German Polizei
462 days ago
 

Are governments trying to kill the sharing economy?

NB: This is a viewpoint from Arnaud Bertrand, CEO at HouseTrip.

Until recently, travel companies in the ‘sharing economy’ have fallen below the radar when it comes to government regulation. These companies have enjoyed rapid growth, with legislators uninterested in coming up with any form of legal framework.

But this is all changing, as proven by the recent move by the city of New York to switch from a state of ‘don’t ask, don’t tell’ to one of prosecuting and fining hosts who rent out their homes to holidaymakers.

The New York law is just the tip of the iceberg, though, as other locations such as Berlin and Spain are also examining laws in the same vein.

In each market contemplating holiday rental bans, the reasons behind the proposed prohibitions differ.

Spain had a law on its books dating from the mid-90s that is being revised by an association of four Spanish regions who are compiling information to determine the future of holiday rentals in the country.

This move is mainly motivated by the need to make more landlords declare and pay tax on income – but the hotel lobby is pressuring hard to go even further and make the practice of renting out one’s home almost impossible.

Vacation rentals in Berlin

Berlin differs from Spain in that local legislators blame the rapid rise in rental rates and property prices for local residents on the increase in holiday flats in the German capital.

In a city of over four million private dwellings where a mere 12,000 units are dedicated for holiday use, this view is shortsighted. The reality is that a booming economy has brought thousands of job seekers to Berlin and rents have naturally increased.

Official numbers state that there are 40’000 new Berliners every year; that is the real issue behind the increase in prices. However, in an election year, it’s much easier to blame problems on tourists who can’t vote rather than local government failings regarding home construction and infrastructure development.

And it’s not just holiday rentals. Uber, the fast-growing taxi service is another sharing economy startup facing its own array of legal challenges in the US.

Short-sighted government regulators?

Governments need to realize that the sharing economy is a rare opportunity for badly needed growth. To be fair, some do: For every New York that chooses to ignore the growth by banning it, there is an Amsterdam or a Paris that sees the value in sharing economy models and tries to establish sensible legislation.

Instead of forbidding an entire economy outright it defines its boundaries so as to ensure a form of growth that has a net positive impact overall.

At HouseTrip, we support efforts for clear and sensible “net positive” legislations.

When it comes to holiday rentals we think it sensible, in specific destinations with a pressurized real estate market, to put a cap on the amount of “dedicated holiday rentals” (properties for the sole use of travellers).

But we do not favour nor understand restrictions on the rental of primary and secondary residences to travellers. By definition primary and secondary residences are inhabited at least a few weeks a year by their owner so if they are forbidden for short-term renting, they wouldn’t go back on the long-term market. We therefore see no point at all make them stay empty when not inhabited by their owner.

Legal questions in our space are going to continue. The question will be around which regions choose to be progressive by searching for ways in which the sharing economy can operate effectively and which regions choose to kill an entire economy because they will not have taken the time to understand it or will have yielded to lobbies or vested interests.

 
 
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About the Writer :: Special Nodes

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  1. Steve

    This issue definitely hits home – as I’m on both sides, as the owner of a vacation rental site and a hotel.

    It took me 10 YEARS to get my hotel fully licensed. 10 YEARS. You don’t know to know what it’s cost!

    In the last year, I was fined 4,000 euro for having a handful of extra beds spread over 3 different rooms – sized about 1 meter less than the official size needed for the nr. of beds there were. We were also fined for not having the proper sign displaying where the exit was in case of fire.

    As a legal business, 10% of every cent is lost to VAT tax. 33% percent of anything left over after expenses (and only those with an acceptable fiscal receipt) is lost, and then anything distributed to me as the shareholder is taxed again.

    If it’s more expensive to stay in my hotel, where rates have remained around 80 euro a night since, well, the euro came into people’s hands, it should be pretty obvious why. Is this fair competition? Of course not. Do the laws suck? Of course they do. Should they be changed? Absolutely. But in the meantime, should they be respected? If the answer is no, then you’re slapping everyone in the face who has ever made any effort to do things the right way, and the signal you’re sending is that it pays to just to things illegally.

    I’m not part of a hotel cartel that’s complaining because my thick wallet is slightly less thick. I have 5 employees with families who depend on our business. There is no reason why I should lose guests to someone charging 1/2 my price to get a few extra bucks without feeling like they have to work at it or treat it like a real job.

    Folks, the playing field isn’t level. Airbnb, Housetrip, and anyone else who’s jumped on the bandwagon encourage casual, non-professional renting of one’s spare real estate. They do not encourage the long term, semi-professional creation of Bed and Breakfasts, guest rooms and vacation homes that still get people into cool, local neighborhoods at less than hotels (perhaps you, Housetrip, are partially excepted…). I know this because I too have a vacation rental site, since 2000 – and help people build businesses – real businesses, that participate in the real economy, as in the one that pays taxes. We do not help people illegally rent their space.

    If you tell me that owners should still pay their taxes and get local authorization, you’re really missing the appeal of airbnb in the first place. The site makes it possible to circumvent all that, for the first time. That’s why it’s successful! Take some of those millions to set up a legal department. Offer some pdfs of paperwork people need to take care of to be legal. Do something, anything, that shows that you really want to work with people who are legal, and I’ll sing a different tune. Because the rhetoric is really unconvincing when you get on the site and see the typical renter and what they’re in it for.

    Sharing is when you use something of someone else’s. When you pay for it, it’s called renting.

