As cities like Las Vegas navigate the evolving short-term rental market and the Federal Trade Commission (FTC) cracks down on hidden fees, a new study from UNLV’s Lee Business School dives into how Airbnb’s pricing transparency — or the lack thereof — shapes consumer choices.
Economics assistant professor and digital economy specialist Mark Tremblay, along with colleagues, analyzed how Airbnb’s decision to increase transparency around cleaning fees influenced prices and bookings in the European Union. The study found that while some hosts lowered fees in response, others raised their nightly rates, leading to fewer bookings in certain cases.
The findings were published as a CESifo Working Paper in December 2024, and the research team subsequently was invited to present to Airbnb and the FTC. Tremblay notes the insights apply to other access-based industry platforms like Uber and Amazon.
Tremblay’s take? Price transparency isn’t just a nice-to-have — it’s a game-changer.
“Consumers react quickly to pricing changes,” he explained. “When costs are clear upfront, they make more informed choices, which in turn forces hosts and platforms to rethink their pricing strategies.
“This study highlights an important shift in how consumers and hosts behave when faced with greater transparency. While some hosts lowered fees to stay competitive, others adjusted their pricing strategies in ways that ultimately impacted booking volume.”
What Happens When Fees Are No Longer Hidden?
Airbnb’s move to show total prices upfront in the European Union gave researchers a unique case study. Here’s what they found:
- Some hosts cut cleaning fees to stay competitive, adjusting to a market where hidden fees were no longer an option.
- Others raised nightly rates to compensate for the increased transparency, sometimes leading to fewer bookings.
- Listings that never charged separate cleaning fees suddenly looked like better deals, prompting those hosts to increase their rates in response to the perceived advantage.
- Consumers adapted quickly, choosing listings based on new price clarity, which in turn reshaped overall booking patterns.
Why It Matters for Las Vegas and Beyond
Las Vegas thrives on tourism, and short-term rentals are a key part of the city’s hospitality scene. But, as federal officials debate new rules about fee disclosures, understanding how price transparency affects both hosts and travelers is crucial. The FTC’s push for mandatory fee disclosure rules in the U.S. could shake up the market nationwide, Tremblay said, changing the way both hosts and guests approach booking.
“Consumers deserve clear and honest pricing,” Tremblay said. “Our research shows that greater transparency can influence both pricing strategies and booking behaviors. It’s a critical issue for cities like Las Vegas that rely heavily on tourism.”
Some cities have already implemented stricter regulations on fee disclosures, and Tremblay says pricing policies play a great role in shaping consumer trust and host profitability.
Tremblay noted that policymakers play a key role in shaping fair pricing regulations that protect consumers without stifling industry growth, ensuring a balanced approach that supports both transparency and a thriving rental market.
He hopes that his research findings help lawmakers to shape fair and effective policies, making it easier to spot true deals and avoid unexpected fees — leading to better-informed booking decisions. For hosts, Tremblay said, pricing strategy is more critical than ever, as those who fail to adapt to transparent pricing models may struggle to remain competitive in an evolving market.
