When local business faded away: the uneven impact of Airbnb on the geography of economic activities.

This paper examines how Airbnb, a short-term rental platform, has unevenly reshaped the spatial organization of economic activity in Madrid, Spain, by promoting tourist-oriented businesses—such as restaurants, bars, and souvenir shops—while displacing resident-oriented establishments that serve local daily needs. Using establishment-level data from Madrid City Council and Airbnb listings from 2014 to 2019, the study finds that Airbnb increases the birth and transition of tourist-focused businesses at the expense of local businesses, a pattern robust to alternative measures of Airbnb activity and unrelated to other factors like traditional accommodations, gentrification, or e-commerce growth. The findings highlight that Airbnb's impact extends beyond city centers into residential neighborhoods, raising concerns about the displacement of local populations and services, and suggesting the need for policy interventions addressing both housing and the structural transformation of urban economic landscapes. The methodology and classification system developed offer a replicable approach for analyzing short-term rental effects on urban business dynamics in other cities.