    Please can we stop glossing up this issue? Airbnb and the like are disrupting an industry that is what it is because it is forced, by nature of being publicly visible, to respect a law that your providers don’t need to. They don’t need to have a public presence because they have airbnb to rent them, more or less, without anyone having to know. If you take out this element, these sites will no longer be successful as they will lose huge amounts of inventory.

     
    • Juliana

      Dear Arnaud and all,

      This is the ordeal of a fully licensed vacation rental owner and Airbnb host:
      I find it very hard to collect occupancy tax from Airbnb guests – I have to explain to them what the tax is, that yes, it does apply to them, then collect it myself after they book through the site. What a pain. I had a guest who formally complained to Airbnb customer service that a host was doing some “shady stuff” like collecting tax. And the worst of all: the Airbnb rep email saying that I should build the tax into the rental rate. Yes, they are suggesting that! They want to score commission on tax???

      Airbnb sends hosts a 1099 yearly detailing all the rental income to the IRS. At least in the US, hosts are paying income tax on rents. Why is it so difficult to comply with occupancy tax? As a fan of the sharing economy, I feel sad that Airbnb shows such disdain for rules and regulations. It just throws a huge burden on the shoulders of the hosts who are complying with local laws.

      If you are basing your business model on a 10% discounted rate due to tax evasion, your business sucks. Amazon didn’t die after it was forced to collect sales tax, nor will you.

       
  2. Daniele Beccari (@danbec)

    With regards to the noisy guests problem:
    We are getting stuck into anectodal evidence, probably amplified by lobbies and blood smelling press.
    We can’t stop having highways for everyone, just because of a few road warriors.
    We can’t stop having an airline industry for everyone, even when there are risks of very sad crashes.

    With regards to the ethical responsibility from aggregators do to something: I think it’s up to their brand and editorial strategy to decide where to place the bar. Just as you have news sites that are more/less serious and credible, we’ll see rental sites curating more or less professional owners.

    As I mentioned previously, the only big news is that now these transactions are all traceable, so governments should be more than happy to have someone who’s done the job of bringing an underground industry to light.

     
    • John Pope

      Daniele,

      You’re right, noisy guests is anecdotal. My specific example came from a personal experience I’ve had in the past myself when renting an apartment in Vancouver; I can’t site any empirical evidence or research done on the issue – likely none has ever been done. Conversely, I’m pretty sure it’s impossible to cite anywhere that says, “it isn’t a problem” either.

      And, with respect to the highways and airlines analogy, I’d also agree we shouldn’t stop them altogether because there are accidents. However, both of those entities are HIGHLY regulated with many, many laws in place to protect those who drive and fly.

      We shouldn’t stop the sharing economy altogether, nor should we stop the private holiday rental industry, altogether.

      All I’m personally advocating for here is that there be regulations, laws and standard rules of governance to protect those people who prefer to use private, holiday rentals – just like the highway and airline industries – that’s it, that’s all I’m suggesting.

      I can assure you that that motivation isn’t influenced by any lobbyists or blood thirsty media outlets – my motivation comes from a sense of responsibility – to try and insure that every precaution is made to protect people from an infinite number of potential problems – not just noisy guests.

      As you will find out, we want to be apart of the industry ourselves, just a better version of it. If we have to regulate ourselves, putting us at a competitive dis-advantage, so be it. I’d rather make less money, with my head held high, knowing that we did everything we could to make our business as ethical, law-abiding and in the best interest of EVERYBODY involved, especially the guest/traveller.

      Here’s a reference to an unfortunate story that I read just a moment ago on another travel industry news site, about the death of a 6 and 7 year old brother and sister who died from carbon monoxide poisoning because a gas boiler malfunctioned, whilst their family was on holiday in Greece in 2006:

      http://www.travelmole.com/news_feature.php?c=setreg&region=2&m_id=s~T_s~b_rY!&w_id=9166&news_id=2007478

      And this unfortunate and very rare accident happened in a HIGHLY regulated industry, with professional maintenance people working at the resort, professional reps who were at the resort to inspect and personally vet the safety of the property, and working for one of the largest, and THE oldest travel brands in the world.

      If it can happen under those reasonably rigid conditions, surely you must concede that it could happen under conditions where the properties are not licensed hospitality venues, they don’t have dedicated maintenance staff to insure all equipment and appliances are kept in order and professionally trained staff working on behalf of the middleman / agent to make sure the property is living up to the standards of their multi-billion dollar brand.

      And finally, I’d absolutely agree with you that now that the industry has been brought into the light of day and is no longer operating underground, that that is a good thing – a very good thing – and can be the catalyst to make sure the industry is not put back into the dark because of some unforeseen and unfortunate accident like the one I just highlighted above.

      Because – forget the relatively small issues of noise, or lack of taxes being paid – if something like that happened at a private rental, and was booked through one of the big aggregators – AirBnB, HoemAway, CraigsList, FlipKey or even HouseTrip – it won’t be a blood thirsty media or professional lobby who will be the problem; it will be crowds of citizens up in arms carrying pitchforks and shouting at their politicians because something wasn’t done to regulate the industry in the first place.

      If that scenario ever happened, there wouldn’t be a private rental, sharing economy, or “whatever you want to call it” industry – the whole dam thing would be shut down, toute suite!

      And then, everybody loses.

