Researches Reviews of the Department of Geography, Tourism and Hotel Management 46-2/2017 Original scientific paper UDC 338.487:004.738.5 SATISFACTION AND CHARACTERISTICS OF AIRBNB DEMAND IN BUDAPEST Klára Morvay Karakas1 Received: January 22, 2017 | Accepted: July 18, 2017 ABSTRACT: The past two years Budapest has been placed on the list of the most visit- ed European cities. in 2015 The total number of tourists arriving to Budapest increased by 7.6%, the number of guest nights showed quite a big (6.8%) growth as well, while the income of the commercial accommodation types increased by 15.5% (Hungarian Central Statistical Office, 2016). After the bankruptcy of Malév (Hungarian Airlines) in 2012 very different type of guests appeared in Budapest. The rise of sharing economy may explain this considerable growth and change. The goal of this article is to get an insight to the Airbnb market in Budapest. The huge growth on supply side will be proved by data. Understanding of Airbnb demand is based on primary research. Demographic features and spending structure is presented, as well as the guest satisfaction with Airbnb and Budapest – as a touristic product. Keywords: sharing economy, Airbnb, guest characteristics, satisfaction, Budapest INTRODUCTION Sharing economy is a new phenomenon in the world economy. Trust, convenience and a sense of community are all factors in pushing adoption of the new model forward. Sharing economy in Europe can increase to 570 billion Euros in 2016, which is twen- ty times bigger than the previous year’s number, in 2015. Based on a research of Price Waterhouse Coopers (2015), its most important sectors are the followings: community finance, community-based accommodation sharing, passenger transport, on-demand household and professional services. From the above listed sectors, the community-based accommodation sharing is go- ing to be the focal point of this research. New software platforms use modern informa- tion technology, including full-featured web sites and mobile apps, to allow service pro- viders and consumers to transact with relative ease and increased trust. These platforms provide notable benefits including reducing transaction costs, improving allocation of 1 Department of Catering, Tourism and Catering Management, Budapest Business School, contact: [email protected] 76 Researches Review DGTH | 46-2, 76–88 2017 resources, and information and pricing efficiencies (Edelman and Geradin, 2015). The sharing economy is thriving in the travel industry today, with apartment dwellers or home owners using a variety of distribution channels to rent out their unused units or spare bedrooms to travellers seeking alternatives to traditional hotel stays (HotelNews- Now, 2015, Guttentag, 2015) LITERATURE REVIEW Airbnb Couchsurfing, Homestay, Love Home Swap, Home Exchange, Bedycasa, Cul- ture GoGo, Homestayin, World Wide Opportunities on Organic Farms (Wwoof) and Airbnb are already existing communities and/or websites with almost the same pur- pose: travelling while meeting people from different cultures, ages and genders, avoid- ing high hotel rates (Lieber, 2012). One of the most popular one of them is Airbnb, founded in 2008 by three entre- preneurs: Joe Gebbia, Brian Chesky and Nathan Blecharczyk. Airbnb’s founders recog- nized the traveling public want an alternative to traditional hotels and have developed a seamless platform to operate and sell that inventory (Oskam and Boswijk, 2016). Trave- lers want authentic, local experiences and more space. They want to pay for the things that matter most (HotelNewsNow, 2015). Airbnb targets hosts and travellers. The company is looking for adventure-seakers, city-breakers, those who would like to travel and those ones who would like to earn “some” extra money by a business that allows them to do that by offering their apart- ments for short term rents (Le Jeune, 2016). „While Airbnb has primarily served budget-minded tourists, it has been attracting a larger share of business travellers. This is due in part to cost – companies can save mon- ey on conferences, meetings and retreats. But the attractiveness of staying in someone else’s home goes beyond the travel expense report.” (Folger, 2016) To measure the size of Airbnb business here you are some of the newest statistics and facts (Smith, 2017): • Airbnb’s total valuation – $ 30 billion • Number of Airbnb users – 100 million • Number of Airbnb hosts – 640 thousand • Number of Airbnb listings – 2.3 million • Number of active countries – 191 • Number of active cities – 65.000 • Top city for active Airbnb listings – Paris and