Examination of Airbnb Demand and Supply in India

Abstract

This thesis finds Airbnb occupancy in India low and examines the reasons for it. In particular, it focuses on the curious case of year-round high occupancies of 85% + for RAHO properties, a hospitality company with accommodations listed on Airbnb in Coorg, South India. When comparing RAHO accommodation occupancies with the average Indian Airbnb occupancy of 36% and the average branded hotel chain occupancy of 66%, some questions become apparent. Is RAHO’s high occupancy systemic or idiosyncratic? What could be the reason underpinning the occupancy rate differences between Airbnb and branded hotel chains? This is a particularly relevant topic given the changes in the Indian economy. India is a rapidly developing country with an average year-on-year real GDP growth of 5.75% from 2013 to 2023. The GDP per capita has grown by 57% during the same period. This economic development and increased disposable income have resulted in a larger, more powerful middle-income group that travels more often. As a result, the number of domestic traveler visits has doubled from 2013 to 2019. This increasing demand can be more easily met if accommodation supply comes from individual homeowners through online travel agencies (OTAs). The findings aim to inform strategies for improving the supply of suitable accommodations for this target group, particularly non-urban vacation destinations in India. This thesis hopes to provide a valuable resource for entrepreneurs in the space to build sustainable businesses by highlighting the primary reasons for higher occupancies and suggesting approaches for higher occupancy.