       
      • Daniele Beccari (@danbec)

        Let’s not forget that the online P2P marketplaces have also introduced a new layer of self-regulation that wasn’t possible before, and – I think – much more effective than any un-enforceable regulation: reviews for guests to hosts AND viceversa.

        (It sounds normal to us in this forum but if you think about it, this is totally revolutionary for classic commerce.
        “The client walked into my bakery during peak hours and queued up without making a fuss. He was well dressed, and expressed his request for one baguette in clear terms. Money was paid in cash, and with a smile. Strongly recommended!” … )

        So overall I can only see improvements compared to the past, and I have no doubt further improvements will be found down the road.

         
  3. Timothy O'Neil-Dunne

    Dear All,

    Perhaps I am more optimistic than John. Because I believe that failure to do ANYTHING will doom the industry segment before it gets started. Thus there will be a legal limbo for YEARS.

    My suggestion to the industry segment is to do something and do it NOW. Or you will be having to provision in your business plans for a large liability. As I have noted before – I would love to write the risk register for AirBnB and others such as Housetrip. (Note to Accel, Balderton and Index – let me know if you need some assistance to write it for you!).

    As we have seen other segments of the “sharing” economy are failing spectacularly. Car sharing… one player got it right (ZipCar) AND they did things within the confines of the current regulatory framework. Then there is the somewhat strange idea in the parking garages of SFO. http://sanfrancisco.cbslocal.com/2013/06/04/sfo-car-sharing-startup-sued-over-violating-airport-rules/ .

    I hope Arnaud takes this to heart and produces something more concrete rather than just words

    Cheers

    Timothy

     
    • John Pope

      You’re very kind, Timothy.

      Insinuating that I am advocating for nothing to be done, is a similar “broken record” type accusation from a recent NDC related debate. But, not at all an accurate supposition.

      Because I’m not necessarily advocating for the EXACT same solution that you are, in all instances – although, I do remember recommending your earlier suggestion for a solution as “EXACTLY” the one I’d propose in the short-term lets vertical being discussed here – doesn’t mean I want any form of stagnation, by any stretch of the word.

      You continually make the same mistake on my stance of the NDC issue. It’s a rather lazy position to take, rather than debate me on the efficacy of individuals being in charge, and taking ownership, of their own personal data – via the VRM model.

      Truth be told, it would be at a personal financial loss if the private-short-term-rental market was shut down, or severely restricted – I’m choosing to advocate for the “High Road” that better takes into account the needs of “ALL” stakeholders involved – hosts, guests, distribution, AND the greater societal and economic good.

      I appreciate it’s easy to misinterpret my position; but rest assured, I’m a much wealthier man, and we’d be a significantly bigger business with a healthy, vibrant sharing economy operating legitimately throughout the world.

      We’re just going to attack the problem from the most ethical possible position.

      So there you have it, my bias is one the side of the greater good.

      Believe that, my honorable friend. :-D

       
    • Arnaud Bertrand

      Timothy, I have a feeling that you are speaking about a widely different industry than the one I write about. We are not doing business in an industry segment that is just getting started (“I believe that failure to do ANYTHING will doom the industry segment before it gets started”), we’re doing business in an industry that’s existed for ever. I grew up in the south of france: during my childhood my family was renting out part of our house to travellers in the summer. I was just reading a biography of Charles de Gaulle: he used to spend all his holiday in holiday rentals. Our “segment” was there even before airlines existed!

      What’s changed recently is that, thanks to some innovative new models like ours, holiday rentals have grown more popular. That is creating some tensions in specific places like Berlin or Spain; I am just advocating sensible legislations that ensure society gets the good things arising out of our popularity (economic growth, sustainable travel, etc.) and limit the bad.

      On “producing something more concrete rather than just words”, I am producing concretely happy guests every day and, as a bit of a cheeky reminder if you know your bible, it starts with “In the beginning was the Word” and then ” And the Word became flesh”. Words are at the origin of everything; they’re not “just words”.

       
      • Timothy O'Neil-Dunne

        Arnaud

        Thank you for this.

        We are speaking about the same industry. I own a property (and have had) for many years in France. So I am more than aware of the issues and restrictions of owning and renting holiday properties. Also I am more than familiar renting for short term stays in different locations. These are governed by laws and by liability and then by taxation. All of which have to be covered. The law is black and white. No Greys here.

        Holiday rentals and Short Stays in Cities have blurred. Thus the segment has to accommodate both types and mostly consumers don’t distinguish.

        When i started on a rather large international website Holiday rentals was one of the first 3rd party applications we wanted to put into the site. The best we could find in those days because companies like yours did not exist – was House Exchanges.

        I believe that you are still skirting the problem about legality and that is my point. Separately you are breaking several laws in different jurisdictions with each sale. For example are you fully registered for seller in travel laws?

        And we all know what happened when a certain couple strayed after the word became flesh.

        Thanks

        Timothy

         
        • Arnaud Bertrand

          Well done on the “couple”, very good one :-)

          Come on Timothy, you are a host yourself, and in France! You must know even better than me how many rentals there are there and that the overwhelming majority respect the law, like yourself! And surely you would find it stupid that a new law appears from one day to the other forbidding you to rent out your house in France? Then if so you completely agree to the substance of my article, no need for debate ;-)

           
  4. Arnaud Bertrand

    Thanks all about your comments on the article; it is good to see interest and reactions to this issue. Good to see also that my answer was eagerly awaited (ref to John’s comments) ;-)

    If I am to summarize your comments broadly, you make 2 high-level points: 1) that local legislations need to be respected and 2) that, when being defined, legislations need to take a vast array of concerns into account (i.e. unfair competition with hotels, disturbance of neighbours, etc.). Correct?

