This article provided a detailed data analysis of the AirBnB market in Berlin for both technical and non-technical audiences in the year 2020. The analysis follows the CRISP-DM process.
Introduction and Business Understanding
Airbnb is one of the hottest startups of the 21st century. Founded after the financial crisis in 2008, the company solved the problem of matching unoccupied and unused apartments with the demand for such during busy seasons, when hotel rooms where fully booked or unaffordable. And if it wasn’t for the corona crisis, which is affecting the whole world right now, the company would have already gone public this year.
After its inception and scaling phase, the company quickly became more valuable than established hotel chains such as Hilton or Marriott. And all that without owning any large real estate whatsoever. This is the power of the sharing economy that created other companies such as Uber. Today, the platform offers many budding entrepreneurs or hobby hosts an opportunity to earn money by offering rooms or apartments. The service is offered worldwide and expanded to other fields such as travel experiences. Find more about the company here.
As a budding German Data Scientist, I am interested in the impact of Airbnb on the German market, in particular our capital: Berlin. Thanks to the website http://insideairbnb.com/index.html, I could extract current market data of Airbnb in the Berlin real estate market.
This data analysis can help travellers and (potential) Airbnb hosts alike. As a tourist, we want to spend less money on accommodation without sacrificing the comfort of a good night’s sleep. As a (potential) host we want to earn some money on our free space and also make nice acquaintances with people all around the world. Hence, questions we are aiming to answer are:
- What are the prices for various room types?
- Which neighbourhoods offer the most Airbnb listings?
- Do I safe a lot of money compared to a usual hotel room?
- What is the optimal amount of people I should travel with to optimise my budget?
- Which months are best to travel regarding occupancy and prices?
- How does Corona affect the market for Airbnb listings in Berlin?
This analysis and subsequent communication is part of the Data Science Nanodegree from Udacity and, hence, is my first real contribution in Data Science to the wider community that I am about to share. Please leave feedback on further questions or potential improvements of my analysis process. It is much appreciated.
Ultimately, the power of the Airbnb platform is that it motivates guests to blend into communities, belong anywhere, and live like locals.
(Joe Gebbia, Co-Founder Airbnb)
Data Understanding
The data was provided by insideairbnb.com and offers a rich dataset of listings, calendar entries and reviews. We will mainly focus on the listings and calendar entries data here as the reviews data is more of a qualitative measure and during our exploration process we quickly realise that most listings receive a quite good rating. Some insights from data exploration are:
- In Berlin there are 24,728 listings as of now.
- Around 17% of the hosts are classified as “superhosts” (Read here how to become a superhost)
The data is relatively clean and we only need to conduct some minor cleaning steps. Please find my Github repository that I used for cleaning here.
How are prices distributed for Airbnb Listings in Berlin 2020?
- Airbnb listings in Berlin are on average less expensive than hotel rooms (97€ per night). Info from average prices for hotel rooms in Berlin here.
- Most listings in Berlin are centered between 25–75 € per night.
- As expected, we have a right skewed distribution due to some big outliers in the data which can be attributed to luxury accommodations.
What is the distribution of Airbnb room types in Berlin 2020?
- We have a fairly evenly distribution between private rooms and entire homes/appartments which together account for over 95% of the listings in Berlin.
- We can assume that customers value privacy because shared rooms are, in contrary to the original idea of offering spare airbeds, very rarely offered and apparently less demanded.
Airbnb’s value propositon “At home everywhere” could be looked at more critically here. Customers use Airbnb’s platform more like a hotel service than a means to connect with locals.
How are listings distributed across the city? What are the most expensive areas?
- The 4 parts of the city Mitte, Pankow, Friedrichshain-Kreuzberg and Neukölln are the largest areas with regards to number of listings. Those are also the areas that revolve around the cultural hubs in the city. According to PlanetWare, the most important sights and nightclubs can be found in either of those four parts of the cities.
- Charlottenburg has the highest average prices per night. Here the high society of Berlin resides, beautiful areas of living can be found and wonderful parks. It therefore makes sense that prices here are the highest.
- Most affordable are Neukölln and Friedrichsdorf. Since Neukölln also has a very high number of listings, one could try to find a good offer here!
- Friedrichshain-Kreuzberg and Pankow are closer to the mean price of the whole city
As a traveller, how many people should I include in my Berlin trip?
To answer that question, I only looked at the four areas of the city that offer the best sights to tourists.
- Most listings are for couples or for a group of four people. You should therefore, if travelling in a group, travel with your best friend / significant other or your family.
- Prices rice as number of possible occupants rise. This a very plausible observation.
- However, prices increases plateau at a group larger than six and up to 9. You might consider looking for listings that allow for up to 9 people as prices do not rise so much in this interval and it would offer more space for a larger group.
How did occupancy in Airbnb listings in Berlin change when comparing 2019 to 2020?
The coronavirus had a large economic impact on Airbnb. The reason why the company did not go public this year was because of the sudden pandemic outbreak and the complete shutdown of all travel activities around the world. One might argue that offering your apartment on Airbnb is no longer a profitable idea for (potential) hosts. But let’s have a deeper look at the data:
- One year ago (in May 2019), the bookings were very high for the months June to September and then again for Christmas (Availability rates less than 20%). This picture changed when looking from today into the future. Many listings are still available this year at the same point in time(around 30%).
- This means that compared to last year, the demand dropped by 50%. Of course, this is due to the travel restrictions and therefore less people use Airbnb as a means to spend a weekend or a couple of days in Berlin.
- Prices for individual listings are higher this year compared to last year which somehow contradicts the sinking demand for listing.
Conclusion and Potential future research
To sum it up, the Airbnb market in Berlin is currently going through a tough phase and it might be hard to find occupants when starting to offering your services now.
However, if you want to get started, it is a good time to put everything in place and launch your Airbnb hosting idea as soon as the market regresses back to its normal form.
“A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.”
(Warren Buffett)
The overall economic impact of the virus on the Airbnb market in Berlin has to be quantified.
I am very grateful for my first opportunity to contribute something to the great Data Science community. I am looking forward to sharing more of my work and connect with all of you.
Find my Github repository on the project here.
