Airbnb Demand in Cape Town: A Look at Key Drivers

Abstract

This dissertation investigates the determinants of Airbnb demand in Cape Town, a prominent tourist destination known for its natural beauty and socio-economic diversity. Despite extensive global research on Airbnb, there is a gap in localized studies for Africa, although the continent remains a popular tourist destination, and Airbnb as a business model appears to be on the rise in Africa. Using data on Cape Town in South Africa from InsideAirbnb, this study analyzes key factors influencing Airbnb booking rates for over 8,000 active listings. The findings reveal that minimum stay requirements and host acceptance rates have a significant positive impact on both occupancy rates and booked days, indicating that these factors strongly influence demand. Host response rates also positively affect both measures of demand, emphasizing the importance of prompt and reliable communication by hosts. Superhost status consistently enhances both occupancy rates and booked days, highlighting the value of this designation in attracting guests. However, price generally shows a negative relationship with demand, and instant bookable listings surprisingly exhibit a negative effect on both occupancy rates and booked days in this context. These findings offer valuable insights for hosts, investors, and policymakers, contributing to a deeper understanding of Airbnb dynamics in Cape Town and supporting the development of strategies for sustainable tourism growth in Africa.