and significant fixed costs, Airbnb can expand its presence in a destination without investing in physical infrastructure, acting purely as a digital intermediary. This structure has enabled it to redefine the rules of the tourism accommodation industry.
One of the study’s strongest findings is the confirmation of a spatial substitution effect: high Airbnb listing density is directly correlated with declining occupancy rates in small lodging establishments.
Additionally, the research sheds light on demand segmentation and consumer responses to the new supply. Simulation results show a selective migration of consumers toward the digital platform, driven mainly by price and the pursuit of “authentic” experiences. Tourists with tighter budgets or a greater preference for locations farther from the city center tend to abandon traditional hotels, leaving smaller establishments with a reduced client base—often less price-sensitive but more demanding in service. However, as Airbnb hosts build better reputations and become more professionalized, even this higher-value segment is contested, forcing traditional operators to rethink their value propositions beyond mere price competition.
This competitive pressure directly affects the economic viability of small lodgings. The research shows that, unable to reduce fixed costs at the pace of collaborative competitors, many small establishments are forced to operate with shrinking margins, hurting their long-term profitability. The simulation reveals scenarios in which, without regulatory intervention or significant strategic innovation, a substantial portion of traditional supply could exit the market. This economic “natural selection” process does not necessarily reward the operator with the best service quality, but rather the one with the most flexible cost structure and the least regulatory burden, raising concerns about fairness in the current competitive landscape.
From a theoretical perspective, Airbnb is often cited as a case of disruptive innovation (Guttentag, 2015). By offering consumers more personalized, diverse, and often cheaper lodging experiences than traditional hotels, the platform has not only expanded tourism travel opportunities but has also introduced asymmetric competition—especially harmful to small operators without the resources or scale to adapt quickly.
The dilemma is clear: Is Airbnb a complement that helps expand the tourism market by attracting new demand segments? Or is it rather a substitute that displaces and cannibalizes the income of established, particularly vulnerable, accommodations? (Zervas et al., 2017).
4. Competition, Externalities, and the Need for Regulation
Empirical literature has built a growing body of evidence on Airbnb’s economic and urban impact. Several studies, using rigorous econometric approaches, have identified negative effects on hotel revenues and traditional hotel occupancy rates (Yeon et al., 2020). These impacts are especially severe for lower-category establishments and independent ones such as hostels, bed & breakfasts (B&Bs), guesthouses, and boutique hotels, which lack economies of scale, access to global platforms, or strong brand power.
Adding to this is the challenge of competing on equal terms. While hotels are subject to strict health, tax, labor, and urban planning regulations, Airbnb hosts have historically operated under more lenient legal frameworks, giving them competitive advantages that do not necessarily reflect greater efficiency but rather regulatory asymmetries.
Beyond competition, the rapid growth of short-term rentals (STR) has caused negative externalities for local communities. Among the most studied impacts are rising residential rental prices, reduced housing availability for permanent residents, and urban gentrification that displaces traditional communities (Gyodi, 2019).
Moreover, literature has documented effects on residents’ quality of life, including increased noise, traffic congestion, and the transformation of residential neighborhoods into heavily touristic zones, leading to a loss of local identity and community cohesion (Petruzzi et al., 2020).
In response, many local governments in cities such as New York, Barcelona, Berlin, and Amsterdam have implemented regulatory measures, including caps on rental days, mandatory host registration, tourist taxes, and penalties for non-compliance (Yeon et al., 2020).
5. Overall Conclusion
The collaborative economy is here to stay, and its influence on the structure of urban and tourism markets is profound and irreversible. However, its impact is neither neutral nor uniform. While Airbnb has introduced valuable innovations that democratize lodging access, foster new forms of tourism, and lower prices, it has also produced social and economic costs that require informed and adaptive public policy responses.
Ultimately, the key lies in integrating innovation with governance, aiming for a balance between market freedom, technological inclusion, fair competition, and urban sustainability. The future of urban tourism will largely depend on regulators’ ability to intelligently adapt to the challenges of the digital economy.
