The impact of AirBnB on our cities: Gentrification and ‘disneyfication’ 2.0

The Urban Media Lab is back to analyze the sharing economy platforms’ panorama[1]. The scientific and public debate, in particular around the topic of the short-term rental’s impacts on urban contexts, is indeed becoming hot. Home sharing platforms are more and more dominating the tourist market especially in big cities, and Airbnb is the leading marketplace for those seeking and offering short-term housing solutions. Founded in 2018 in San Francisco, it quickly became a global phenomenon contributing significantly to the rise of the sharing economy as a new economic paradigm (Geron, 2013). Today, the platform has a network of over 3 million properties in over 200 countries worldwide, covering more than 65 thousand cities (Econopoly 2018); it reaches a market value of 31 billion dollars (Statista, 2017), thus exceeding the main hotel chains, both in terms of available rooms and in terms of turnover. But, unlike traditional tourist hospitality operators, Airbnb does not own the rooms or properties that appear in the listings, as it operates as a peer-to-peer platform that connects hosts (who offer) and guests (those looking for), allowing private individuals to earn from short-term leases through secure transactions. The platform is the intermediary to build the trust between strangers that is, as emphasized by Botsman and Rogers (2010), the true currency of exchange for this economic model.

Airbnb exemplifies what Germann Molz (2011) calls “network hospitality” referring to the way in which a new generation of travelers relies on online network systems to connect with other members offering accommodation. The centrality given to the interpersonal meeting with the local hosts and the informality of the accommodation represent a reaction to the homogenization resulting from the globalization (Germann Molz, 2011) and to the “concomitant standardization” (Steylaerts and O’Dubhgall, 2011, p. 264) typical of the traditional tourist industry. Airbnb therefore responds to the search for a more personalized and “presumably more authentic” form of travel (Steylaerts and O’Dubhgall, 2011, 261). In theory.

In practice this approach has quite degenerated. A recent research of the University of Pisa (LADEST) (Picascia et al., 2017) reports that today the greater part of the revenues obtained through the platform is gained by the very few multiple advertisers who rent more apartments, or by brokers and specialized real estate agencies (and not by single private tenants). The consequence is that the human dimension, the meeting with the local, the human-to-human interaction (Sans and Quaglieri Domínguez, 2016) fail and Aibrnb becomes a mere channel to promote short-term rentals, especially in urban areas (Guttentag, 2013 ; Gant, 2016). See the very famous case of Bettina: she’s not a private citizen but she represents the Halldis Italia society with 713 apartments (or villas) uploaded on the platform. Some examples from the University of Siena research: in Florence, hosts earn on average € 5,314 per year, but according to data processed by researchers, only one has collected over 700 thousand; in Milan, over four thousand owners of rented apartments earn an average of 1,600 euros a year, but only one gains more than half a million. Therefore, according to the researchers, short-term rents reinforce phenomena of social inequality and do not favor real redistribution of wealth.

The studies presented by Airbnb on its social and economic impact

Airbnb for its part, claims positive impacts for three categories of subjects:

  1. Consumers and the tourism industry,
  2. Neighborhoods and local businesses,
  3. Residents and owners of housing solutions (Airbnb, 2015).

According to the internal reports of the platform, 35% of its guests would have traveled for a shorter period or would not have traveled at all without the platform, considering that a guest stayed 2.1 times longer and spent 1.8 times more than a traditional traveler. Changing the way people travel impacts also on the choice of the neighborhood in which to stay: according to Airbnb, its guests tend to choose the neighborhoods that are less congested by the tourist presence, thus favoring greater distribution of economic impacts for the benefit of neighborhoods normally excluded from the tourist industry. According to the platform, 74% of Airbnb listings in major cities are located outside the traditional districts where hotels are located and 42% of guest-time is spent in the neighborhood where they are staying. In this way the economic flows deriving from the presence of these guests impacts on the local communities and businesses, indirectly benefiting the residents as well. Finally, Airbnb believes it contributes to the well being of its hosts, in 52% of cases with low-to-medium incomes, as the compensation earned through the platform allows additional savings and income with which to meet domestic expenses or start new business entrepreneurship (Airbnb, 2015).

