Barcelona as a case study for the effectiveness of short-term rental market regulations

Abstract

Aim: The main goal of this work is to identify the effectiveness of regulatory developments concerning the short-term rental market on the example of Barcelona. While various aspects of short-term rental platforms have already been explored, there is still a research gap regarding the interplay between the regulatory efforts undertaken by cities and empirical analyses which show the results of these regulatory initiatives.

Data and methods: First, our work provides an overview of the main policy changes and enforcement activities. Second, using listing level data on Airbnb, changes in the main attributes of Airbnb supply are examined in the period 2015-2022. We analyse the structure and evolution of the short-term rental market in the context of policy, including the dynamics of different zones that are subject to varying rules. The share of listings complying with regulations is approximated based on the official registry of licenses. Finally, we examine changes of trends in various key Airbnb attributes following regulatory developments on the basis of panel data analysis.

Results: The results support that policy developments can influence the dynamics of platform-mediated services and can effectively mitigate the negative effects created by platforms. The campaign-like enforcement activities lead to one-off increases in the legality of Airbnb that were not sustainable on the longer run. On the other hand, deeper reforms like the PEUAT system brought a more lasting change on Airbnb supply, with long-term increases in the share of listings with a license. However, in the short-run the city had to cope with unintended negative effects of the reform, with hosts using loopholes and adapting to the enforcement strategy of the city. The results also support the key role of enforcement.