A new study that examined the economic impact of Airbnb on local communities found that Airbnb does, indeed, help boost business at neighborhood restaurants, but, perhaps, unevenly: Neighborhoods that benefited most from Airbnb activity were predominantly white — not Latino or black.
To measure Airbnb’s economic impact, the authors of the Purdue University study specifically looked at local restaurant employment, using data from the U.S. Bureau of Labor Statistics, Census, Airbnb, and 3.5 million Yelp reviews of more than 34,000 New York City restaurants over the course of 10 years, from 2005 to 2015. The restaurants in the study were located in neighborhoods that were not traditionally known as popular tourist destinations.
Researchers found that growth in restaurant employment in a particular neighborhood was often accompanied rapid growth in the number of Airbnb listings, as well as an increase of Yelp reviews by visitors to New York City. In short, if Airbnb activity in a neighborhood was up 2 percent, restaurant employment would generally increase by approximately 3 percent.
Not Living Like a Local
However, when researchers looked at data for predominantly Black and Latino neighborhoods with significant numbers of Airbnb listings and bookings, they did not see increases in restaurant employment or Yelp reviews from out-of-towners. The study suggests that even though these neighborhoods are attracting visitors, those visitors aren’t necessarily choosing to dine where they are staying.
“Visitors may not feel comfortable wandering around and checking out restaurants in these minority areas,” Mohammad Rahman, co-author of the study and a professor at Purdue University’s Krannert School of Management, focusing on digital economy and big data, told the Washington Post. “It’s the uncomfortable reality in our society. They may be a lot more careful and just sleep at the Airbnb, coming and going in the comfort of an Uber or a Lyft.” He also added, “The kinds of restaurants these visitors are looking for may not be present in these neighborhoods.”
When Rahman and his colleague expanded their study to look at data for other major U.S. cities — Austin, Chicago, Los Angeles, Portland, and San Francisco — they found similar data, but with a major exception: Majority Latino neighborhoods in Los Angeles, where the city has a Latino population of 49 percent, did see a boost in restaurant employment and Yelp reviews from visitors.
Airbnb Was Right
Overall, however, the findings do support Airbnb’s claims that its homesharing business brings economic growth to places located outside traditional tourist zones. But it also suggests that not everyone in a particular city sees the same benefits from that economic stimulation.
In September 2017, Airbnb issued a report saying that in just one year, the company generated $6.5 billion for restaurants in 44 cities worldwide. It also noted that approximately 75 percent of its home listings are located in nontraditional tourist zones, suggesting that a significant number of restaurants that benefited from Airbnb were local neighborhood establishments. The report also said that 43 percent of Airbnb guest spending, on average, took place in the neighborhoods where those guests were staying.
“Airbnb undoubtedly boosts local businesses,” Airbnb spokesperson Nick Papas said in a statement to the Washington Post. “Using a subjective and voluntary input like Yelp reviews to draw conclusions in what purports to be a rigorous analysis is wrong.”
Papas also told the Post that 95 percent of Airbnb hosts in New York recommend local small businesses to their guests, and that the company is actively encouraging its guests to frequent local businesses, including neighborhood restaurants. Papas also said that Airbnb guest numbers are growing at a faster rate in predominantly black neighborhoods in New York than in other neighborhoods in the city.
This isn’t the first time that claims of racial economic disparity have been lodged at Airbnb.
Last year, a report from Inside Airbnb pointed out that in New York City’s predominantly black neighborhoods, Airbnb hosts are five times more likely to be white, with 74 percent of hosts being white, even though the white resident population in those neighborhoods is only 14 percent. That study also found that white Airbnb hosts in black New York city neighborhoods earned 530 percent more than black Airbnb hosts.
One piece of data not taken into consideration by the Purdue University report’s authors relates to the demographics of restaurant ownership and restaurant employees in these neighborhoods — both of whom directly benefit from visitor spending at their establishments. While there’s certainly an argument for the “economic spillover” that the success of local businesses has for local communities, the report seems to assume that the owners and employees of restaurants in these predominantly minority neighborhoods are also minorities. And by extension, that the owners and employees of restaurants in predominantly white neighborhoods are not minorities. That is not consistent with data about hosts in the same neighborhoods.
What This Means for Restaurateurs
For local neighborhood restaurants, this report does raise some questions about how they should market themselves, and what kind of relationship they want to have with their diners — both residents and non-residents. Should they cater primarily to local repeat diners who live in and around their restaurants, or to Airbnb guests attempting to live (and eat) like a local?
Depending on which strategy they choose, that could certainly determine the types of restaurants that locals and visitors alike will find in these neighborhoods that are seeing a bump in Airbnb activity.
The Purdue University report’s authors wrote that as more travelers choose homesharing in non-tourist areas, the economic impact on local restaurants “could prove crucial” and “visitors and locals will likely have different preferences and expectations.”
The report also highlights the importance of restaurant marketing and reviews.
In fact, within Airbnb’s own channels, including its mobile app, users can easily book restaurants, thanks to its tech integration with Resy, a restaurant reservations and technology platform that counts Airbnb as a major investor.
With Airbnb Experiences, the company’s tours and activities unit, both locals and visitors alike can also book food-related activities that bring them to restaurants that are located in minority communities.
Perhaps, if Airbnb wants to encourage more of its guests to frequent restaurants in predominantly minority neighborhoods or immigrant communities, or to dine at minority-owned establishments, it can work with Resy, with restauranteurs, and its Airbnb Experiences hosts, to promote them in its own channels, too.
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