Yves here. It is hard to see why Brussels would come to the rescue of Airbnb, since member states are in need of tax revenues, and AirBnB among other things hurts hoteliers who are taxed at particularly high rates. But Airbnb has nothing to lose by trying.
By Don Quijones of Spain, the UK, and Mexico and editor at Wolf Street. Originally published at Wolf Street
Airbnb has a big problem on its hands in Europe, its most important market for listings. The region’s bustling tourist destinations are growing increasingly disaffected with tourist rental property platforms as the cons of unfettered tourism — a squeezed housing market, surging rents, overcrowding, overstretched public services and infrastructure, and the erosion of the town or city’s distinctive character — begin to heavily outweigh the pros.
Even one of the supposed main benefits of mass tourism — job creation — is riddled with caveats. As a spokesman for a new campaign group, the Network of Southern European Cities in response to Mass Tourism, points out, “the tourist sectors of the hospitality and catering trade [in Spain] have the worst working conditions: low salaries, fraud in the number of hours declared in the contracts — when there are any — and outsourcing.”
As summer approaches, the backlash is intensifying. On May 18th and 19th, two days of protest will be heldacross 14 Southern European cities, including Barcelona, Venice, Seville, Palma, Lisbon, Malta andMadrid, all under the unified banner of “Stop the exploitation of our cities.”
In Spain, the rise of “tourism-phobia” risks harming an industry that represents around 13% of the entire economy and has played a vital role in Spain’s economic recovery, accounting for over a quarter of the new jobs created since 2013.
In the Balearic Islands, almost 40% of the new jobs created there since 2013 depend on tourism. But that didn’t stop the islands’ capital, Palma de Mallorca, Spain’s eighth largest city by population, from imposing a blanket banon all tourist apartments last month.
A week later, the government of Valencia, a region that includes many popular coastal resorts, proposed a lawthat would restrict licenses for tourist rentals to ground-floor and first-floor apartments. If the law is passed, an estimated 65%-70% of the region’s current tourist apartments would no longer be able to operate legally.
In even bigger markets such as Paris, Berlin and Barcelona, the problems are also stacking up. In Paris, Airbnb’s second largest global destination, the authorities have filed a lawsuitagainst the company and two other firms for failing to respect local laws regulating holiday rental properties.
Berlin, Airbnb’s ninth most popular destination, has gone a step further by banning whole-home rentals outright, while preserving limited rights to rent out rooms within homes on a short-term basis. According tothe Berlin Senate Department for Urban Development and Housing, the measure helped return 8,000 units to the city’s long-term rental market, in the process deflating the city’s rental housing bubble.
As for Barcelona, the home rental platform’s sixth largest market, it will be watching developments in Palma and Valencia very closely. The City Council has been been locked in a three-year battle with Airbnb over unlicensed tourist apartments. In 2017 local residents went so far as to identify mass tourism as the biggest problem the city faces. Now, even in Madrid, a city that at first embraced the recent explosion in tourist arrivals, the Mayor’s office is planning a response to the “AirBnB effect.”
Clearly, the overall trend in Europe is no longer Airbnb’s friend. The constant growth in tourist numbers is coming at ever higher costs to the local population. But that doesn’t mean the company is going to just give up.
It already has a vital ally on its side: the European Commission. According toa report published by non-profit research and advocay group Corporate Europe Observatory (CEO), lobbyists from AirBnB, HomeAway (owned by Expedia), and their principal lobbying group, European Holiday Home Association, are small in number compared to other sectors, but when it comes to influencing the Commission, the EU’s executive branch, they “punch well above their weight.”
Sharing economy platforms have been able to use the EU’s e-commerce directive, which dates back to the year 2000, to overcome some of the policy measures passed against them by local city authorities. Until now local authorities have been able to opt out of at least some of the obligations and limitations in the e-commerce directive on public interest grounds. But that could soon change.
In a meeting with Commission representatives in 2016 the EHHA lodged a formal complaint against the cities of Barcelona, Berlin, Paris, and Brussels, which could ultimately lead to action by the European Court of Justice (ECJ). So far there is no indication that the Commission has referred the case to the ECJ. But lobbying pressure on both continues to mount.
In July 2017, the EHHA sent a “Draft Principle on Regulation of Short-Term Rentals” to the Commission, in which it outlined the sort of regulations it would like to see enacted across Europe. CEO asked to see a copy of the document under EU rules on access to documents, but the Commission refused, citing an exception relating to “business secrets.”