But the reality is quite different and the impacts of the platform’s presence are often more negative compared with those presented in the Airbnb reports. This is testified by the growing citizens protests all over in the world and by the attempts of the public administrations to fill the legislative gap intervening at the regulatory level. Indeed, according to Lee (2016), the home sharing distorts, reducing it, the offer of affordable housing for the normal real estate market, through two mechanism. The first one is a mechanism of “conversion”: each housing unit previously occupied by a dweller, and now included in Airbnb’s listings, is a unit removed from the long-term rental market and added to the local hotel offer, resulting in an increase in the rental price, in particular in the most central districts of the cities. The “hotelization” is the second mechanism: as long as the owner or the tenant has the possibility to rent a room on Airbnb at prices lower than those of a hotel room, earning a considerable premium on the residential market, there is a strong incentive to upload housing units on the platform rather than renting to local residents, creating the so-called “hotel cottage” effect.

What are the consequences?

The offer of long-term rentals is reduced, encouraging the relocation of residents to another district and thus encouraging gentrification and segregation processes (Guttentag, 2013; Ball et al., 2014). Dwellers struggle to find long-term rentals or affordable housing solutions, and in addition they clash with a significant increase of the services cost, due to the growing presence of tourists that push business owners to raise prices (Gant, 2016). Besides these effects of gentrification we can observe also the intensification of the so-called “disneyfication effect”. The massive tourist flows, nowadays favored by short-term rents, risk to transform the historical centers, especially Italian ones, from key places of local cultural and political life, into real consumption citadels. “A city in the city outside the city itself, where the distance between the center and the periphery is more marked than in the past” (Mammone, 2017). This effect is also confirmed by the aforementioned research by the University of Siena, according to which the uncontrolled flows of tourists affects the identity of the city, reinforcing the risk of social desertification of historic centers (Semi, 2015). In this process the “local life” is marketed, sold as an added value to the rental of the accommodation (Sans and Quaglieri Domínguez, 2016, Warren, 2016) and the identity of the district erodes and changes. This situation has the double effect of determining, on the one hand, the expulsion of the weaker classes (the low income renters) from their neighborhoods of historical settlement, as in the case of the center of Naples and Florence for examples, and on the other hand to incentivize the unlimited indebtedness of the middle class.

How to counteract these processes?

These effects are evident especially in hypertouristic cities (Costa and Martinotti, 2003) such as the already mentioned Florence and Naples, but also Rome and Venice, and in Europe, cities like Amsterdam, Barcelona, Paris, London, Berlin… These effects are pushing the local administrations to intervene to limit both the gentrification and the disneyfication mechanisms. To give some examples: Amsterdam has established an “Airbnb law” that limits the short term rental to 30 days and bans renting in the more central neighborhoods, causing the disappointment of the Airbnb community, which consists of 19,000 Amsterdam hosts; in particular the rule set the following conditions:

  1. You have to live in the house/houseboat yourself;
  2. You may only rent the house/houseboat occasionally;
  3. You must pay the tourist tax and the income tax on the income from holiday rentals;
  4. You need permission from the Owners’ Associations (VvE) or landlord;
  5. Your home/houseboat must be fireproofed;
  6. You cannot rent out your house/houseboat to more than four people at the same time;
  7. Your guests may not cause a disturbance to local residents.

Paris, that counts 60,000 homes on the site, has adopted a complex legislation more suitable for professional operators than for private citizens, asking to delete the listings of those not registered with VAT (that means to delete the 84% of the Parisian offer on the platform); in addition the municipality wants to ban the short-term tourist offer in the First, Second, Third and Fourth Arrondissements. The words of the Deputy Mayor are emblematic:

Airbnb threatens the soul and identity of a number of neighbourhoods. We cannot remain inert in this situation. All the big cities of the world are facing this problem. If we do not regulate Airbnb, we will no longer have inhabitants in our city centers. Do we want Paris to be a city which the middle classes can afford, or do we want it to be a playground for Saudi or American billionaires?”.

In Berlin the Airbnb Law “Zweckentfremdungsverbot” basically established that owner-occupiers can, under certain conditions, rent out their own home as much as they want, and rent out second homes for up to 90 days a year. Owners need a permit if they rent 50% or more of the total area of the main residence for a short period, i.e. on a daily or weekly basis. But the law also establishes that it is not allowed to rent out apartments to tourists or travelers that should be available or actually were available for regular tenants before. If an apartment used to be a regular long term rental apartment, then it shall be used as a regular long term rental apartment.