    On the first point, I couldn’t agree more. And that is the very reason why I wrote that article: hosts have to be legal and if the law is unreasonably restrictive there won’t be hosts anymore. That simple.

    On the second point, again, that is the very gist of my argument. Local legislators need to be sensible in their approach so the laws they come up with have a net positive impact. If a law satisfies hosts but alienates the majority of the local residents, that is not exactly what I call net positive. Similarly, if a law bans all forms of hosting, you’ve just killed an entire economy with little to show for it (of course the hotel lobby would be pretty happy).

    John asked me to define the outline of what a net positive legislation could be: this is very difficult to do because each market is different. NYC has a different set of problems with holiday rentals than the south of Spain. Some legislations like the Berlin one are pushed by the need to ensure enough supply for local residents; on the other end of the spectrum some ski resorts in Switzerland are speaking of legislations to force local owners to rent out their homes when unoccupied (a big problem locally referred to as the “cold bed problem” –> the vast majority of Swiss resorts’ homes are empty most of the time).

    So it is impossible to define a one-size-fits-all legislation; again my big point in the article is that it is senseless to just forbid an entire industry without looking at ways to keep the good and limit the bad. That’s it.

    Now I wanted to comment specifically on 2 points. The one around neighbourhood issues and the one around unfair competition to hotels. On neighbourhood issues, I have never understood this argument. I would actually argue that you’re better off having short-term tenants as neighbours than long-term: you don’t choose your neighbours and if you end up with a noisy and rude long-term neighbours you’re in much worse a situation than if they are short-term… I do not think that on average short-term neighbours make more noise or are ruder than long-term neighbours; they’re just people like you and me. On unfair competition to hotels: from your comments your argument seems to be that holiday rentals aren’t at a level playing field with hotels; they effectively have less constraining legislative conditions applied to their business, allowing them to charge more competitive rates. This might be the case in some specific regions but it is largely a myth: hosts have to pay tax like hotels, they have to ensure the safety of their guests like hotels, etc. Those who don’t abide with their local laws are illegal and this brings me back to my position stated above; that we do not condone illegal hosts. However it is true that holiday rentals are quite likely to remain cheaper than hotels. Why? Simply because less people are looking to make money in the value chain. The classic hotel chain organisation is one with hotel brands (looking to make big profit margins) who subcontract management companies (again, looking to make big profit margins) to run hotels owned by investors (who also want to make big profit margins). The classic holiday rental structure is you have an owner looking to make money to earn a living; that’s it. And that, having a more efficient structure which isn’t bloated by too many people looking to make big margins in the process, that my friends is fair competition.

    Lastly, a comment on our role and in particular a response to Timothy’s comments. Our role is to ensure that guests will get an awesome experience when they book through HouseTrip. That sounds simple enough but it’s actually extremely complicated. That implies doing quality control to make sure our properties are not scams and are as-described in their listing. That implies a big education work on hosts to make sure they have a guest-friendly behaviour. That implies having a large (more than 100 people) customer service team to be there for our guests if they need any help. And, believe me, it implies many many more things. Is our role to make sure that hosts pay their taxes, respect local zoning laws or god knows what? If it has no obvious impact on the guest experience, absolutely not. Checking that people pay their taxes and so on is governments’ role; not businesses’. We aren’t a government and if you expect businesses to take over governments’ role, I do not share your vision of society.

     
    • Timothy O'Neil-Dunne

      One comment then.

      Encouraging people to break the law can be termed to be conspiracy. The explicit expectation you have is that hosts on your service are “businesses”. I would argue from prima facie reading your texts on the site that most of them are not. Hiding behind caveat emptor may be easy – is it right? If you are doing quality control – have you educated the hosts on their legal responsibilities? What are you doing about that? I believe that the role of government is to protect the people. If you are convinced that the people do not need protecting either as consumers or as hosts and that the behaviour you are encouraging is 100% legal decent and honest – then you have nothing to fear do you?

      Thanks

      Timothy

       
      • Arnaud Bertrand

        Not how you transform “we do not condone illegal hosts” into the fact that we are encouraging people to break the law… We are concerned about the law being sensible and allowing hosts to stay in business because we do encourage hosts to respect the law.

         
    • John Pope

      Wonderful to hear from you, Arnaud.

      You’re a man after my own heart for standing up and being heard, rather than adopting the strategy by some of your counterparts at other leading brands – cough, cough, the typical arrogance and silence demonstrated by Chesky and Gebbia.

      If what you are saying, and guaranteeing, is that ALL of your properties are 100% legal, and all taxes and regulations are being met by your hosts, then I APPLAUD YOUR PRACTICES wholeheartedly. You are certainly the exception and not the rule in the industry, if what you say is in fact true.

      That characteristic alone should act as a unique competitive advantage for HouseTrip, compared to your less-than-law-abiding competitors.

      As you’ve just eloquently described, different locations have different problems, and should therefore have different solutions. With that being the case, why are you and your PR representative so vocally opposed by NYC, Berlin (and London’s?) efforts to solve their own unique problems, in the way that they see fit?

      Forgive my continued cynicism, but It’s seems pretty clear it’s because it doesn’t satisfy your specific commercial objectives and concerns.