The Commission had already published a set of guidelines that is broadly reflective of the legislative framework sought by Airbnb and other rental platforms. For the moment those guidelines are non-binding, but that could change. Last year, the European Parliament passed with an overwhelming majority a resolution that “condemns” any attempt by local authorities to restrict the supply of tourist accommodation from online platforms. It was yet further proof of how divorced the cosseted decision makers in the EU government bubble are from the regions, cities, and communities they’re supposedto serve and represent.
If Airbnb and other tourist rental platforms ultimately win the regulatory battle in Brussels, local authorities will be rendered virtually powerless to regulate the local housing market and city environment in the interest of the people who live there. But the struggle for the heart and soul of Europe’s cities is unlikely to end there. In fact, if anything, it will merely intensify the simmering resentment and anger many local residents feel toward the platforms, their hosts, and the growing hordes of tourists they accommodate.
Amid a blossoming backlash against mass tourism, one place takes extreme measures. Read… Airbnb Just Lost a Limb in its Fourth Biggest Market
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Mon Dieu [!!!!!]…. whom knew that renting out an IP via some app would lead to property owners cracking a fat because their primary residence has become diminish due others looking for an absentee ownership seeking free ride income stream without any normal social responsibility.
Oh yeah… something about providing a space for people to engage in providing good and services, albeit with some ticket clipping.
Airbnb is the sort of company that you would like to suggest that it take a long walk off a short pier while carrying an iron anvil. The again, perhaps it is its bad luck to be a company that seeks to cram more tourists in already overcrowded destinations and adding to the problems of those people that actually live there. The headwinds they face are substantial.
Venice appears to be at the forefront of this issue. Not long ago they had huge actual ocean liners come right into the city to accommodate the rich tourists but which was damaging Venice itself. They literally towered over the city itself. It was ridiculous and I am not sure if they still allow them into the city center.
If Brussels tries to side with Airbnb they may be opening up a hornet’s nest for themselves. The European Parliament may be in favour of yet more tourists but I am willing to bet that those same Parliamentarians do not live in areas much effected by them. There may be even a local guerrilla campaign to fight the effects of companies like Airbnb and I doubt that there are any laws against harassing tourists and protesting their presence.
Truth be told, you could build a city in the middle of nowhere and fill it full of bars, hotels, strip clubs and the like and a big chunk of tourists would be quite happy with that as that it all many want or need. Have it near a beach or on an island and you would have a winner. Airbnb could then stock as many places that they could and no-one would care but I doubt that this will ever be done. But if it was done, it would take a lot of pressure off other destinations.
Las Vegas was basically founded for the reason you mention, to obtain tourists — specifically, gamblers. I find the place loathsome, but it does draw crowds away from other spots.
Tourism does seem suited for local regulation, not international control. Some areas would have no economy without tourism — ski resorts come to mind, as well as Las Vegas. Some coastal areas would be the exclusive preserve of the ultra-rich. Yet major cities like Berlin and Barcelona would do perfectly well without it.
I like Berlin’s approach of letting homeowners rent out spare rooms.
Cruise ships are portable Las Vegas. I see the primary advantage of cruise ships is that they keep the partying tourists well out at sea where there is no way they can disturb the neighbors or cause traffic jams.
Thanks, RevKev. I agree that many ‘mass tourists’ would never miss actual foreign places. This sort of tourist would probably better be described by the British term ‘holidaymaker’ — someone looking for a good time and some sunshine before going back to their dreary jobs, as opposed to wanting to absorb culture, history and ambiance.
But AirBnB would *never* ‘stock’ any places at all. That would make them a hotel, you know, where vacancies cost them. Their business model is to let other people do all the stocking as well as soaking up the costs of vacancies, ongoing maintenance, adverse regulation, tenants who trash the place and any other downside risk that may be involved.
Ditto! Had the misfortune last year of traveling with some colleagues to South Carolina. We managed to score some cheap hotel rooms in downtown Charleston. They were determined to spend most the time getting wasted at bars while one of the most beautiful cities in America waited outside. Amazed how most people really don’t care about the history or beauty of a great city. They just want to party. I was lucky and there were several foggy nights which made lazy midnight strolls all the more charming. What a magical city.
