Category Archives: International Politics

Airbnb Part II: The Dangers of Over-Regulation

Negotiating for fair regulatory oversight has long been a battle for globally-successful businesses. Since catapulting onto the international stage, home-sharing platform Airbnb has faced harsh – even hostile – regulatory pushback from governing bodies worldwide. An organization known for its good nature and cooperative spirit, Airbnb makes it a point to respond to each restrictive measure with a humble call for reconsideration. A couple months ago in Toronto, for example, legislators slammed the platform with startling regulations including but not limited to: capping home rentals to 180 days per year, limiting short-term rentals to an owner’s principal residence, and forbidding the listing of secondary suites as short-term rentals. In response, Airbnb sent a letter to ask the Toronto city council to rethink its position on the matter, pointing out therein that such regulations would severely limit the supplementary income that casual users could earn through the service and undercut the economic benefit the platform provides to the middle class. As of mid-December, Toronto legislators remain unmoved in their decision.

But, why? As I wrote on my last blog on the home-share giant, Airbnb operates at a significant benefit to tourism economies and host cities worldwide. In the Spanish city of Barcelona, the platform sparked over $175 million in economic activity and supported over 4,000 jobs in 2014 alone. Yet, Barcelona is one of Airbnb’s sternest hosts and harshest regulators. The city requires Airbnb users to apply for a special license before listing their property on the site – with the not-so-small catch that the city stopped granting these licenses in 2014. Currently, the only way to enter a new Airbnb listing would be to purchase an existing property with a license. The city even fined Airbnb 600,000 euros for what it perceived to be the company’s flouting of regulation via “offering unlicensed accommodation.” Now, this sounds overly restrictive (and it is!) but the city’s rules come from a place of care. Leaders in and beyond Barcelona want to prevent their homes from turning into Venice-esque theme parks and further preserve in-city housing for long-term residents.

This seems reasonable at first glance; however, I would argue that these fears overlook some important details about the way Airbnb chooses to do business. Airbnb is first and foremost a home-sharing platform – an estimated 81% of its hosts share the home they live in rather than keep an unoccupied property on reserve for short-term guests, and thus minimize the risk to local housing supplies. Secondly, Airbnb prides itself on offering an authentic look into a host city’s culture; the company has no interest in turning cities into been-there-done-that attractions! Thirdly, Airbnb is not digging in its heels. While the company has spoken out against increased regulation, it has done so with respect and thoughtfulness. This collaborative attitude can be summed up in comments made by Alex Dagg, manager of public policy for Airbnb’s Canadian branch in response to Toronto’s increased regulations: “What we’ve tried to do is say to the federal government, we’re here, we’re happy to engage, we’re happy to have conversation with you.” Domestically and internationally, Airbnb faces regulations which assume it to be a voracious corporate power or a disruptive interloper in the local landscape – but it isn’t. Airbnb doesn’t need more or stricter regulations, it needs a place at the table! Airbnb and its host cities stand to benefit from increased collaboration and conversation, but those benefits can only come to pass if we stop over-regulating and begin establishing proper communication channels.

The Rise of Airbnb in Europe

Airbnb co-founders Brian Chesky and Joe Gebbia have come a long way from renting out airbeds on the floor of their San Francisco apartment and hawking cereal boxes to their guests to make ends meet. With millions of apartments listed worldwide, the company’s current value stands at $31 billion, positioning it as the second-most profitable startup next to the ride-hail giant Uber. In March, financial papers reported that Airbnb’s Q3 numbers leapt a full 50% since the same time the previous year. The online service’s major successes may be due in part to its branding – Airbnb sets itself apart from other hospitality services by marketing itself as a waymaker for experience, rather than as a mere booking service. With Airbnb, the service explains, visitors can step beyond the typically packaged tourist experience and live as a local. This pitch has brought them far in their stateside expansions and is demonstrating similar success in nations abroad.

 

However, financial gains haven’t been limited to the company alone. In 2015, European hosts collectively made about $3 billion in revenue from their short-term rentals. Studies conducted by the platform’s research group further found that Airbnb guests tend to stay twice as long and spend twice as much locally than those who use traditional hotel services, with a full 42% of guest spending taking place in host neighborhoods. Analysts with the site postulate that this high guest engagement is due to Airbnb’s mission to facilitate authentic experiences; guests want to explore, rather than follow a predetermined “tourist” itinerary. Thus, Airbnb has a considerable positive impact on both domestic and international economies; in my current home city of Barcelona, the platform estimates that it generated over $175 million in 2013 alone, and further supported approximately 4,000 jobs.

 

That said, Airbnb is not content with the passive benefits it provides to city centers across the globe – it wants to do more. After releasing projections that the company will have boosted European economies by 340 billion euros by 2020, Airbnb announced its intent to invest 5 million euros in “ongoing investments for innovative, locally sourced projects” that vitalize authentic, local experiences. This is hardly a new move for the platform; to date, Airbnb has supported local projects in Barcelona, Berlin, Bologna, Dublin, Hamburg, Lisbon, Milan, and London. Airbnb has also committed itself to providing authentic travel experiences for its users by offering over 2,500 activities and tours across the world. Recently, the site even partnered with Vice Media to curate specialized tours in South Africa, Paris, New York, and Tokyo. While these planned travel experiences are offered as contest prizes to promote the partnership, they will soon be available for purchase to the general public.

 

Tourism has been forever changed by Airbnb’s entrance onto the international playing field, and we are all the better for it. Gone are the days of tourism homogenization; of grinding a city’s culture into digestible chunks for visitors. Today, travelers prize the authentic experiences that Airbnb facilitates. Airbnb has revolutionized tourism on a global scale – and we are all the better for it.