Date of Award

5-2026

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Khemraj, Tarron

Area of Concentration

Financial Economics

Abstract

This thesis analyzes the U.S. short-term rental industry using a Structure–Conduct–Performance framework to explain how control over demand access is centralized at the platform level, while pricing, revenue generation, and competition play out across distinct local markets at the operator level. The industry does not operate as a simple platform-versus-host model. It runs in layers that are connected through supply. At the top, platforms control demand access through search rankings, platform rules, and distribution, which allows them to influence visibility and booking flow across the entire system. In the middle sits the supply layer. Homeowners and investors decide whether to convert housing stock into short-term rental (STR) inventory, and that decision determines how much supply is available for platforms to capture demand. Units move in and out of STR use based on expected returns relative to long-term rentals (LTRs) and other alternatives. Once supply is converted, operators step in to run the asset as a business. This layer is not passive. It is where capital allocation decisions are made. That interaction between supply and operators is what makes the platform layer functional. Platforms do not generate revenue on demand alone. They require active, bookable supply to capture that demand. That operator segment is the core of this analysis. STR hospitality operations scale units through three models: leasing and operating (arbitrage), managing for owners (profit-split or revenue-share), and owning and operating. At its core, this is a hospitality business. Operators are not just competing with other STR listings. They are competing directly with hotels and extended-stay lodging within the same local market. Competition at this level is local. Operators are not competing nationally. They compete within defined geographic markets, where pricing, occupancy, and performance depend on nearby substitutes, including both STRs and traditional lodging, and on execution quality. Differentiation, reviews, amenities, and operational discipline drive pricing power, but that power is fragmented and location-specific rather than market-wide. To quantify structure at the platform layer, I construct a Herfindahl–Hirschman Index using booking-share data and pair it with revenue and margin comparisons for dominant firms. The results show that the short-term rental industry follows clear economic logic. Platform-level control over demand, supply-side conversion decisions, and operator-level competition within local lodging markets interact to determine visibility, pricing outcomes, and how revenue is ultimately captured across the industry.

Rights

The author has granted New College of Florida the nonexclusive right to archive, make accessible, and distribute for educational purposes this work in whole or in part in all forms of media, now or hereafter known. The copyright of this work remains with the author.

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