Software and technologies used: Tableau for data visualization and an interactive dashboard.

A client wants to invest in a property in Mexico City and rent it through Airbnb.
They want to know in which neighborhoods they should search for properties for sale and they wish to compare potential properties to other listings on Airbnb as pricing references.

Mexico City is divided into 16 “alcaldias” that we will call neighborhoods. Historic downtown cdmx is located in Cuauhtemoc neighborhood, and the surrounding neighborhoods like Miguel Hidalgo, Benito Juarez and Venustiano Carranza also offer high touristic, historical or economic value. We expect that most of the attention will be centered in one or some of these neighborhoods.

First, exploring prices and number of rooms for each neighborhood, the neighborhood with the highest median price is Cuajimalpa, followed by Miguel Hidalgo and Cuahutemoc. However, there are 149% more listing in Cuahutemoc than in Miguel Hidalgo. Cuajimalpa is in 7th place, with 294 listings.

Seen on a map, the difference in density between Cuahutemoc and Miguel Hidalgo is evident. Cuauhtemoc (grey) has close to one Airbnb listing per block of houses.
We need to consider supply and demand for each Neighborhood when we select the best options for our client. We can use number of reviews per month as an indicator for demand, and while not a perfect metric for demand because not all guests leave reviews and not all guests stay the minimum number of nights (some will stay longer), it is a good starting point.

We plot the number of listings, average revenue per month (*) and the average reviews per month as a way to compare supply, demand and revenue per neighborhood. Cuauhtemoc is the clear outlier with a median revenue of $2,627 MXN per month, 5207 rooms total and an average of 1.8 reviews per month. But standing out amongst other listings is going to be hard in this neighborhood, so the next three best options are Miguel Hidalgo, Venustiano Carranza and Benito Juarez. Cuajimalpa, while having a high median price it also has less than one review per month, so demand for this neighborhood is not very high and property prices are high in the area.
* Revenue per month is approximated with the formula: price per night multiplied by the minimum number of nights per listing times the number of reviews per month.
Revenue=[Price]*[Minimum Nights (Calendar.Csv)]*[Reviews Per Month]
This is not an exact calculation because not all guests leave reviews, the number of guests per night is not known and the exact number of nights stayed is also not known, so it is assumed only one guest stayed for only the minimum nights required per listing per review. But it can still be used as a starting point to compare these neighborhoods.

Each of these neighborhoods mentioned has its own characteristics,
Miguel Hidalgo is a neighborhood with Museums, embassies, luxury stores and luxury dining options. The Airbnb rooms in this Neighborhood are also listed at some of the highest prices per night in the city. However, similarly, property in this area comes at a premium, so this may not be a feasible option. It’s also worth mentioning that private rooms in this Neighborhood have a higher avg. price than entire homes/apartments and this suggests that this neighborhood is attractive to wealthy tourists who also need the extra security that comes from rooming with a person or persons who are knowledgeable about the city and can provide guidance and tips on how to move around the city safely. This is not something the client can offer, since they won’t be living in that property.

The next interesting neighborhood is Venustiano Carranza, with only 282 Airbnb listings and an average revenue per month of $3,070, this could be an interesting option with the potential of less competition, more demand and lower property prices. Venustiano Carranza is an attractive neighborhood due to its proximity to the airport, so we can expect shorter stays of guests in this neighborhood who are staying due to a lost, delayed flight or before a flight connection.

Benito Juarez does not have any big tourists attractions, however it is located directly south of the most tourist dense Neighborhoods. Underground stations and Metrobus stations also make it very convenient to move around Benito Juarez. Houses and rooms in this Neighborhood are listed at a higher price than at Venustiano Carranza, and there is not as much competition as in Miguel Hidalgo. Staying in this neighborhood requires being a bit more comfortable interacting with the locals than in other tourist-heavy areas, so guests in this neighborhood can be expected to be mainly Mexicans.

Recommendations:
The three neighborhoods with most potential for a profitable investment are
1. Venustiano Carranza for the high apparent demand and low competition
2. Benito Juarez, with an attractive median revenue just $792 mxn lowe than Miguel Hidalgo and lower competition than Cuahutemoc or Miguel Hidalgo
3. Miguel Hidalgo for the high median revenue but lower competition than Cuauhtemoc, if inside the client’s budget.

Feel free to explore the interactive dashboard, which includes a graph showing each listing filtered by neighborhood and distributed by price per night and number of reviews so the client can explore different listings and get an idea of what popular rooms look like in a certain neighborhood.

Interactive dashboard with Tableau Public

The data for this project was obtained from Inside Airbnb https://insideairbnb.com/get-the-data/