The last time we were in Grenada some wealthy Russian’s yacht–reputed to be the world’s biggest–anchored in the harbor; it dwarfed the city. Was around for a week and you would see it meandering offshore, another island unto itself, as it plied local waters. Locals joked that the oilygarch just might buy the place, solve everyone’s problems. He was probably buying a Grenadian passport, which Chinese and Russians are said to be scooping for future security purposes.
I suspect AirBNB won’t get very far trying to use EU law in their favour. I don’t know the details of the complaint to the EU, but I suspect it relates to cities trying to use regulations to crack down on the platform, as opposed to the property owners. It may be that they are overstepping the law in doing this, but there are many ways to tackle the problem. Here in Ireland AirBnB is struggling because a variety of regulatory tweaks have meant that renters are mostly liable for tax, and a number of low level legal decisions have ensured that the use of properties for short term holiday lettings has been declared a separate zoning use class, hence the owners need permission to do it (and this is rarely forthcoming unless the property has been purpose built for letting).
My own apartment building management has thankfully banned it – its within our lease that we can forbid short term letting even on freehold apartments. Numerous other buildings are doing likewise in my area – its just too much of a security hassle to have people wandering around the building so almost all apartment management companies that I know of have limited or banned AirBnB use. I know several landlords who have reverted from short to medium and long term letting, just because of the hassle factor.
That said, while there is a backlash against tourists in some areas, its by no means universal. AirBnB is very popular because it works – its a cheap way for people to travel, and a great way to avoid rip-off hotel prices at peak period. And a lot of regular people see it as a way of boosting their income, by renting out a spare room or attic. If AirBnB was sensible, they’d self-regulate to mitigate the worst impacts, but it seems they are so arrogant they are their own worse enemies.
Although it is rigth to say there is no universal backlash against AirBnb there is a strong argument and anger about sky-high rents in large municipalites partly driven by AirBnb and the like. The convenience thing migth be good for visitors and owners of multiple units but municipalities, tenants and home-seekers are increasingly worried.
I agree, there is little obvious help to be gained from whining to the EU. A lot of municipalities have broad latitude under very stringent and well enforced environmental and sustainability protections which are strongest of all available under EU rules. Venice used these successfully.
And the Commission is commendably rigorous in enforcement of environmental protection, even huge and normally unquestioningly supported industries have felt the wrath of the Commission where environmental protection directives have been ignored under spurious “business” or “safety” nonsensical challenges.
So if the municipal authorities use environmental damage — and there’s no shortage of good evidence that tourism has big environmental impacts especially in water stressed or air quality degraded cities.
I’ll bet the EU comes down on AirBnB like a ton of bricks. AirBnB is making the same mistake that’s afflicted U.K. business in dealing with the EU — huffing and puffing, whining about things it turns out to be on shaky ground over, then getting lawyered up when their feeble arguments don’t land on anything other than deaf ears with EU policy makers. It is, as U.K. businesses have found (here is a case study in how whinging British businesses simply didn’t understand how the EU works) counterproductive. Special pleading gets you nowhere. You need to build cross business and cross border support, which I doubt has even occurred to AirBnB.
I think it wouldn’t be wise for the Comission to confront municipalities on this issue. Moreover when populisms are on the rise, and taking in account that those have a large share of population. Also, the Comission, powerful as it is, is not competent on municipal issues. In addition I believe the ECJ has no jurisdiction on municipal issues, which have not been transferred to the EU by any agreement.
What part of airbnb being a rent clipping app that is corrosive to local community is confusing.
Yep, no part. Let’s add that while municipal authorities are democratically chosen, the Comission is fingercratically selected. Should they choose to confront it would be crystal clear what kind of interests are those institutions defending.
Agreed.
What a delicious term, Ignacio. I am stealing it, thank you very much!
While I have plenty of issues with AirBNB in terms of tax and local regulations, I find it very hard to blame them for a housing crisis that has been mismanaged in most of the world, because markets. And having used AirBNB in Paris and Barcelona, one as a complete unit and one as a share, for a family group that wanted to self cater, I found the service very convenient. There was no obvious alternative available when we did not want to stay in hotel type accommodation, and while mindful of price it was not the driving consideration.
The issue for cities like Paris and Barcelona is how to make them work for their citizens and tourists. Blaming AirBNB is not the solution.
Airbnb moved in everywhere, flouting the law, because disruption. They disregarded zoning and didn’t even bother to check in many cases that the person listing a rental was actually the owner of the property.
