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Team Project: Airbnb Business Analysis

Our team project was to take an Airbnb dataset for New York in 2019, and apply machine learning approaches to analyse business trends.

Our team chose this business question.

Is a proposed price for a given room type in a given neighbourhood underpriced, in price range, or overpriced?

Abdullah began by loading and inspecting the Airbnb data.

Leah and I then pre-processed the Airbnb data.

Leah did some exploratory data analysis.

Preh and Ali used an autoencoder for anomaly detection.

My part of the project was to use Neural Architecture Search techniques to choose a machine learning model to answer our business question.

I wanted to show the results from the Decision Tree model with an interactive interface, so I made this web app.

You can choose a neighbourhood and a room type, and the app shows a map of the neighbourhood and the expected price range on a graph. You can then choose an example room price to compare with the price range.

Please try out my web app below!

Marwa finished by writing a final evaluation.

Business Question


Is a proposed price for a given room type in a given neighbourhood underpriced, within the expected price range, or overpriced?


Results


After the data cleaning process was completed, the final dataset contained 48,572 Airbnb listings and 18 variables. From that point onward, analysis shifted toward exploration - patterns examined, outliers flagged - all built on this refined collection.

The average listing price was $140.27, while the median price was $105. As low as $10 appeared in records, contrasted sharply by a peak at $999. The standard deviation was

$112.90, indicating considerable variation in listing prices across the dataset.


The initial analysis showed that both location and room type have a strong influence on listing prices. Manhattan listings stood out by carrying steeper price tags when compared to areas elsewhere across the city. Entire units - be they full homes or flats - tended to cost more, especially next to private rooms or spaces meant for sharing.

A pattern-finding method based on an Autoencoder helped detect property listings priced outside expected ranges. By studying traits tied to individual ads, it flagged those acting unlike typical market examples. The final Autoencoder model identified 3,287 anomalous listings, representing approximately 6.8% of the dataset. Listings exceeding the anomaly threshold were flagged for further investigation and analysed as potential cases of overpricing, underpricing, or unusual market behaviour.


Key Insights


Patterns emerged during exploration of the Airbnb data. A close look revealed recurring trends worth noting.

One of the most important findings was the impact of neighbourhood location on listing prices. Prices climbed highest in Manhattan when compared across regions, yet stayed furthest down in the Bronx. Though many factors matter, where something is found tilts the scale early.

Figure 1. Price Distribution by Neighbourhood Group


Figure 1 compares listing prices across neighbourhood groups. Manhattan exhibits the highest median prices and the widest price range, while the Bronx shows the lowest overall pricing levels. Several extreme values are also visible across all neighbourhoods.


Room type was also found to be an important factor affecting listing prices.Entire homes and apartments were generally more expensive than private or shared rooms.

The price distribution was not evenly spread across the dataset. A majority of entries clustered toward cheaper and mid-level costs instead. In contrast, only a few stood far above others in cost. Because of those outliers, the mean shifted upward noticeably. This pattern pulled the shape of the graph to the right slightly.

Figure 2. Distribution of Airbnb Prices


Figure 2 illustrates the distribution of Airbnb listing prices in New York City. The distribution is positively skewed, with most listings concentrated at lower and mid-range prices, while a smaller number of high-priced listings create a long right tail.


Overall, neighbourhood location appeared to be the strongest factor influencing Airbnb prices in New York City. Understanding these patterns helps provide context for identifying unusual pricing behaviour within the dataset.


Patterns Detected


The Autoencoder-based anomaly detection model was trained using key numerical features including price, availability, and review-related variables. Reconstruction error was used as the anomaly score, and listings exceeding the 95th percentile threshold were classified as anomalous.

The model identified 3,287 anomalous listings, representing approximately 6.8% of the analysed Airbnb properties. These listings exhibited characteristics that differed substantially from normal market behaviour and therefore warranted further investigation.

The findings demonstrate that self-supervised learning can effectively identify properties whose characteristics deviate from expected market patterns without requiring

pre-labelled examples of anomalous behaviour. This approach provides a practical method for detecting potentially overpriced, underpriced, or otherwise unusual listings within large accommodation datasets.

Top Overpriced Listings


The anomaly detection model identified several listings with exceptionally high prices relative to their feature profiles. These properties produced some of the highest reconstruction errors and were therefore classified as potentially overpriced or highly unusual.

Examples of the most notable overpriced listings included:


We wrote our final report together.

Airbnb Dataset Analysis


  1. Introduction


    The Airbnb NYC 2019 dataset contains specific information about Airbnb listings in New York City, such as property attributes, host information, geographic location, pricing, availability, and customer review activity. The collection includes thousands of listings from various neighbourhoods and boroughs, providing significant information about the short-term rental industry and client preferences. As digital mediums continue to impact the hospitality sector, data-driven decision-making is becoming increasingly critical for optimizing pricing strategies, analyzing customer behavior, and boosting business results.


    This dataset provides a good basis for studying intelligence for business and predictive analysis in the collaborative economy. Organisations can acquire a better knowledge of economic trends and customer demand by examining the correlations between listing characteristics and pricing behaviour. Furthermore, consumer segmentation can help with specific advertising techniques and budget allocation. According to Mikalef et al. (2019), businesses that effectively use statistical analysis are more inclined to enhance decision-making and achieve higher business performance. As a result, the purpose of this research is to use machine learning techniques to extract useful insights from Airbnb listing information and promote evidence-driven business decisions.


