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The thorny issue of short-term rentals

On the occasion of the report published by the World Travel Tourism & Council in partnership with Airbnb, Hospitality ON takes a look at the consequences of the development of private rental on the tourism landscape and the balance of its destinations' ecosystems.

Airbnb remains in the sights of many local authorities who are acting to preserve the diversity of the economic network in their territories. After Paris, Amsterdam, Barcelona and London, others are going on the offensive to limit the development of the private rental supply.

It should be remembered, however, that the success of private rental is due, in some markets, to the lack of supply of commercial accommodation. There is still room to develop hotel properties in  Europe.

Some French territories, as shown in the map below drawn up by MKG Consulting, still lack the presence of the chain hotel industry, which has been driving growth in the number of properties for the last four decades.

Source MKG Consulting
Source MKG Consulting

 

A report published by Similarweb indicates that Airbnb happily outpaced its competitors in visitor growth between spring 2020 and spring 2022 as tourism activity picks up. The conversion rate of visits is also increasing.

Many French destinations are pushing for labels such as Gîtes de France, which offer a precise framework and operating standards to control the quality of the tourist accommodation supply on their territory.

In January 2020, the newspaper El País devoted an article to the village of Deiá in Majorca, which had more tourist accommodation than inhabitants. The village, one of the most visited on the island, had 617 residents for 1,126 tourist beds. This is a problematic situation because the destination's infrastructure cannot absorb such a population delta between the high and low seasons, creating a lack of water resources in particular. The municipality is trying to turn the situation around by offering tax reductions to owners who rent out their accommodation for a long period at a reasonable rate and by supporting the reception of students or young workers in order to anticipate the transformation of Deiá into a ghost village outside the high season.

Actions implemented by the local authorities

An attractive destination means a need for accommodation. Naturally, the market is structured to absorb accommodation needs. As nature abhors a vacuum, an ever-increasing number of tourist destinations are taking action to regulate the development of private rental.

The city of Colmar decided to act in February 2022 to curb the supply of short temm rentals, which was present in 10% of the accommodation in the city centre. Fearing that a negative dynamic would take hold in the town, favouring tourist accommodation and pushing year-round residents out of the area, the town council unanimously adopted a text regulating this supply. Relying on the work already carried out by Strasbourg, Colmar thus obliged the creation of a so-called common law accommodation for any change of use of a secondary residence into a furnished tourist accommodation. A tolerance of one accommodation per individual is applied. It is also stipulated that the number of units dedicated to the reception of tourists must not exceed 15% of a building. Offenders are liable to a fine of up to €50,000.

The municipality of Saint-Malo has put in place quota systems to maintain a balanced neighbourhood life.

The Peloponnese Peninsula Tourism Organisation in Greece was also lobbying its government in February 2022 for restrictive measures. In particular, the Peloponnese Tourism Organization (PTO) called for a legal framework that would allow STR to be brought under the tax radar in the same way as other tourist accommodation.

The Greek Tourism Confederation (SETE) also called on the government to define a framework. This representative organisation of tourism professionals is asking for a framework that will allow for "fair play" in the competitiveness of tourism accommodation.

In Lyon, the compensation of m² between short term rental and rental accommodation has applied since April 2022 to the smallest m² in the city centre. Until then, this compensation only applied to accommodation exceeding 60m².

The local authorities of the Atlantic coast are on the offensive in order to preserve the mix of their territories. Thus, in 2021 and 2022, several  have taken measures to regulate rental accommodation between individuals in their municipalities.

The community of communes on the island of Oleron has taken legal action against Airbnb, accusing the platform of not respecting the law on the payment of tourist tax. A lack of declaration in 2020 and erroneous data in 2021 triggered the community's complaint. In May 2022, the case took a new twist, since if Airbnb paid the €468,000 claimed by the local authority, the latter announced that it would take the matter to court.

In Sables-d'Olonne, quotas have also been put in place, prohibiting the creation of new tourist rentals in certain areas. The historical presence of a large number of second homes, particularly in certain districts, crystallises the problem. The model set up by the municipality is similar to the one established in Saint-Malo.

La Rochelle will also be stepping up its efforts in September 2022 through a reinforced system. The municipality is in fact facing a shortage of student accommodation. The town will thus propose a virtuous approach allowing owners who rent their accommodation to students for 9 months to rent them on tourist rental platforms for the rest of the year. The municipality also plans to set up a compensation scheme for square metres, as in the municipalities of Lyon, Paris and Colmar.

These are sometimes difficult battles for communities that are more or less equipped and that are faced with a company which recently went public and which is firmly determined to defend its economic model and its turnover. Behind each action, there are also more and more owners who are making their voices heard.