They have been operating illegally all over the world.
They are entirely to blame.
I have loved renting flats, including Airbnb, while travelling but can no longer do so in good conscience unless it is a) a spare room or b) someone’s primary residence or c) it is a high-vacancy rental market (very few of those).
AirBnb unequivocally negatively impacts long-term affordable rental stock and in very substantive ways. And if you read the linked article above, the business is so lucrative organized crime is moving in.
Until it was outlawed, in Seattle the wealthy were buying apartment buildings and putting every single unit up on air bnb. This in a city that has one of the highest rates of homelessness in the country.
MEPs are wealthy enough to be proud users of AirBnB, I wouldn’t be surprised if a disproportionate amount of them and/or their family-members rent out using AirBnb. The money they make from being MEPs should be enough to have a good life and a good retirement but they strike me as people who’d not shy away from making some extra money…..
Thanks for highlighting that the mantra of mass tourism protagonists, job creation, is itself “riddled with caveats”. In my city of Cape Town, where overseas surplus savings (largely European) are being parked in local real estate at unprecedented levels, large swathes of rental stock has shifted to air bnb with devastating effects for locals. The little that is left of long term rental stock comes at eye popping rents. Said european surplus capital has created an asset bubble that has squeezed all but the wealthiest locals out of the property market. While the water crisis was expected to at least have a deflationary effect on housing prices, not much has been noticed by way of easing of prices.
And yet, local city authorities have been unequivocal in their support of air bnb and its ilk, stating categorically that “the city of cape town will not place any obstacles on the path of disruptive innovation”, never mind that the ability of locals to have a decent roof over their heads is being disrupted out of existence. Try raising this with well-to-do progressives and the response you get is “it creates jobs” (with no mention of the caveats of course). At least European municipal officials, sobering up from years of intoxication by the Silicon Valley cool aid, are waking up to the cons. Maybe Cape Town will follow some day…
After many years of turning a blind eye to the substantive problem of Airbnb, this year both San Francisco and Vancouver took action to sharply curtail Airbnb.
Both cities are limiting Airbnb to primary residences and hosts must display a valid business licence from the city. This effectively bans “commercial hosts”, who have removed so much long-term rental stock. Also the fines are substantive, up to a $1,000 a day for even advertising.
Airbnb sued SF for curtailing its business but lost. The lawsuit is a clear indicator of Airbnb’s amorality, as SF has been in a housing crisis for many years.
Here in Tucson, if you want to operate your business from home in a residential neighborhood, you must have:
1. A city business license
2. A home occupation registration
For the record, I have both. Neither was hard to get.
I don’t see why my fellow Tucsonans, who are listing their places on AirBnB, can’t follow the same rules. They aren’t THAT onerous.
While I am opposed to licensing as a means of creating monopolies (hello NYC taxi medallions), AirBNB etc. need to be regulated to have an even playing field on three fronts:
1. Taxes – hotels, B&Bs etc. are a significant tax base for the local communities. Not collecting taxes is simply free-loading creating an unfair market advantage.
2. Code enforcement – regular rentals, hotels etc. need to meet minimum code standards for public safety etc. Not meeting code is usually a safety problem as well as an unfair market advantage.
3. Zoning – Cities often locate hotels and short-term rentals in commercial areas as part of land use planning. Random rental locations in AirBNB effectively negate zoning and planning.
So AirBNB is a useful service, but needs to be on an even playing field with the rest of the industry.
I think these examples illustrate the fundamental problems of air bnb- local authorities , especially in many European cities, have been culpably negligent in their response to airbnb, with the results eloquently described in the many posts above.
Why? Bueaucratic inertia, lack of vision, lack of understanding of the concept of consequences, and various manifestations of naked self -interest ( dare I say it, naked capitalism…..!) Or all of the above.
The obvious solution is a bit like Marijuana really – legalise, regulate and tax.
First law of capitalism, supply and demand; and the logical consequence of making something that people want illegal is the creation of a black market and another opportunity for organised crime.
And where do you think hotel prices would be without airbnb? Second law of capitalism, what the market will stand….
I fully agree with the corrosive effects of AirBnB on local housing markets. I get it, I really do. However, I hate hotels, even nice hotels. I hate the thin walls, the zero privacy coming and going, the generic everything, the small fridges and microwaves, having someone cleaning up after me, and how it completely separates you from the culture of a new place.