  2. Business Problem


    One of the most difficult tasks for Airbnb hosts and platform operators is to develop profitable and competitive pricing strategies while also understanding the varied features of clients and listings. Several factors influence the short-term rental market, including neighbourhood location, room type, host activity, availability, and customer feedback.


    This study's major business goal is to use machine learning approaches to reliably estimate Airbnb listing pricing and identify important consumer categories. Pricing prediction is crucial since inaccurate pricing can lead to decreased rate of occupancy, less revenue generation, and a loss of market competitiveness.


    The study uses regression and clustering algorithms on the Airbnb NYC 2019 dataset to give real business insights for cost optimisation and segmenting markets. These findings can help to improve revenue management, satisfaction with customers, and strategic decision-making in a shared economy ecosystem (Han, Kamber, & Pei, 2022; Witten, Frank, Hall, & Pal, 2017).

  3. Data Preprocessing


    We began by exploring the initial data, and checking for missing or unexpected values. We were pleased to find the data was already very high quality. There were 48895 records, and the only missing values were 16 "name" values and 21 "host_name" values, which aren't necessary to answer our business question. There were no duplicate records.


    There were some unexpected values.


    • 11 properties had a price of 0.

    • 239 had a price greater than 1000 - the maximum was 10,000.

    • 17,533 properties had an "availability_365" value of 0 - we weren't sure if this meant they were never available or they were fully booked.

    • 197 had a "minimum_nights" value greater than 90 - it seemed unexpected that these could only be booked for longer than 3 months.


      We "cleaned" the dataset with the following steps.


    • We changed the missing "name" and "host_name" values to "Unknown".

    • We removed records with price 0.

    • We removed records with a price of 1000 or more.

    • We removed records with "minimum_nights" of more than 365.

  4. Exploratory Data Analysis


    After the dataset had been preprocessed, we could move on to exploratory data analysis. Our goal has been to understand the dataset better using the preprocessed data to explore its structure, pricing, and other characteristics. We decided to use libraries such as Seaborn and Matplotlib, as they provide a great combination of ease of use and the ability to generate visualisations and summaries from complex datasets.

    The analysis focused on identifying trends and creating visualisations based on prices, neighbourhoods, or room types.


    This analysis allowed us to visualise several trends found in the dataset, such as the price distribution, which has proven to be right-skewed (Sedgwick, 2012), with most listings concentrated towards the lower prices, with only a few outliers.



    Another interesting finding has been a correlation between price and neighbourhood, where significant differences have been identified, suggesting that location has a strong influence on the listing price.



    Furthermore, it has been observed that entire homes and apartments generally tend to have higher prices compared to both private and shared rooms, where the differences fade.



    Overall, the exploratory data analysis provided valuable insights into the dataset, which allowed us to move on to the machine learning analysis.

  5. Self-Supervised Model (Anomaly Detection)


    A self-supervised autoencoder (TensorFlow/Keras) was built to detect pricing anomalies without labelled data, by learning normal listing patterns and flagging deviations.

    Six numerical features were selected: price, minimum_nights, number_of_reviews, reviews_per_month, calculated_host_listings_count, and availability_365. The training subset was restricted to listings with prices between £10 and £500 and a minimum stay of 90 nights or fewer, yielding a representative sample of normal behaviour. All features

    were normalised to the range [0, 1] using MinMaxScaler, fitted exclusively on this normal subset to prevent data leakage.

    The autoencoder used a 32 → 16 → 8 encoder and symmetric decoder, trained via Adam/MSE on an 80/20 split with early stopping until loss stabilised.



    The trained model scored all 48,572 listings by reconstruction error. Using a 95th percentile threshold, 3,287 anomalies (6.77%) were identified, slightly exceeding 5% as the threshold was derived from normal listings only.



    Anomalies were split into overpriced and underpriced outliers to support pricing decisions. Results were saved with anomaly scores for further use.




  6. Neural Architecture Search


    A Neural Architecture Search tests different statistical models to find the most suitable for a task. We wanted to find the best statistical model to classify prices.


    We know what output we want so we explored supervised rather than unsupervised models.


    We want to classify the data so we explored classification models rather than regression models.


    We considered many kinds of classification models - most are intended for purposes which don’t match our business question, so we tested two in depth - K-Nearest Neighbors and Decision Tree. The Decision Tree model gave the best result - 100% accuracy in our initial test. Here is an interactive demonstration we made to show these results: price range interface.



  7. Evaluation & Final Output Integration

The outputs from each stage of the project were combined to produce a coherent analytical framework for Airbnb listing evaluation. Data preprocessing improved data quality and consistency, exploratory analysis highlighted key pricing patterns, the

self-supervised autoencoder identified anomalous listings, and Neural Architecture Search supported the selection of an appropriate classification approach. Together, these components provided complementary insights that enhanced the interpretation of listing behaviour and demonstrated how machine learning techniques can be integrated to support informed business decisions.


References

Han, J., Kamber, M. and Pei, J. (2022) Data Mining: Concepts and Techniques. 4th edn. Burlington: Morgan Kaufmann.


Mikalef, P. et al. (2019) ‘Big data analytics and firm performance: Findings from a mixed-method approach’, Journal of Business Research, 98, pp. 261–276.


Sedgwick, P. (2012) 'Skewed distributions', BMJ online, p. 345. Available at: https://doi.org/10.1136/bmj.e7534s


Witten, I.H., Frank, E., Hall, M.A. and Pal, C.J. (2017) Data Mining: Practical Machine Learning Tools and Techniques. 4th edn. Cambridge: Morgan Kaufmann.