London “Airbnb’s stated goal of $10 billion in revenue by 2020 will likely come from a vari- ety of categories — namely, vacation rentals, China and business travel,” said Piper Jaf- fray analyst Michael Olson in a note to investors in March 2016 (Taylor, 2016). In spite of its impressive statistics, Airbnb experienced a series of ups and downs (Airbnb, 2016). Researches Review DGTH | 46-2, 76–88, 2017 77 Airbnb in Budapest „Similar to other large cities in Europe, Airbnb has completely revolutionised the way many tourists arrange their stay in Budapest. Shortly after the hostel revolution of the early 2000s, the market of short-term rentals was further boosted by 8,100 apart- ments to rent out through Airbnb. This has transformed downtown Budapest districts to very lively and vibrant tourist destinations, especially during the peak summer season. The apartments available through the sharing economy platform bite into the business of hotels in Budapest. It is mostly mid-priced outlets which feel the competitive threat from the poorly regulated market and operators who often fail to pay taxes and other levies, putting hotels in a disadvantageous situation.” (Euromonitor, 2016) The web page called „AirDNA” deals with Airbnb data analysis. One can get an easy access to Airbnb host and property information, listing the number of bedrooms in the city, Airbnb rental activities, occupancy or even the most popular listings in a certain city regarding customer satisfaction. The number of properties started to increase from 2009 and in October 2016 the number of active rentals in Budapest was 8,351. We can also see some basic information about rentals, guest reviews, the quality of Airbnb services and a pie chart that shows us the popularity of the different types of ac- commodations within Airbnb in Budapest. Figure 1. Airbnb Property Information Source: https://www.airdna.co/city/hu/budapest, 14/10/2016/ Booking an entire house or apartment has always been more popular than sharing a room with an unknown person. This is exactly why entire places occupy 84.5% of total Airbnb flats in Budapest. The rate of private rooms is only 1.4% from the total, while shared rooms are the least favourite types of accommodation in the capital city of Hungary. The seasonality is observable in the case of Airbnb occupancy, June-July-August are the most popular months. Another significant component of AirDNA is the Airbnb rental activity that shows the months available for rent and the actual rents. 78 Researches Review DGTH | 46-2, 76–88 2017 Figure 2. Annual Revenue Source: https://www.airdna.co/city/hu/budapest, 14/10/2016/ Figure 3. Airbnb Rental Activity Source: https://www.airdna.co/city/hu/budapest, 14/10/2016/ In this case the two extremes are conspicuous: most of the months (from ten to twelve months) are available for rent. However, people tend to rent Airbnb places more frequently for one to three months. As we could see active Airbnb rentals were 8351 in October of which nearly 3500 was in Budapest at that time. According to Hungarian Airbnb experts 70-90% of the owners of these properties offered for rent do not registered the accommodation, so this infor- mation is not available on the Hungarian Central Statistical Office (KSH). Researches Review DGTH | 46-2, 76–88, 2017 79 METHODOLOGY With the emergence of Airbnb new opportunities opened the eyes of a lot of tourists and made several places even more accessible. While it is very popular to write about the advantages, disadvantages, positive and negative effects of Airbnb, there is no data avail- able anywhere about the characteristics of those people who choose Airbnb as a form of accommodation. One can only estimate the approximate number of them. This is the reason why it is worth to make a research about. Besides the demographics also the ex- penses and satisfaction will be investigated. We try to prove the credibility of this hy- pothesis (Bunyevácz, 2016): “Most of the Airbnb guests tend to spend less on accommodation and more on addi- tional services.” Two types of primary researches were used: a survey directed at Airbnb guests stay- ing in Budapest and interviews with Airbnb hosts to gain both quantitative and qualita- tive data. In order to gain reliable data, we had to observe the situation from the two dif- ferent aspects: from hosts’ and guests’ points of view. Four interviews were conducted in October 2016 with four ladies, operating one to thirty apartments offered by Airbnb website. All the participants received the same 11 questions. We wanted to gain knowledge about everything hosts know