I recently stayed in a very very old hotel that had a new wing (I picked the old part), and while some of the issues were there, it didn’t grate on me as much. And the common areas were especially enjoyable to sit around in. The newer wing felt just like any Marriott.
If hotels were not so atrocious, AirBnB (and VRBO) wouldn’t be a thing.
I hate AirBnB but I, like you, also hate hotel rooms. I don’t want or need a maid barging into my room every day any more than I would at home, and I don’t want to be forced to eat at restaurants because there is no actual kitchen with an oven and a stove and a refrigerator in my room. Even a common kitchen like I’ve had at hostels is far better. So often, there are these local markets with incredible ingredients for sale, and I can’t eat any because I have no way to prepare them into meals. And hotels just don’t care what I want, and never will.
Maybe AirBnB, Uber and other app reliant nefarious outfits should be taxed directly by each jurisdiction (Sales tax and property tax to begin with). That’ll put a quick end to them. I don’t see why their stock should be valued so high for being an intermediary (a rentier’s rentier).
This is where Amazon went several years ago for Amazon-sold products, they collect and remit taxes in every state and county. They are now competing based on their specific service and pricing, not because you can avoid sales tax. AirBnB, Uber etc. need to do the same.
Great idea – governments could use the funds to build some government-owned affordable housing. But it’s harder to implement than you might think depending on the state you’re in.
Our city is in the process of banning Airbnbs that are not owner-occupied and regulating the ones that are. I brought up the possibility of imposing a city lodging tax but found out it couldn’t be done. In our state, the state reserves the right to collect all lodging taxes for itself so it would be necessary to get the legislature to change some laws first and that isn’t easy to do. I’m sure they would all start screaming that we can’t raise taxes because ‘jawbz!’ and ‘economy!’, despite the fact that it is relatively wealthy tourists that are coming to our relatively poor state for vacations.
The Sharecropper Economy is a little too close to feudalism for these folks to forget.
Wish I had taken a picture of the “Tourism is terrorism” hand made signs I saw around the neighborhoods in Barcelona.
I have used Airbnb a few times and enjoyed the experience of meeting the home owner and staying in a real neighborhood. I think there is a place for Airbnb in most cities but with more stringent regulations. In my area Boulder, CO, some homeowners who have owned their homes for a long time are in a financial bind with rising property taxes, so Airbnb can be a good remedy for some. But there have been a lot of complaints about apartments rented and condos purchased for Airbnb. Stricter regulations and taxes have been enacted but I think probably even further tightening is justified, especially because of the very tight and expensive rental market in the Boulder/Denver area.
Stricter rules might cause Airbnb prices to rise, but most Airbnb rentals would still be cheaper, nicer, more pleasant, than the majority of hotels. I, too, really dislike motels/hotels. The traditional bed and breakfast never caught on in the USA and Airbnb filled that void somewhat. Too bad the usual greed and stupidity is ruining a good thing.
That said, I prefer to use VRBO which has more reasonable cancellation policies, especially for long term rental.
I used AirBnB only once back in 2013. My host did not want to give me a washcloth. When calling AirBnB I was told that if it was not included in ad, my complain would not be valid reason for canceling. I asked to cancel as of that day. They said I had to pay for two additional days even if I did not stay. There were other issues that were not stated in their ad.
What is VRBO’s cancellation policy?
Can we please not use the term “sharing economy ” when talking about Airbnb or Uber? It’s marketing BS. Sharing is NOT a financial transaction.
I so agree! When I first heard the concept, I thought, what a cool way to share a commute and gas expenses (regarding Uber), when it really is just an app-based taxi service.
I have seen plenty of people on AirBnB offering use of 1 bedroom in their house (where they currently reside) or couch surfing. Those seem legitimately like sharing (sub-letting) to me. Here is a whole apartment/house/townhouse is something else entirely.
When you rent with AirBnB a house during owner’s holidays it is also sharing. I’ve used this service three times and only once this was the case.
An unaddressed problem with AirBnB is that in markets where AirBnB is marketed to home buyers as way for them to pay their mortgage, the price of homes will rise to take the income from AirBnB into account. What starts out as an optional way to cover part of the mortgage will eventually become an unavoidable way to cover the larger mortgage. In the end, the money winds up with the banks.
In Rhode Island, the state where I live, Airbnb pays the same taxes as the hotels.