      Surely, you have to eat your own dog food, on the issue of different solutions for different jurisdictions. It’s pretty hard to have it both ways.

      As far as your statement, “On neighbourhood issues, I have never understood this argument. I would actually argue that you’re better off having short-term tenants as neighbours than long-term…”

      That dog just doesn’t hunt – short-term guests are FAR more likely to be in celebratory or partying moods whilst they’re on holiday, than the feared “nasty neighbor” syndrome you cited. You can have the authorities step in, or have consistently noisy/problem neighbors evicted for not complying with local laws on a continual basis.

      Short-term tenants are here one day, gone the next.

      I’ve personally used the services of private short-term rentals/lets, and only when we arrived were we told that we had to be especially quiet, and not disturb the neighbors because the landlord/owner knew that she was breaking her apartment’s property regulations. It was a great apartment, much better than hotels for the same amount of money, but we were made to feel unwelcome simply because we knew we were part of an illicit scheme for the owner to make more money with short-term vs. long-term lets. We even had the neighbor knock on our door asking probing questions about who we were, and why we were there.
      And we were sincerely as quiet as field mice.

      And finally with respect to your comment towards Timothy:

      “Is our role to make sure that hosts pay their taxes, respect local zoning laws or god knows what? If it has no obvious impact on the guest experience, absolutely not.” Because it’s government’s role etc. etc. etc.

      That is an extremely foolish position to take – you would simply have to have the hosts provide you with all the required paper work, if you actually had a thorough vetting process, beyond making sure the images match the property. That is a cop-out and self-satisfying position, I’m sorry. Simply have the hosts send you a copy of all the health and safety, local zoning permits and some form of proof they’re legally allowed to let the property on a short-term basis.

      Most sellers of holiday services, specifically Tour Operators, are certainly liable for any issues that happen at poorly vetted properties – this has happened several times in the past few years, here in the UK, alone. If you are not taking similar precautions and processes, you are an accident waiting to happen.

      And, probably liable from a Fiduciary perspective to your shareholders, as well. Risky business, indeed.

      If the business model is to have longevity, and respect for all stakeholders concerned, it ALL has to be done above board. Otherwise, you’re just asking for trouble.

      Please don’t misunderstand my overall sentiment towards the “Sharing Economy” because I absolutely believe it’s a great thing – but only if it is done in FULL LIGHT OF DAY.

      I do genuinely wish you well, IF (BIG “IF”) you, and HouseTrip, are always acting with the best interests of EVERYBODY CONCERNED – I’m still not convinced that that is the case, though.

      You would be a unique exception to the rule of the general industry at large.

      Live long and prosper.

       
    • Bo Vibe

      Good to see a response actually addressing some concrete concerns. However, the claim that “you’re better off having short-term tenants as neighbours than long-term” I feel is rather dubious. In my experience (Barcelona) the co-existence of permanent residents and short-term tenants is not necessarily characterized by the exchange of e-mail addresses by visitors and residents on a rose petal covered floor when a stay is at an end. Even if the host is very professional educating guests on rules and regulations, conflicts may occur. And, if the host is not, cue complaints, negative campaigns and legal action. While the P2P model is different from the traditional holiday rental agency it is still your brand on the line if things turn sour. If guests have a negative experience, they are going to communicate that they have had a bad experience with you, not with “Michel in Paris.” And, if neighbours are unhappy; complaints, negative campaigns……etc.
      Later you refer to the “big education work” you at HouseTrip do with hosts, which is a claim I see as contrasting to the earlier one that residents are “better off” having short-term tenants as neighbours. If you think it is that simple, I worry that you are failing in an important step of the educational process with hosts!

       
  5. Timothy O'Neil-Dunne

    A gauntlet throw if ever I heard one.

    If I may suggest that Arnaud and Ryan actually lay out a proposal in public to deal with some if not all of these issues.

    The sharing economy is proven only to a point. The downside is that it has unintended consequences. Just ask the short term rental market in SF. One could argue that this is the free market system at work but I believe that if there is an unfair advantage to one player vs another then that form of disruption can be counterproductive with bad things happening.

    Let’s think how that could be accommodated.

    One of the first things would be for the sharing marketplace to self regulate. So could the “sharing economy” players propose a self form of regulation? So far their response has been to shift the blame onto the hosts. The redraw of the contracts (frantic activity in 2012 Q4) to hold themselves harmless. Hardly a kind thing to do. Are we seeing the players bail out some of the hosts who thought they were doing OK and listening to the rather favourable spin? So far absolutely not.

    Let me give an example.

    I am not sure if anyone has read a apartment/flat rental form lately. Usually you have to sign/initial the specific understanding of the different parts of the law. For example “NO SUBLETTING.” Thus a “sharing” host should specifically sign a section of the AirBnB/Houstrip host form that says.

    “I FULLY understand that if I sublet my apartment to another person in direct contravention of my rental agreement with my landlord and local laws that I will have to accept the consequences up to and including losing my apartment/flat.”

    The catch all that many travel and accommodation websites currently have is rather unfair to consumers and sellers (hosts) alike. The implied use concept. IE by using the site – I am implicitly accepting that its my responsibility to comply with all laws (even though I may have no idea what they are and this site is not going to bother to tell me at all).

    So why wait for the law to come to you… why not self regulate and show us how good you really can be. I will be first in line to applaud that effort.

    Thanks much

    Timothy

     
    • John Pope

      Exactly.