about guests considering different aspects: nationality, age, gender, degree, financial background, clothing, interests, etc. On the other hand, 104 questionnaires were filled out between July and November (2016) in order to gain a realistic thought about the characteristics of Airbnb guests. The questionnaires were filled out manually. Questions were analysed in the same way. At the time of the check-in participants were told to help us make a research about their characteristics, behaviour and spending and almost all of them proved to be helpful. Multiple choice, short answer and scaling related questions were asked from partic- ipants. The 43 questions might seem a bit too much, but we needed all of them in order to get a clear picture of the subject of the research. Limitations In the case of secondary researches, the most serious barrier was the lack of academic literature available on the topic. Airbnb’s tendencies are changing very fast (day by day) and it can be difficult to quote from different authors’ articles as they might not be actu- al anymore. From participants’ point of view two main limits must be mentioned. One of them is the confidential data that interviewees shared with us. On the other hand, it would have been important to reach more Airbnb clients to write a more precise conclu- sion at the end of the research. We have to take all these limitations into consideration upon analysing the results. 80 Researches Review DGTH | 46-2, 76–88 2017 RESEARCH RESULTS The main findings provided by Airbnb hosts are the following: The hosts receiving guests from different continents, but mainly from Europe (Eng- land, Russia, France, Italy) and North-America. The ratio of Hungarians is very low (5-10%). The proportion of genders has been 50-50% or a little higher ratio in favour of male. The average age is approximately 30, because most of the guests were young adults, few parents arrived with children or grandparents arrived with grandchildren. The most frequent guests are couples and small groups (friends). The clientele is well ed- ucated, well-dressed and belongs to the middle class with good financial background. The younger generation is more thankful at the time of the check-out. The older the peo- ple get, the more critic they become. The Spanish nation turned to be the most enthusiastic and happy among all of clients while the ones from Asia are very polite (there were people who used the washing ma- chine in order to leave clean sheets and bedclothes after themselves). Each guest is grate- ful for personal contacts and authentic information. Their main purpose of their visit is city break: sightseeing, relaxation, visiting ther- mal baths and participating on activities Budapest offers for them, but approximately 10-15% of the customers came for conferences or other business purposes. Demographics After analysing the questionnaires, the following results came up. Most of the peo- ple (48) are between the age of 26 and 32. Only two participants were under the age of 18 (Figure 4). The rate of genders is the following: 63% of the participants are male, while 37% of the participants are female. Only two of the participants had less than a high school degree, which can be ex- plained as two of the participants are under the age of 18. Almost 57% of the participants had bachelor degree, while nineteen clients had a graduate or master degree. The number of nationalities participating in the survey was 20 (Figure 5). Among them we can distinguish 26 English (which is 25% of the total number of participants) and 15 American (from the USA). Figure 4. Age of the observed participants Source: Own research Researches Review DGTH | 46-2, 76–88, 2017 81 Figure 5. Nationality of the observed participants Source: Own research Among the participants we could differentiate three unemployed, eight retired, six- teen students and seventy-seven employed people. 61% of the clientele are working full time, while 12.5% of them have only part-time jobs. According to the monthly personal income of Airbnb clients who filled out the ques- tionnaire (Figure 6), 27% of the participants earn 1201 to 2000 Euros, while 22% earns between 400 and 800 Euros per month. 16% of the people earn less than 400 Euro in a month. One participant earns more than 3000 Euro per month. Figure 6. Monthly personal income Source: Own research The majority of the customers live with their partner and children currently (61%) while 32% of the clientele live by their own and only 2.8% live with their parents. 