[ATLANTA] Sunbathing in Tel Aviv or hitting Dubai's fabulous malls will set you back a bit more lately. A combination of high hotel and apartment costs and strong tourism has Airbnb rates in some Middle Eastern cities among the world's priciest.

Middle East Climbs

In the latest Bloomberg index, Miami and Boston took the top two spots in the average daily cost of lodging in private dwellings for the second straight year. Airbnb owners asked for US$205 a night and US$195 a night, respectively, in the two cities. However, the Middle East has been climbing in the annual index and this year has five destinations among the top 15 priciest global cities: Tel Aviv and Dubai at Nos. 4 and 5, and Jerusalem, Riyadh and Kuwait City also near the top.

City of Gold

Dubai's expensive short-term rentals, averaging US$185 a night in Bloomberg's index, probably are a function of high hotel rates in the Emirati city, where more than 70 per cent of hotel rooms are four-star or above, said Ivana Gazivoda Vucinic of the international real estate firm Chestertons. Dubai's supply of Airbnb units more than doubled to 3,249 units in the two years ended August 2017, following a relaxing of government regulations, according to Vucinic's research on Dubai's short-term rental market.

Dubai has spent billions to pump up its tourism sector and hopes to attract 20 million visitors to the city by 2020, up from 15.8 million visitors last year, according to figures from Dubai's Department of Tourism and Commerce Marketing. Two UAE-sponsored airlines, Emirates and Etihad Airways PJSC, have been among the world's fastest-growing carriers in recent years. Should Dubai reach the 20 million visitor goal, it will be among the top five most visited cities globally, according to market research firm Euromonitor.

High Costs

Pricey Airbnb listings in Israel may have more to do with the high cost of housing in Tel Aviv and Jerusalem, said Yoav Kerner, a lecturer of statistics at Ben-Gurion University in Israel. Apartments in Tel Aviv typically eat up at least three-quarters of the average person's gross income, said Kerner, who studied the Airbnb market in Tel Aviv on behalf of a hoteliers group.

Since Airbnb owners want a premium over what they could earn renting out their units for a full year, that drives up short-term rental costs, he said. Kerner estimated Airbnb has helped push up overall Tel Aviv rents by about 10 per cent, he said.

Several cities around the globe, including New York, have put various restrictions on the short-term rental market out of fear that the practice drives up housing costs. Airbnb spokesman Nick Papas challenged this idea, saying it's being perpetuated in part by hoteliers.

"It's no surprise to see the hotel industry paying for misleading reports about our community," Papas said by email. "The data shows that these claims simply don't hold water."

Airbnb figures show that the average daily rate in Tel Aviv is US$87 and the average rate in Jerusalem is US$82, far lower than the US$188 per night and US$173 per night costs that Bloomberg found. Airbnb uses a different methodology than Bloomberg, including looking at rates of units that were actually booked, while Bloomberg looked at advertised rates.

While the Bloomberg index considered Airbnb listings in more than 120 global cities, the highest worldwide prices for short-term rentals can be found in smaller resort destinations, according to short-term rental information provider AirDNA. The Caribbean island St. Barthelemy had the highest average daily rate over the past year, at US$1,127, followed by the ski resort city of Vail, Colorado, at US$668, according to AirDNA figures for units rented out for at least 30 days a year in cities with at least 1,000 listings.

Methodology: Bloomberg collects the average daily rates of private dwellings, regardless of accommodation types, for at least two guests, via airbnb.com. To help minimize the impact of holidays, festivals and special events-related pricing quirks, Bloomberg collected daily average prices, as advertised, for two 10-day windows six months apart: 8/1-8/10/2018 and 2/1-2/10/2019. Data was collected between May 1-10. Prices were rounded. We understand that rates change once beyond the research window and that additional fees are applied in some cases.

BLOOMBERG