A well-known example of the sharing economy is Airbnb. Airbnb is a company with its origins in San Francisco, California. It is a community-like platform, where people from all over the world can let their apartment/house.
Airbnb facilitates the use of underutilized resources. This means that people’s homes never have to be idle for a longer period of time. Also, Aribnb claims that their guests stay 2.1 times longer than typical visitors (Airbnb, 2017). They also spend 2.1 times more than typical visitors, and also spend it in the neighbourhood, rather than one central place. In this sense, Airbnb is argued to be good for the local economy. In addition, Airbnb helps homeowners and renters with a generally moderate to lower income, who rent out a part of their home and use the respective earnings in paying their living expenses.
However, the downside of the sharing economy has received less attention, in particular for Airbnb. Typically when we look at the larger economy. If we take the hotel industry, we can understand what the downside of a sharing economy means. Most cities charge taxes for tourists who stay in hotels (Baker, 2014). People who make use of Airbnb are not paying these taxes required under the law, which directly means that Airbnb allows them to evade regulations and taxes (Hello Czech Republic, 2017). In this sense, the company is facilitating rip-offs. Any national economy is highly benefited by the taxes from tourists received from the hotel industry. Some countries even depend on tourism, which makes this quite problematic for the macro economy.
A more social problem is that Airbnb also creates ghost cities, where people move out just to let their place for a profitable price (Hello Czech Republic, 2017). People fear that their beloved city will be destroyed and no one will actually live in the city anymore. In addition, neighbours often deal with nuisance, for which guests cannot really be addressed, which contrasts with hotels. When a house appears to be suitable for renting on Airbnb, the valuation of this real estate goes up for no reason, so it also becomes harder for people to buy a house in the city.
I believe stricter regulation is necessary and transparency on Airbnb’s side should be demanded in order to enforce the regulation.
Airbnb (2017). Airbnb’s positive economic impact in cities around the world. Retrieved October 08, 2017, from https://www.airbnb.com/economic-impact
Baker, D. (2014, May 27). Don’t Buy The Hype – Airbnb And Uber Are Terrible For The Economy. Retrieved October 08, 2017, from http://www.businessinsider.com/airbnb-and-uber-are-terrible-for-the-economy-2014-5?international=true&r=US&IR=T
Hello Czech Republic (2017) Prague’s central district warns of Airbnb ghost town scenario. Retrieved October 08, 2017, from http://www.czech.cz/en/Touristen/Prague%E2%80%99s-central-district-warns-of-Airbnb-ghost-to
I think the big majority of new developments in the field of digital business, like Airbnb, cause negative side-effects. You mention three of them; tax evasion, ghost cities and nuisance by renters. To start with the tax evasion, I think guests who rent a space have to pay tax, just like hotel guests. They generate garbage which has to be collected and recycled. The municipality cleans the streets and beaches which are visited by the tourists (Rijksoverheid, 2017). I think it shouldn’t be too hard for Airbnb to install a tax addition in compliance to the laws of the regarding country.
I think the ghost city problem could be reduced by setting a restriction on the number of Airbnb estates per city. In most cities this problem is still small but there are touristic cities, like Dubrovnik in Croatia where this limitation is necessary .
The last concern raised, about the nuisance, is serious I think. Imagine living next to an apartment that is constantly rented out to city trippers who are making the most of their short stay. I think Airbnb should block owners on the platform who’s renters cause many complaints, this will make home owners more responsible and stricter to their renters.
– https://www.rijksoverheid.nl/onderwerpen/gemeenten/vraag-en-antwoord/wat-is-toeristenbelasting-en-wanneer-moet-ik-dit-betalen
Interesting blog, thanks!
I think you have a good point with stating that there have to be stricter regulations. But there are already some great things happening to tackle these problems. To elaborate on that, in Londen and Amsterdam Airbnb has agreed to policing limits on the number of days per year a full unit can be let through its system. With this people can not just buy a house and rent it all the time without living there theirselves. I think, if more cities would adopt this regulation, this can solve a great part of ‘the ghost city’ problem. (Woolf, 2016)
Although this will not solve the problem you state about the taxes. In order to solve this problem, other regulations should be made as well.
Woolf, N. (2016) Airbnb regulation deal with London and Amsterdam marks dramatic policy shift [online] The guardian, https://www.theguardian.com/technology/2016/dec/03/airbnb-regulation-london-amsterdam-housing [accessed 14 October 2017]