53.8% of the participants come from big cities, 31.7% from capital cities, 11.5% from small towns and only 3 people responded with the answer that tells us that they are from villages. Travel habits The second chapter of the questionnaire was the described travel habits. Out of 104 participants 67 travels once a year, 14 participants „less than 3-4 times a year”, 12 of them commented „rarely”, 9 of them with an answer of „3-4 times a year” and only 2 people stated that they travel monthly. 82 Researches Review DGTH | 46-2, 76–88 2017 The most common habit is to travel with family members (53), 11 of them most like- ly travel with friends and other 11 people stated that they travel with colleagues, while only 9 customers travel alone. 82% of the participants arrived to Budapest by airplane (mostly budget airlines), 12% by car, 5% by train. Mostly city breakers filled out the questionnaire (65%). They also marked the option of partying in the city. Four people came to visit friends and/or rela- tives. Eleven people arrived with business purpose (10.5%), 8 people for healing, 46 peo- ple with cultural purposes and 2 people to do sport here. Figure 7. Purpose of travel Source: Own research There was an „other” option here as well. „To have fun” and „To get to know a differ- ent culture” and „Bachelor party” were the three additional reasons of visiting Budapest. Accommodations choice In case of the most important factor that influences their choice on accommodation price was marked 42 times, location was the number one influencing factor for 38 peo- ple and quality was indispensable for 25 participants. All the participants had to mark a number on a scale from 0 to 5 about the reasons of choosing Airbnb in the next section of the questionnaire. The different options and their belonging average values will appear in Figure 8. According to Figure 8 the most popular reasons of choosing Airbnb are the cheap prices of the apartments and all the feedbacks that the system provides. In the next part (Figure 9) Budapest as a destination is going to be rated in the same way (on a scale from 0 to 5) according to the opinion of the observed Airbnb clientele. The reasons of choosing Budapest are the followings: Researches Review DGTH | 46-2, 76–88, 2017 83 Figure 8. Factors influencing the respondent choice of accommodation Source: Own research Figure 9. Why to come to Budapest? Reason of choosing Budapest Average value (from 1-5) I am interested in the city 5 Budapest has a good image 4,2 Budapest is a cheap city compared to other European cities: 4,1 Budapest is near and easy to reach 3,8 Others recommended the city 3,8 The flight was cheap 3,2 I heard from Budapest in the news/read some advertisements 2,9 Source: Own research The next question was: „From where did you hear about Airbnb?” Internet was the most common answer on this question. 80% of the clientele chose this option, while the other 20% claimed that they heard about the city from friends and/or relatives. The majority of the observed customers (Figure 10) stayed from 1 to 4 days in the city. The observed 104 guests spent altogether 293 nights in Budapest. Taking all this data into consideration the average length of stay of the observed Airbnb guests in Budapest was 2.81 days. 84 Researches Review DGTH | 46-2, 76–88 2017 Figure 10. Lenght of stay of the participants Source: Own research Expenditures The first question of the section was: „How many Euros had you planned to spend before your arrival to Budapest?” Counting an average number from the received an- swers participants expected to spend an average 362 Euros during their stay. This num- ber in reality was averagely 372 Euros. Observing the types of services used we can say that thermal baths, sightseeing ser- vices, day-time and night-time activities, catering units can benefit from Airbnb as well, which means that Airbnb has a huge impact on these types of services and service pro- viders. The following table indicates the different services used by Airbnb guests including their expectations and the indication of those services that these clients actually used (Figure 11) during their stay in Budapest. Figure 11. Comparison of guests’ expected and consumed services used in Budapest Services: Expectation Reality Accommodation 104 104 Hospitality (Restaurants, bars, etc.) 104 104 Transportation 96 98 Entertainment 94 94 Nightlife (pubs, clubs, bars, etc.) 88 90 Sport 4 6 Sightseeing services 62 68 Thermal baths 56 58 Other 4 27 Source: Own research Some additional services were mentioned in this section: shooting, beer bike, mas- sage, go karting and boat cruises. Researches Review DGTH | 46-2, 76–88, 2017 85