      Sounds like a fair proposal and responsible set of conditions, if you’re going to be apart of the Accommodation Sharing Economy – no matter what part of the value chain.

      The onus and liability should certainly not only rest on the shoulders of consumers (guests) and sellers (hosts) – the middleman (Web company) needs to also act as a liable, culpable, and ethical party in the game. After all, they’re the ones creating tremendous wealth on the backs off of others assets and actions.

      Self-regulation is the obvious and ethical solution to the whole issue.

      But, as others have identified already, there probably wouldn’t be as much money in it, if they act that responsibly.

      By the looks of things, thus far; I won’t hold my breath that the players will submit to self responsibility.

      There’s too much money involved now. The potential financial rewards, too high.

       
  6. Daniele Beccari (@danbec)

    Sharing economy brings new disruptive rules, it can obviously scare incumbents but it can’t be stopped – and in this particular area, it’s making the pie larger.

    On the opposite, I think online agents are a great opportunity for governments.

    Tax authorities should do everything possible to encourage online P2P: it’s much easier to deal with online transactions instead of randomly wondering in the dark to find tax evasion.

    Aggregators can directly offer automatic declarations for rental activities to the relevant authorities (so owners don’t have to worry), levy the appropriate city taxes out of the sums paid by customers (so owners don’t have to worry), they can automatically generate all the necessary prefilled paperwork for filing taxes (so owners don’t have to worry).

     
    • John Pope

      All excellent solutions to the problems relating to taxes, and encouraging economic growth etc.

      As you’re clearly the problem solver in the audience; now what do you about the zoning regulations issue?

      In order to deal with any potential structural imbalances relating to residential housing vs. commercial use density.

      If you allow anybody who wants to be a host become a host, that could lead to a whole host of problems relating to “quality of life” for those people who simply want to live in a residential neighborhood.

       
  7. Peter Syme

    If you think this is a legal mine field have a look at all the P2P sites marketing tours and activities. Have not found one that complies with European laws . They all seem to pass the responsibility to the guide to comply and trust him/her to do so. I cannot see why it is so difficult for them to ask for copies of the guides insurance and risk assessments and any licence they need to have to operate in the area or certain activity.

    Then again if they did ask for this maybe they would not have a business model?

     
  8. Timothy O'Neil-Dunne

    Ryan – there are a number of inaccuracies and misconceptions possible in your statements.

    For clarity purposes – whether Arnaud is nice or not is somewhat irrelevant to the dialogue. The basic premise is whether or not the service offered by AirBnB and yourselves is legal or not has to be considered before you enter a market. It would be inappropriate for readers to get the impression that suck it and see was a perfectly acceptable way to deal with the law of the land.

    You are correct – Airbnb was founded in 2007 – https://www.airbnb.com/story. Housetrip was founded in 2009 and started operating in January 2010. The NY State law APPLIES to NYC. I provide the actual text of the law in the following link: http://www.nyc.gov/html/dob/downloads/pdf/NYS_chapter_225.pdf

    However this was originally intended to deal not with the likes of AirBnB and yourself but the greater threat from the use of Craigslist. However the issue of the legality on the type of stay is somewhat moot since the issues of registration etc are not simply addressed by this law – it closed several loopholes. Existing legislation in many jurisdictions cover rentals for accommodation and the sale of travel products. The service you offer is either one or both. BOTH are in many ways regulated and have been for many years with thousands of enterprises conforming to those laws and regulations.

    Opening up a service in contradiction or contravention to both normal practice and against actual law is not a wise practice. However challenging the status quo is quite OK and should be encouraged as long as its safe – legal and honest etc etc. That Housetrip is willing to cooperate is great news from a PR standpoint but the fact remains that according to the law businesses that operate against the express elements of the law are technically illegal.

    AirBnB has been shown to have companies, individuals IE entities who are operating illegally. http://newsfeed.time.com/2013/05/21/nyc-judge-rules-airbnb-rental-is-an-illegal-hotel/ I leave open the question as to whether AirBnB (and Housetrip) are illegal in their own right. In my own opinion they are in more than one way and in more than one jurisdiction. But I am not a lawyer.

    If the host is doing something illegal and using a service then logically the person or entity encouraging or facilitating the illegal behaviour has culpability.

    I applaud those jurisdictions who are working to solve the issue. However from a question of right vs wrong – I think it would be more appropriate to accept a basic truth. IE that IF the service you are operating results in illegal behaviour irrespective of whether your company is the directly liable party or not then there should be a clear warning to the consumers of that fact. Neither you nor AirBnB leave that impression at all on your websites. Thus a consumer who does not know or understand the finer points of the law (nor should she/he which is why the laws exist in the first place). Thus they easily may be lulled into thinking everything and anything about the process is just like renting a hotel and perfectly legal.

    To equate renting a accommodation on your site to the 18th Amendment of the US Constitution is somewhat gratuitous.

    I hope that this causes you and others some pause for thought. Best of luck in your endeavors.

    Cheers

    Timothy

     
  9. Bo Vibe

    I wholly agree with Bertrand that the sharing economy offers exiting new growth opportunities, but “short-sighted government regulators” is not the only obstacle to making this new model even more profitable and less controversial. It does seem that Airbnb and HouseTrip have been a bit short-sighted as regards to exercising editorial control over their content. Being creative and offering a different stay model (to standard hotels and holiday rentals) should also entail being equally progressive when dealing with legal issues and ethic competition. The best way to avoid antagonizing competitors and city officials is to show concrete initiative regarding promoting rentals that are licensed, and pay the taxes and fees that are comparable to the rest of the market players.

