Analysing the Impact of Guest Preferences on Airbnb Pricing Across Submarkets in Dar es Salaam, Tanzania

Abstract

The rapid proliferation of Airbnb accommodations has revolutionized the hospitality sector, providing travelers with diverse options while empowering property owners to tap into a dynamic rental market. This study explores the nuanced impact of guest preferences on Airbnb pricing across distinct submarkets in Dar es Salaam, Tanzania. Drawing insights from consumer surveys and linear regression models based on OLS for 141 guests in five wards of Dar es Salaam, it was noted that there was a price reduction effect of accommodation accessibility (-0.48, sig. 0.01) in low submarkets but such effect was insignificant in the high submarket.  Building design was also negative on price and statistically significant (-2.85, sig. 0.01).  When building design was assessed in the high-submarket, a sign reversal of the price effect was noted though not statistically significant.  The study suggests for significant price effect reversal in relation to number of visits and neighbourhood quality.  Visitations exhibits a normal downward sloping demand (-0.03, sig. 0.05) in the high submarket and it is an abnormal demand (0.07, sig. 0.001) in the low-submarket while improving neighbourhood quality reduces price (abnormal) in the high-submarket (-2.76, sig. 0.001) and turns out to be normal in the low-submarket (0.71, sig. 0.001).  These findings contribute to the global discourse on platform-based rental markets by highlighting the critical role of localized consumer behavior in emerging economies.  It provides actionable insights for hosts, policymakers, and platform managers aiming to optimize pricing strategies and enhance market efficiency by improving neighbourhood quality only when necessary and encouraging formalized Airbnb across submarkets. By shedding light on the unique Airbnb dynamics in submarkets of a rapidly urbanizing African city, this study enriches the literature on peer-to-peer accommodation services in underexplored regions.