Recently several of the major municipalities around the world passed local regulation curtailing the way in which home stay and vacation rental can be offered in these locations. The regulations range between a full ban of the model to limitations on the amount of time allowed to be rented per annum. In some cases only allowed to be offered if it is the owners primary residence. The municipalities in question aim to improve the local housing markets in locations when residents have been forced away from the central business district. New York, Paris, London, Amsterdam, Barcelona, Berlin, Singapore and Las Vegas are a handful of examples where regulation and limitation are in place.
In your view what are the pros and cons of this for the following aspects of industry;
- AirBNB, VRBO and Vacation Rental / Home Stay in general
- The impact on hospitality and hoteling
- The impact on the traveller
- Your view on the housing challenges that are driving some of this approach
Do you see this development as having a positive or negative impact on destinations moving forward?
The question is fallacious, as it's set up in black-and-white terms. We're stuck in this loop of "traditional hospitality good, alternative hospitality bad." But, you know what? We have to stop thinking like that! Travelers certainly don't; for them, hospitality is hospitality, no fancy labels needed.Do vacation rentals speed up gentrification? Well, should we automatically boo gentrification? A study by those smart folks at AMI House Builders shows that gentrification ain't the villain we make it out to be. It's saved dying cities by bringing in business, jobs, jacked-up property values, better infrastructure, and less crime.Vacation rentals as the bad guys in the hospitality industry? Nah. They ARE hospitality. And clamping down with more rules isn't the answer to whatever problems we're seeing (IMHO: none). The world is changing, and it's high time we change too. There's plenty of room in this sea for all sorts of fish, hotels, and rentals alike. So, let's quit whining and deal with it. The times are a-changin'!
The impact of inventory loss within the travel and hospitality sector's key markets is a multifaceted issue with far-reaching consequences for both businesses and their clientele. These markets are often the lifeblood of demand, making any decline in resources a matter of significant concern. This situation simultaneously presents both a challenge and an opportunity.
On one hand, displaced demand seeks alternative accommodations, potentially revitalizing sectors like hotels. Travelers with specific needs, such as digital nomads, long-term stayers, or families, require amenities like ample space, functional workspaces, and essential facilities like kitchens and laundry services. Traditional hotels, in many instances, fall short in meeting these diverse demands, leaving a gap that alternative lodging options have traditionally filled.
However, navigating this transformation is not without its complexities. Striking a balance between serving the local housing market's needs and harnessing the economic benefits of tourism demands a delicate equilibrium. Tourism-generated revenue often sustains communities, and the emergence of new traveler segments has expanded the hospitality landscape.
Nevertheless, within these challenges lie opportunities. Innovative solutions addressing traveler displacement, foster collaboration between the industry and local authorities, and explore new destinations can not only ensure survival but also lead to thriving prospects for the sector.
I believe the vacation rental industry is to blame itself for these very restrictive regulations and all of its recent woes. For years it fought against licensing its hosts. Fought against including local hotel taxes in its pricing as if their customers didn"t need public infrastructure and safety, street lighting, etc. Allowed corporate ownership of thousands of units. Dragged their feet to prevent fake listings, disturbances of local noise regulations and huge parties. Not to mention cleaning fees of $150-$350 per stay!
In the same time, there is a global trend for housing shortages due to the pandemic and years of no or very limited new home construction, and the rise of the middle class and growing demand for housing (2.5 billion people were elevated from poverty and joined the middle class over the past 30 years), etc.
In my book, hoteliers are the ultimate winners from all of these new local regulations. All suite hotels, extended stay hotels, apart hotels and hotels offering an Airbnb-type of a product will flourish at the expense of vacation rentals.
Vacation rentals will continue to grow but at a more moderate pace.
I have personally encountered accommodation challenges in Amsterdam and can comment from a guest's point of view. Some of these destinations that are listed have severe accommodation challenges.
We used Air BNB as it was
- 50 % more economical than hotels
- Hotel rooms were not available for a 15-day stretch at the locations I needed
We stayed as a family, where it could be rated more of a four-star and not backpacker accommodation. They are, in fact, a more cost-efficient and convenient alternative for guests without compromising their comfort. As such, it also boosts tourism and the tourist economy.
While a good blend of local cultures and tourists is healthy, more tourist arrivals benefit the hospitality industry beyond just rooms, food and beverage and wellness services. I also believe some of these regulations would drive up room rates and become unaffordable, negatively impacting the industry.
As industry stakeholders, while safety, environmental and sustainable regulations are a must, reducing supply and increasing rates are not healthy for the industry's continuity.
Consumers demand home-sharing and vacation rentals for a reason. Hotels have tried improving their existing offerings. Some also entered the home-sharing market by introducing their version of vacation and short-term private residence rental services. To some extent, short-term residential rentals have pushed more innovations and changes for hotels as the incumbents try to defend their market share.
Travelers would like to see more competition. A variety of accommodations in the market usually offers more options to meet different needs and purposes of their trips. Competition could also mean lower prices for consumers.
I encourage local governments to also pay attention to the positive consequences of the booming tourism and lodging markets. When more people stay in the city center, either in hotels or residential rentals, local governments can collect more tourism taxes and have a lower unemployment rate. Besides adding more restrictions on short-term residential rentals, governments may find ways to collect more taxes to support additional affordable housing projects.
Lastly, we should also assess the potential of empty office and retail space in metropolitan areas. For example, can converting some vacant buildings into hotels, short-term residential rentals, or affordable housing facilities make sense to meet the demand?