     
  10. Ryan Levitt

    Arnaud is very clear in his statement that he supports ‘clear and sensible net positive legislations’. At HouseTrip, we appreciate legislators in Amsterdam and Paris who have reached out to us in order to work together to find a solution that benefits hosts, consumers and local residents alike. In locations such as NYC, however, the reaction has been to ban the practice like ostriches burying their head in the sands.

    And I must remind you that the law in New York is for the state and not just the city. Have they thought about the impact this has on owners and guests in ski locations such as Lake Placid, the Catskills and Finger Lakes? Why is it hideous that hosts are doing it in New York City, yet NYC residents continue to do short term house rentals in The Hamptons and Fire Island? I can just imagine the outcry if suddenly the week-long rentals in Montauk were no longer applicable to Manhattan’s residents. The law, if it is going to be applied, needs to be applied in a similar manner across the board.

    Both HouseTrip and AirBnB are companies that were started before New York State introduced its holiday rental laws. So I think we can safely say that neither of our companies started a business that knowingly flouts the law. Rentals were occurring in New York long before HouseTrip came alone. HomeAway had been operating in the space since launch. Why was the law not introduced back then? Why the sudden interest now?

    We want to work together with legislators in New York – as Arnaud clearly says – to find solutions that ensure guests are safe, local residents aren’t impacted and financial benefits go into public coffers. The fact that guests continue to rent apartments means that there is a demand for the practice. HouseTrip have never said that hosts should get away without making financial contributions to city coffers. We just want to find a way to do it – and we are doing that with our efforts currently happening in other locations such as Spain.

    Prohibition didn’t work in the US when there was public demand back in the 20s. So lets find a way to make sure balanced, safe, practice in this industry sector is managed rather than banned so that everyone can benefit.

    As Michelle states, Amsterdam’s legislation incorporates terms under which short term rentals are allowed to minimize these types of negatives. Could NYC not also look at zoning laws that permit practice rather than complete bans?

    Ryan Levitt, PR Director, HouseTrip

     
    • John Pope

      Ryan,

      What happened to Arnaud, does he no longer speak on behalf of himself or HouseTrip? Especially peculiar considering he wrote the original article. Is he too busy now? Or did he naively expect tremendous empathy and outcry for the best interests of his (your) business.

      Just to be clear for the audience (in case they may have missed it), it’s your remit to put the most positive spin on all (potentially) negative issues relating to your employer, HouseTrip.

      Saying that Arnaud “supports ‘clear and sensible net positive legislations” is pretty ambiguous – why doesn’t he go on record here and state EXACTLY what those legislations should be? Or, are they only sensible and positive if they satisfy HouseTrip’s needs? I mean, let’s be real here.

      You describe NYC’s actions as “ban the practice like ostriches burying their head in the sands.” – and the wider New York State’s actions as hypocritical and inconsistent. Here’s where I will agree with you: the laws should certainly be enforced equally across all locales – there should not be separate rules or instances of enforcement for the “well-to-do” regions, if that is actually the case. But it also wouldn’t be the first time the wealthier among us were able to flout the law, or held under a different set of rules to the rest of us – that’s just an unfortunate reality of life.

      In response to your point about why all the interest now, retroactively as you put it? As has been mentioned on this thread previously, most laws are created in retrospect to the problem – because of the recent proliferation and success of companies like CraigsList, HomeAway, AirBnB, and to a lesser extent HouseTrip – jurisdictions are now having to take action, because greater amounts of complaints are happening for all the reasons already highlighted here.

      The (negative) externalities – both existing and potential – being a significant issue, but of even greater concern, the fact that peer-to-peer rentals are happening without paying the subsequent taxes, health and safety requirements, and zoning application fees and processes, puts their law-abiding hotel and B&B industry cousins at an unfair competitive dis-advantage.

      So let’s see if the business model is still as attractive to both the renter and guest after all comparable costs are factored into the equation. My instincts are that some of the shine will come off the P2P business model and experience altogether, once the effective economic subsidy is taken away, or dramatically reduced, from the host, guest and intermediary of choice.

      And finally, to address the flimsiest of all your arguments – Demand. Under the same reasoning, illegal drugs, tobacco and alcohol should be permitted, too. Along with virtually any other crime, as one could always argue that there’s demand for their felony of choice – “well Judge, I think it should be OK to cheat on my taxes, as I really wanted to do it.” That’s also demand after all, under the same criteria and logic you put forth here.

      If you, your hosts – and even your guests – want to continue to engage in this business, then all stakeholders must subscribe to the same rules as everybody else. That means, if people want to be hosts, they should legitimately apply for a change in zoning – like any other commercial establishment must go through – if they want to use their premises for other use cases than their present zoning permits.

      That also means having their direct neighbors agree to all the changes that the host or property owner is requesting the new use for. If it’s a good enough process for developers, shops, bars and restaurants to go through, it should also apply to new short-term accommodation providers.

      Disagree with that, and you’re really just trying justify for your own blatant self-interest. And not at all interested in the community, as a whole.

      And, I have to repeat the initial sentiment about Arnaud not coming back here to debate the issue, that he himself raised. The Web is a conversation – and not simply a broadcast medium. That’s basic Web 2.0 stuff – you should be advising him of that fact.

