Cities Need a Middle Way between Fight or Flight in the Face of Home-Sharing Technology

The advent of “home sharing” platforms has turned tourism into an important challenge for transatlantic cities. Parts of cities where in the past regulation limited the opening of hotels, or where only the most adventurous tourists would go for a quick visit, now see a constant flux of short-term visitors. This puts enormous pressure on the housing market, as well as altering the social, cultural, and commercial fabric of neighborhoods.

Cities on both sides of the Atlantic are trying to find ways of curbing this. Thus far they are not showing themselves to be particularly coordinated or adroit in their approaches, which range from blanket bans or unenforceable regulation to a total absence of regulation. Finding the right balance in policies and regulations has important implications that go far beyond the tourism industry; this affects people’s feeling of place and local identity, as well as their predisposition to accept global and technological developments.

Tourism has always been a challenge for urban ecosystems in terms of mobility, public space, and environmental sustainability among other issues. With low-cost travel having made tourism more accessible to more people and technological change effectively opening whole cities to accommodate tourists, it has become a housing challenge as well, adding for many cities to an affordable housing crisis.

In Lisbon, the number of listings on “home sharing” platforms practically doubled between 2015 and 2017 (up to around 13,000, 74 percent of which are entire homes/apartments). Already by 2016 the average rent had increased by 23 percent to €830; with an average gross salary of €914, this is pushing many residents out of their city.[1] In New York, for every one percent of residences listed on Airbnb, rents in the neighborhood went up by 1.58 percent, causing renters overall to pay an additional $616 million in 2016 alone.[2] Barcelona’s gothic neighborhood, where over 50 percent of the buildings host some tourists,[3] has lost half its residents in the past 10 years, with 87 percent saying that they were leaving because of the increase in rents and because daily life had become impossible.[4] In 2017, for the first time, its bi-annual citizen survey found tourism to be the most important problem facing the city.[5]  

Effective policy frameworks and solutions are urgently needed, as these pressures will only increase

Effective policy frameworks and solutions are urgently needed, as these pressures will only increase; not least as the continued growth of the middle classes in India and China alone is expected to contribute more than half of the 600 million international tourist trips by 2030 forecast by the World Tourism Organization.

Housing generally, and more specifically the growing difficulty for lower and middle-class residents to continue to live in their own neighborhoods, is an existential issue for many people. Like jobs and culture, it is something that impacts one’s sense of identity and belonging to a society and a city. The challenge for housing through platforms such as Airbnb probably explains the growing animosity against tourism in many cities.[6] While these effects are concentrated on traditionally open, liberal, and globalized cities, those who are worst impacted within these cities are the most vulnerable socio-economically.

Cities from Chicago, San Francisco, Seattle, and Austin, to Berlin, Paris, Amsterdam, and London have passed some form of regulation affecting Airbnb listings and hosts. Even cities that are not global tourist hotspots are being pushed to act. For example, Leipzig – which is growing again after decades of declining population, high vacancy rates, and low rents – is considering ways of relieving the additional pressure caused by Airbnb on an already tense housing market.[7] 

The effect of many of these measures is still difficult to assess because not only are they recent, they are also still shifting. When a city moves from a blanket ban or a total absence of regulation to some form of regulation, if the policy in not enforceable or has little effect, it is difficult not to succumb to the temptation to shift back to one or the other extreme, rather than fine-tuning or developing new ways to make a policy effective.

For example, New Orleans passed an ordinance last year to legalize and regulate Airbnb rentals, whereby the platform cooperatively facilitated the application for the newly required municipal license and displayed the registration number on the listing, making it easy for the city to enforce its regulation.[8] Nonetheless, it seems this was not enough to balance the incentives created when the average rental price per night for a home is $229, compared to the $45 per night that a landlord would get for the same home rented to a long-term tenant.[9] After a year, the continued proliferation of legal and illegal listings, alongside rapidly increasing housing prices, pushed the city council to impose a moratorium on most short-term rental licenses, causing Airbnb to remove the information from their website that previously helped the city enforce its legislation.[10]

Cities should not lose sight of the fact that autonomously and easily renting out an extra room, or an apartment while travelling, is a positive development. It offers individuals the option to earn extra income while making use of otherwise unused space. The negative consequences are only truly consequential for a city when unregulated forces lead to abusive behavior, such as the unauthorized primary use of an apartment as a business that constantly houses tourists, or the ownership and management of multiple listings by a single person or business, which is far from negligible in many cities (66.3 percent of listings in Lisbon, 56.4 percent in New Orleans, 55.9 percent in Boston, and 60.7 percent in Rome).[11]

When this occurs, a platform such as Airbnb is not being used to share a home for money but as a business. Preventing this abusive behavior without curtailing anyone’s ability to earn extra income by occasionally sharing their home will not be easy to achieve. Berlin seems to be trying to find this equilibrium, as it has recently revoked the total (and unenforceable) ban in place since 2016, replacing it with strict regulation. It remains to be seen to what extent this is effective and enforceable.[12]

So far, only Barcelona has successfully coerced Airbnb into giving local authorities access to its data, allowing the city to enforce its regulations more effectively.[13] New York has just followed suit and passed a law taking effect in February 2019 that aims to force the company to share relevant data with local authorities.[14] Many cities will be paying attention to the effectiveness and enforceability of this new wave of coercive regulations as they face similar challenges. Unfortunately, cities do not seem to be engaging with each other or sharing lessons and experiences to speed up the finding of effective policy approaches together.

Cities should test, share, and learn from each other on different policy formulations and regulations to help find the best way of reaching the desired equilibrium. The bluntness of a total ban is a futile struggle against how technology is reshaping cities. On the other hand, not regulating the short-term rental market will continue to compound pressures on rents, pushing many people out of their neighborhoods. Furthermore, this could encourage not only a more hostile and unwelcoming stance to tourists but also to foreigners, globalization, and the technological developments that have the potential of adding value and convenience to urban experience.