The trend in its European markets is not Airbnb’s friend.
By Don Quijones, Spain, UK, & Mexico, editor 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 held across 14 Southern European cities, including Barcelona, Venice, Seville, Palma, Lisbon, Malta and Madrid, 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 ban on all tourist apartments last month.
A week later, the government of Valencia, a region that includes many popular coastal resorts, proposed a law that 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 lawsuit against 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 to the 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 to a 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 supposed to 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. By Don Quijones.