      By removing himself from the conversation, when the going gets (a little bit) tough, demonstrates that he’s only prepared to talk, and not really interested in listening.

      As we were all given two ears, and just one mouth, it’s probably better if he (and you) uses the same ratio to respond to what he’s heard.

      And not send another mouth to make the case on his behalf.

      P.S. Enjoy the “crisis” meetings at HT HQ that you, yourself have instigated; at least you’ll have another opportunity to showcase your positive “spin” credentials, and can at least take comfort in the fact that even “bad” PR is “good” PR.

      In any case, at least you’ll be busy. ;-)

       
      • Kevin May

        Kevin May

        @john

        Pls, no need to shoot the messenger eh…

        I am sure if Arnaud had the ability to comment at that precise moment in time he would’ve done – so fair play that a representative at the company chimed in then to address some of the comments made.

         
        • John Pope

          Pretty sure my aim was directly pointed at the message, Kevin.

          Think my past record also points to that perspective – I typically always address each individual point of disagreement – as I did here as well. You know, my tl;dr nature.

          And, it has now been three days since the first set of comments were made – with no response except via his PR rep. Sure, I’ll give them credit for at least having somebody comment – just seems weird, and possibly dubious, it’s not the author, himself.

          I will gladly eat my words, if and when Mr. Bertrand addresses any of the arguments against his initial convictions that governments are trying to kill the sharing economy.

          That to me is a tad disingenuous, considering there isn’t a government on the planet today who would legitimately and maliciously try and stifle economic development – that to me, is a ridiculous thing to express, and then not expect any disagreement with their assertion. It’s a self-interested assertion from a less-than objective source. Full stop.

          Other than that, I’ll retain my viewpoint that this is a broadcast of personal interest.

           
          • Kevin May

            Kevin May

            @john – not every comment, story, tweet, etc, masks some kind of a conspiracy theory.

            As I’ve said before GENERALLY, Tnooz prides itself on having a platform where viewpoints can be made and subsequently debated respectfully.

            I’m very glad that people disagreed with Arnaud initially (and his representative more recently) – it has made for a very robust discussion…

            But what concerns me here is the tone.

            Yes, I agree with you that some answers would be welcome from HouseTrip (and Arnaud in particular), but let’s all play nice eh.

             
          • John Pope

            Hmmmm…

            Conspiracy theory? Really?

            Do you mean the headline, “Are governments trying to kill the sharing economy?”

            Other than that, not sure what you mean.

            I’ll concede that my “mouth” related comments at the end of my initial comment could be construed as a personal and disrespectful tone, and for that I apologize, as my sarcastic form of humor might not always translate or be admired to every audience member.

            Please read this story that another Tnooz audience member (John Calder) graciously, and ironically, referred us to the other day, for further explanation on that matter:

            http://www.niemanlab.org/2012/06/how-do-you-tell-when-the-news-is-biased/

            It appears there is actual concrete empirical research on how some things get “lost in translation” to readers of differing perspectives. I’d highly recommend to this audience that they travel over to the article – “Expedia admits that TripAdvisor and Booking.com are hitting it hard” – to read all other links that Mr. Calder referred us to – the one where Mr Calder defended the honor of Tnooz itself; to the shagrin of another Tnooz commenter.

            Keep up the good work, Kevin. I’m sure Tnooz will continue to be the place for good, healthy and honest debate in the travel industry for years to come.

             
  11. Michelle Grant

    I’d also like to point out that travelers do not necessarily treat the residence in the same way as an owner. There are externalities generated by renting out primary homes to transients–more noise, trash, and a high turnover of ‘strangers’ (not to mention exposure to those travelers that may not have the best intentions). This is why zoning laws exist. Amsterdam’s legislation incorporates terms under which short term rentals are allowed to minimize these types of negatives.

     
  12. Timothy O'Neil-Dunne

    The sharing economy is a fine idea. But to flout laws that were written and based on real issues seems foolhardy. Regulation tends to be reactive rather than proactive. This is normal civilized behaviour.

    Why should a city grant AirBnB, HouseTrip 9Flats or anyone else a free pass and let them not pay occupancy tax? The concept of a host and a house guest is a ruse. If you rent accommodation you should be held accountable for it. That means paying taxes and ensuring the safety of your renters. It also means that if you contravene the terms of your own rental agreement with your landlord you should be held accountable.

    That has nothing to do with whether “sharing” is good or not. If there is a financial transaction rather than a favour between ACTUAL friends – then you need to pay the piper. In NYC the city is going after the “hosts” for running illegal hotels. What surprises me is that they are not going after the intermediaries for “selling” travel and “arranging accommodation” on a broad scale. Both of which have been regulated for many years in the Travel and Rental space respectively.

    So someone has to be responsible. Decide who. The intermediary OR the “host”. And in the end both need to be held accountable. if that is the law of the land. Starting a business that knowingly flouts a law would be … er… illegal.

    Sorry I just dont buy the story that the Governments are trying to “kill” the sharing economy. The inverse is true. The SHARING economy participants are trying to circumvent the laws.

    Who is right?

    Voters should decide.

    Cheers

     
  13. Michelle Grant

    Thanks for sharing your perspective, Arnaud. I’m not sure that travelers, though, treat the property and neighborhood the same way an owner does. There have been many complaints about noise, excess trash, etc. when travelers are renting out primary residences not to mention the fact that a few may not have the best intentions. There are externalities that are generated with this particular practice that impact all residents.

     
 
 

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