In the last decade, the use of mass booking sites like Airbnb, VRBO and HomeAway, which provide alternatives to the mainstream or traditional accommodation options, has literally gone viral, and now represents a credible threat to hotels, apartments and guest houses/B&Bs across the world. In fact, so popular have these sites become, that they are now creating residential housing shortages, particularly in or near big cities around the world.
VRBO, or Vacation Rental By Owner, first started in 1995, as an online showcase and booking platform that allowed owners seeking to let their properties to broaden their exposure and, perhaps, to avoid higher real estate commissions. HomeAway, a similar site, started in 2004 and shortly afterwards acquired VRBO, enhancing its software. Then came Airbnb in 2008, with its game-changing software, allowing travellers to see the properties and traveller reviews like their earlier competitors, but adding the ability for rooms within a home to be rented online, and, more recently, the ability to book attractions, restaurants etc. in the destination at the same time. Collectively, they introduced disruptive technology which would impact the tourism industry world-wide, and would come to be known colloquially as the Airbnb phenomenon (despite the other players involved).
Some argue that these high-tech booking sites enable rooms in homes and whole apartment units and houses to be seen world-wide and leased for short-term periods, which is bringing down the cost of travelling generally, and permitting wider participation in the global tourism industry. According to their website, Airbnb alone boasts seven million registered properties in 220 countries, and over 250 million users.
At the same time, from the owner perspective, these sites offer world-wide publicity, instant booking management and guaranteed payment, and a considerably higher level of gross income than longer term rentals. Although the maintenance costs are commensurately higher, the sites do take a commission on the rentals as well, and there is arguably a higher risk of property damage.
However, there are disturbing elements of the Airbnb phenomenon as well. Residential communities world-wide are now struggling to deal with the disruption that comes from the clash between a short-stay, holiday mentality and a homemaker, residential mentality, and many communities are having to go to court to resolve matters. Further, long-term is more difficult to locate, as more apartments and houses are committed to Airbnb, and the economics of supply and demand push rents up. Governments are also trying to ensure that all of these hitherto unregistered tourism landlords are brought into the tax net, so that the leakage of tax from mainstream accommodation businesses can be replaced.
A recent quote from Councillor Kate Campbell, housing convenor at the City of Edinburgh Council illustrates some of these concerns: “Short term lets are having a terrible impact. They are hollowing out communities... Residents are putting up with high levels of anti-social behaviour and...we believe there is a huge impact on housing supply.” These types of comments echo across the cities wherever the phenomenon is seen – that’s over 100,000 cities!
The biggest impact, internationally, appears to be felt in close communities, like apartment blocks and, especially, condominiums, which have the added legal perspective of a shared ownership of common areas and cost responsibility for common services, for example security and maintenance, that are impacted by higher and less discerning traffic. Prior to the Airbnb phenomenon, condominiums were built primarily as residences where people made their homes. It is in these circumstances that the conflict of mindsets and ideologies reaches its peak. Here, the fundamental question has become whether it is reasonable and fair for some owners in a condominium complex to have the right to maximise their income in a way that is detrimental to all the other owners, many of whom are retired and only seeking a peaceful and stress-free existence in their golden years.
The Barbados experienceAs with the coronavirus, Barbados is not immune to the Airbnb phenomenon, and local hotels have already expressed concerns about the unlevel playing field it creates from a tax perspective, but also in terms of Barbados’ reputational risk as a destination, from an ancillary services standard perspective, and in terms of insurance cover for public liability. Several smaller mainstream hotels and apartments in Barbados also use Airbnb though, so it’s not that their presence is being wholly rejected within the sector, but that they need to be subject to the same requirements as any other mainstream tourism player.
There is evidence of this call being recognised, given the imposition of accommodation levies for all visitor accommodation in the 2018 budget, which caught these short- term rentals– although compliance appears to be largely on a voluntary basis at present, in the absence of any co-operation agreement with Airbnb and the other sites. Similarly, draft regulations to ensure that quality, health and safety standards and insurance cover requirements apply to Airbnb/VRBO/HomeAway registered properties are said to be currently under consideration, but nothing has yet been put in place.
Our local residential condominiums, too, are reported to be feeling the impact on their communities, and while it is true to say that there are some condominiums – e.g., sited on a beach location or within a tourist belt on the island – that were probably designed with hotel-type traffic in mind, there are many that were designed as residential complexes.
The way this particular problem has been handled successfully on an international scale – mostly after court battles – is that residential condominium complexes obtain a majority vote from their individual owners to change their Condominium Declaration – the rules and conditions by which every owner in the complex is bound, and agrees to, on purchasing – to limit short-term letting. Typically these changes have involved prohibiting short-term rentals under 30 days, and the various court decisions seem to indicate that the collective will and rights of the majority trumps any individual right – in other words, the right to do what one wants to do with one’s property is not a right that exists in a vacuum, and especially in a ‘common interests’ environment like a condominium, other owners’ rights to the quiet enjoyment of their home must also be protected.
One cannot predict whether our courts will follow the precedents established internationally and protect residential communities from the profit-oriented activities of Airbnb-linked owners, but Barbados does have precedents in limiting the rights of property owners to deal with their property as they see fit, without regard to their neighbours – e.g., beach access.
Like most things in life, therefore, the Airbnb phenomenon has its positives and its negatives. However, we must be careful to ensure that a “wild west” situation is not permitted to develop, where pro-Airbnb owners trample the rights of all others in the community with impunity, taxes are not collected, or that these new entrants into our important tourism industry are not monitored for quality and standards the way mainstream players are currently monitored and regulated.
Airbnb and similar booking sites are here to stay, and there are positive aspects of their existence. It is up to us – through our Cabinet, legislators and judicial system – to ensure there is ample opportunity for more Barbadians to earn what they can legally from our tourism industry, but on the basis of a level playing field; that is, paying taxes, and held to a reasonable standard of which Barbados can be proud; such activity cannot be allowed to be at the expense of home owners’ rights to the quiet enjoyment of their property. Nor should the Airbnb phenomenon be allowed, as Councillor Campbell put it, to “hollow out” our communities, at a time when building community spirit is so critical to our country’s social well-being. Above all, in addressing and resolving this matter, we need to see a spirit of compromise, and a reasonable approach by all concerned.