The Bad Behind AirBnb

Anyone who has travelled anywhere has likely heard someone recommend AirBnb. The site has taken the tourism and hospitality industry by storm with 150 million users as of March 2017.

 

AirBnb has grown fast, it’s an incredible company that is a must for any traveller. It’s innovative, different, and expanding so fast, but there aren’t many regulations around AirBnb.  

 

I stayed in an AirBnb in Split, Croatia. Every hostel in the city was between 20-30$, and an Airbnb was 35$ for a complete apartment. It was a five-minute walk from the old town and beach. My friend and I split the cost so it ended up being about 18$ each. We also saved so much by not eating out because we were able to use the kitchen in the apartment to make meals. I’d say, over the five days, we saved more than 120$ each from using Airbnb.

Any traveller could very well be missing a good deal by not checking AirBnb.

I have used AirBnb and I will again in the future. However, I still believe AirBnb has some flaws, especially in their policies with municipal governments.

The site has become so popular that it’s impacting the sustainability and industries in cities and countries.

 

Imagine you have an apartment in a perfect location. You could post it on Airbnb, and earn money off the property every single night you’re away. Aside from checking off AirBnb’s host checklist (property must have locks, fire extinguisher, etc), all you have to do to get set up is create an account and property page. It can be easy to see how someone could foil this formula.

 

Landlords take advantage of this and technically can create their own hotel. It’s not a licensed business and it does not have to abide by hotel regulations. Technically, it’s just a bunch of rooms that they happen to own and rent on AirBnb. But it’s essentially a mini hotel business inside of an apartment building, sliding past legalities.

 

There are two main issues that make governments and local residents hesitant about welcoming AirBnb to their city. The first is that they do not pay the same taxes as hotels are required to pay. However, it is necessary to note that this issue does not apply to every place AirBnb operates in as it depends on local tax law. The second issue is that properties on Airbnb can inflate local housing crises.

 

With fewer places available for homeowners, the demand increases beyond what is sustainable and accurate for the population. This bubble of low supply and high demand is not solely AirBnb’s fault, but AirBnb is certainly one of the factors influencing it.

 

Toronto has adopted a rule called one house, one host where only one person can own and rent an Airbnb property and they can only own one, preventing the creation of mini Airbnb hotels. The city also placed fees on Airbnbs so that they would more adequately mirror hotel’s taxes.

 

AirBnbs in London make an estimated three times more than traditional rental properties. This has caused London to put in place a 90 day maximum on short lets but the regulation is said to be ineffective and unenforced. It’s also become an increasing concern in New York City and Barcelona after the AirBnb properties were seen to drive up rent and reduce local housing available.

 

Examining and possibly increasing legislation around AirBnb is not about limiting the freedom of homeowners to make extra money. It’s more about ensuring this is not overhauling the already unstable housing situation in cities and undercutting basic tax legislation that applies to other housing companies.

 

In a recent agreement with Québec City, Airbnb has given them the remit of the taxes. The 3.5% of taxes from Airbnb will now go to the government- as is standard for hotels. This 3.5% would’ve been 3.7 million in 2016.

Airbnb can most certainly afford to pay the taxes like they do in Québec. That 3.7 million from 2016 is not much for AirBnb, with their worth estimated at 30 billion USD. However, the agreement is also symbolic.

Airbnb and municipal governments have never been so cooperative. It’s an ability for Airbnb to show that they are capable of working within the government and law.

With the growing amount of online services like Airbnb, uber, and Skip the Dishes, it can seem that the business world is moving faster than the government policy. It will continue to grow and flourish so companies and governments share the responsibility of  ensuring this growth does not endanger the sustainability of communities or operate without legislative responsibility.

 

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