Inland and coastal tourism development: Evidence of Airbnb's entry into Mallorca

Abstract

[eng] This article analyses the relationship between Airbnb listings, and various macroeconomic, geographical, and political factors on the formation of the offer. With this purpose, we present an empirical model of spatial competition between Airbnb listings on the island of Majorca. To evaluate this model we use a panel dataset of listings by month from 2016 to 2020. Coastal market versus inland market is divided according to different thresholds (500 meters, 1000 meters and 3000 meters). As a result, we were able to understand what factors affect the entry of new listings across different markets and how large is their influence. Our results indicate that both the lodging supply in coastal and inland areas respond positively to price changes, and that the cross-price elasticity is not different from zero, indicating that both markets are segmented. At the same time, inland listings are a good alternative if the capacity limit of the coastal area is exhausted, so we found a positive effect of the coastal occupation rate on the number of inland listings. In the case of Majorca, the coastal area attracts more attention from both tourists and the policy-makers, so the restrictions imposed have greatly affected this area, and not the inland.