Special Report: As the sharing economy grows, so do calls for its regulation

Special Report: As the sharing economy grows, so do calls for its regulation

UNWTO New Business Models in Tourism Seminar: Demands to enforce regulation of the sharing economy sector are growing, Ian Taylor reports from Lithuania

Enforcing the rules is key to ensure fair competition

The enforcement of existing regulations on ‘sharing economy’ businesses is key to ensuring fairness between new platforms and traditional names in travel and hospitality.

But enforcement is the main problem, according to Jos Vranken, managing director of Netherlands tourism marketing body the NBTC, which has witnessed the explosive growth of accommodation site Airbnb in Amsterdam.

Vranken told a UN World Tourism Organization (UNWTO) seminar on New Business Models in Tourism that Amsterdam had been among the first cities to regulate Airbnb and levy a 5% tax on its rentals.

He said: “Amsterdam has 700,000 inhabitants yet we have world appeal and exponential growth in tourism, with increasing demand for accommodation, so Airbnb has taken off hugely.”

The city authorities had responded by imposing rules that Airbnb ‘hosts’ may rent out only primary homes, not secondary or holiday homes, and may do so for a maximum 60 days a year, otherwise they are classed as B&Bs.

Vranken said: “[We have] the 60-night rule, a maximum four people per booking and the 5% tax. It is a city tax on tourists in hotels so it is also on Airbnb.”

But he told the seminar: “The real question is how to enforce this. About a quarter of all listings on Airbnb in Amsterdam are multiple listings by real estate firms. When they are told they can only market for 60 days they don’t care, because there is no enforcement.

“Companies like Airbnb and the municipal authorities move at different speeds. Airbnb moves fast and governments don’t know how to proceed.

“It requires enforcement, [but] there is a real reluctance to enforce regulations. Municipal authorities don’t have the resources.”

Vranken suggested: “It is a potential killer of the model.”

UNWTO deputy secretary general Marcio Favilla suggested the ‘sharing economy’ term was misleading, saying: “The peer-to-peer economy is in most cases economic activity – it [involves] economic transactions at a profit.”

Favilla said: “The way forward is to review the rules, adjust them if needed and guarantee enforcement.

“We have to see fair competition. We have to maintain a level playing field on quality, on consumer protection and on labour issues.”

Non-regulation of sites like Airbnb ‘not acceptable’

Hoteliers want consumer protection and other regulations extended to hosts on accommodation platforms such as Airbnb.

Christian de Barrin, chief executive of Hotrec, the European hotel and restaurant association, told a UNWTO seminar on new business models: “We welcome the so‑called sharing economy. It is a great opportunity, but it has to be addressed responsibly.

“At the moment there are two economies – one regulated and one not regulated.”

De Barrin insisted: “We don’t ask short-term rentals to comply with the number of regulations that hotels have to comply with, but there are important matters of consumer protection.

“This needs to be addressed as a question of fair competition. Non-regulation should not be acceptable.

“We are speaking about economic activities. The growth in holiday lets, of offering tourist accommodation in home apartments, is explosive. It has reached huge proportions. It should be exploited in a fair and transparent manner.

“The characteristic [of the sector] is the offer of accommodation and food in exchange for money. That is the same as the traditional hospitality sector. The regulated and the unregulated economy are basically providing the same service. It is not a level playing field.

“There are tax issues, there are labour issues. There should be compliance with requirements to check the identity of guests and to register their presence. Platforms should not display offers on sites that are illegal. When it comes to consumer protection, the same rules should apply. There is a need to apply the existing rules.”

De Barrin dismissed the idea of levelling the field by deregulating the traditional hotel sector, saying: “What would deregulation of the traditional sector mean for the consumer? You can’t make businesses without any regulation.”

Airbnb public policy manager Sofia Gkiousou said: “Airbnb acts as a safe space for a person to share their home with a guest.” She acknowledged: “There are hotels on Airbnb.” But she suggested: “80% of hosts share homes they are living in.”

User review websites play down impact of fake content

Consumers have to rely on user reviews to highlight any problems with peer-to-peer accommodation at present. But TripAdvisor industry relations director Helena Egan dismissed a suggestion that fake reviews called such content into question.

Egan said: “If our content wasn’t reliable we would not survive. We have 300 people working 24/7 and nothing goes live on our site without being checked.

“Our content integrity is amazing. We have hundreds of filters. We have call centres where [hotel] owners can talk to people.

“Also there is the power of the community. If you see something you think shouldn’t be there you can highlight it.” She argued: “The little problem we get [with fake reviews] comes from the industry.”

RJ Friedlander, chief executive of hotel reputation-management and analytics firm ReviewPro, agreed saying: “The growth in volume and influence of online reviews is much more on the pulse of what is happening [than regulation].

“The volume of reviews is staggering. We process tens of millions of reviews a month. Of course, there are fake reviews. You can’t check every one. But the volume means it really doesn’t matter if there is a fake review.

“A city hotel with high occupancy could be generating 200 reviews a month. One or two fake reviews are not impacting the integrity of the system. Unless you’re in a very small city where competitors have little review volume, it is really not an issue in hotels.”

Friedlander added: “Health and safety issues and basic protections for the citizen need to be covered in a standardised way, but a large part of this is moderated by users and their feedback. Obviously there are things that have to be regulated. If there was an Uber for doctors this would never work.”

Rifai: We need to establish some standards

Travel businesses and regulators ignore peer-to-peer platforms at their peril, according to UNWTO secretary general Taleb Rifai.

He told the UNWTO seminar: “The business-as-usual scenario is gone, but we are still operating businesses in many traditional ways. We need to be up to date with technology. We need to understand the power of platforms. They can’t be resisted.”

But he added: “Without fairness there is no sustainability.

“We need to establish some standards. We need a sense of responsibility on safety.”

Rifai said it was a priority for “governments to take charge [and] to rethink regulations on traditional providers”.

Chema Gonzalez, chief strategy and business development officer at accommodation platform BeMate.com, agreed. He said: “If you open a hotel you need to comply with more than 400 rules. If you open an apartment, you have to comply with none.

“We are not saying apartments should have to comply with the same regulations as hotels. However, let’s be fair and have some regulations on the apartment sector.”


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