Forced backtracking

The Generalitat de Catalunya has seen the measure that forced the platform to remove 14,000 rental ads from sale, cancelled. The Tribunal Supremo ruled in favour of Airbnb, against a measure that had been running since 2015. It stipulated that owners wishing to place a rental advert online had to be registered with the Catalan tourism register. The rejected and the professionals of the sector saw in this sentence a state of affairs that will disadvantage tourism professionals working within the legal framework of the territory. More recently, in June, the Tribunal Superior de Justicia de Cataluña annulled a decree of the Generalitat issued in June 2020 stating that the process of consultation of stakeholders had not been respected. A struggle that revives the status of the individual plaintiff owners in the case. The latter claim to be at a disadvantage compared to the professionals of short term rental.

At the beginning of March 2022, the Agglomeration Community of the Basque Country also took action. The central idea was to force any owner wishing to rent on Airbnb to provide an equivalent surface area for long-term accommodation. This measure, which is already in force in Bordeaux, Lyon, Nice and Paris, was to be applied to the municipalities where the situation is assessed as being the most tense, i.e. 24 municipalities in the agglomeration. However, the Administrative Court of Pau suspended the regulation at the beginning of June, arguing that there was a "serious doubt" about the "principle of proportionality" of this deliberation.

Finally, Paris, one of the spearheads of the battle against private rentals, has suffered a setback in the face of landlords wishing to evade the regulatory arsenal put in place by the city. Thus, an administrative loophole could allow owners to circumvent the constraints by claiming a missing mention on the administrative documents of their property, which must mention the function of residential premises before 1 January 1970.

An administrative and legal maze in a sector where everything has been built in less than 15 years, weakens attempts to maintain the balance of local ecosystems. However, as indicated in the introductory section, the problems are strongly rooted in the history of tourism development in these territories. Tourism provides an economic activity which, for certain destinations, allows life to be maintained on the spot while increasing the price of land, pushing the inhabitants to the periphery.

How can we turn this vicious circle into a virtuous one? Many territories are wondering, private rental or not, and few manage to find viable and sustainable solutions.

Operations of seduction

The World Travel Tourism & Council (WTTC) has published a report in July 2022 listing good practices for dealing with short-term rentals. Recalling the vital role of the tourism economy, particularly in emerging countries, the WTTC underlines that the advent of private rental has accelerated tourism development and increased the indirect economic benefits linked to the presence of tourists in the territories. The guide is designed for governments to help them put in place legislation and regulations adapted to this type of accommodation. The WTTC notes in the introduction to its document that the report was developed with the support of Airbnb. It highlights the use of digital technology to track owners, data sharing, taxation and the American giant's investment in local communities.

An operation that centralises all the efforts made by Airbnb to change its image with elected officials, local authorities and even professionals in the tourism sector. Thus, in partnership with the Bienvenue à la Ferme (Welcome to the Farm) French network and MiiMOSA. The American company has launched a financing programme funded by Airbnb to set up facilities on farms. This is a positive way of winning the sympathy of elected representatives in rural areas by helping to maintain the vitality of these areas.

Airbnb has announced that it has contributed $1 billion in taxes in the United States and Canada. This justifies its contribution to the economic fabric of tourist destinations.

The group is also relaunching its system for banning parties in rented accommodation, which was launched in August 2020. Initially temporary, the restrictions are now permanent.

These are all signals sent by the platform to legitimise its economic contribution and demonstrate its desire to have a positive impact on the territories where the firm develops markets.

A seam that attracts new entrepreneurs

The American firm launched in 2007 in response to the crying lack of housing at a trade fair, has been followed by others. Its concept of "design for trust", which allows mental barriers to be broken down and encourages the welcoming of foreigners, has opened the way to many little brothers and sisters who are developing their own concept of home hospitality.

The platform is showing iron health as it emerges from the Covid 19 pandemic announcing an 80% increase in turnover compared to the first quarter of 2019.

Entrepreneurs intend to conquer this market in their own way. The recent acquisition of Altido by Dove Vivo to create a platform capable of linking co-living and short-term rentals is a case in point.

In France, entrepreneur Magali Boisseau-Becerril relaunched Bedycasa in March 2022 using crowdfunding. A second version is intended to be more anchored in sustainable development.

Blueground is also strengthening its Blueground for business supply in order to meet growing demand. They announced that they wanted to reach 40,000 homes by 2025. The company, which is present in 10 countries, will also set foot in Asia in 2022.

In the fight "against" Airbnb, which crystallises many grievances as the precursor of the model, there is also an often ambivalent relationship between locals and tourists. The peaks in occupancy lead to friction between the daily lives of locals and tourists who come to relax and change their surroundings without necessarily possessing the codes of the destination where they are staying.

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