In London despite the 90-day cap on listings the Airbnb’s market share nearly tripled in 2017, jumping from 2.8 to 7.6 per cent of overnight stays (as demonstrated by a study from property services company Colliers – also based on scraped data, from commercial analysts AirDNA). The UK Government introduced the law to make illegal the short-term residential properties that overcome the 90 nights per year in 2015 and in response Airbnb introduced an “automated hosting limit”, which blocks out a host’s calendar for the year once they have reached 90 days of rentals for a single property. Nevertheless the risk that a host can change the name of its listing or use another platform after reaching the 90-day limit still remains.

Barcelona is one of the European cities where the fight against Airbnb is growing fast. In May 2018 the city told the site to remove 2,577 listings that it found to be operating without a city-approved license, or face a court case potentially leading to a substantial fine. In June, Airbnb and the city launched a new agreement that gives Barcelona officials access to data about what’s being listed around town. So for the first time a city council will be able to track the hosts ID numbers and verify if they have permission for their listings. In addition the municipality addresses the tourists, asking to make sure that the property they rent is properly licensed first.

Also in the native place of the platform, San Francisco, many problems are raising and in 2014 the “Airbnb Law” was approved. The law regulates short-term rentals, limiting the activities of the hosts who, in order to use the platform, must be permanent residents of the city and duly registered in a commercial register; in addition: the accommodation as a whole cannot be rented for more than 90 days per year, and the host is obliged to pay a fee and be insured against any liability.

New York too is struggling to manage the presence of Airbnb and a recent law foresees that you cannot rent your entire apartment for stays of less than 30 days; in addition Airbnb have to provide names and addresses of those who rent a house in the city.

Looking to the other side of the globe, Japan has established a country law that limits hosts to respect some rules: a maximum of 180 days per year, the homogenization to fire and earthquake emergency regulations, registration with the competent authorities. By now the government has requested to delete all the listening of “irregular” hosts. At the local level, Kyoto allows short-term rental only from January to March (low season) and Tokyo has adopted measures at the level of individual neighborhoods to contain the phenomenon.

To conclude, the growth of short-term rentals is closely tied to the broader financialisation of housing that makes housing a commodity, erodes the neighborhood identity, attracts new investors for buying or developing more and more units, which in turn increases the scarcity of housing, prompts landlords to raise rentthreatens community bonds and stretches neighbourhood services. The spread of this type of rent opens the way to an expansion without limit of processes of marginalization and social indebtedness. Is this the “Urban era” announced by Henri Lefebvre? Is the process of urbanization of the population and the consequent transformation of humanity into an “urban species” really bringing to a “total urbanization” of the world? It seems that the urban age resulting from the neoliberal globalization is assuming the aspect of the “total financialisation” of the planet theorized by Lefebvre.

Trying to find tools to contrast these phenomena of touristification, gentrification and disneyfication, is a task of all the public administration that want to fight against the desertification of the city’s social tissue and support the wellbeing of their citizens.

 

Sources:

  • Airbnb, 2015, “Shared Opportunity: How Airbnb Benefits Communities”, Airbnb [https://www.ftc.gov/system/files/documents/public_comments/2015/05/01740-96152.pdf]
  • Ball, J., Arnett, G. e Franklin, W., 2014, “London’s buy-to-let landlords look to move in on spare room website Airbnb”, The Guardian [https://www.theguardian.com/technology/2014/jun/20/buy-to-let-landlords-leasing-properties-airbnb-uk].
  • Botsman, R., e Rogers, R., 2010, What’s Mine Is Yours: How Collaborative Consumption Is Changing the Way We Live, Harper Business, New York.
  • Costa, e Martinotti, G., 2003, “Sociological theories of tourism and regulation theory”, in L.M. Hoffman, S.S. Feinstein, D.R. Judd (a cura di), Cities and Visitors, Blackwell, Malden, pp. 53-71.
  • Econopoly, 2018, “Mi ospiti nel tuo appartamento? Gli effetti di AirBnB sulla città turistica”, Il Sole 24ore [http://www.econopoly.ilsole24ore.com/2018/03/29/airbnb-effetti-citta-turistica/].
  • Statista, 2017, Airbnb, Statista, New York [https://www.statista.com/study/24578/airbnb-statista-dossier].
  • Gant, A. C., 2016, “Holiday Rentals: The New Gentrification Battlefront”, in «Sociological Research Online», 21(3), pp. 1-9.
  • Germann Molz, J., 2011, “CouchSurfing and network hospitality: ‘It’s not just about the furniture’”, in «Hospitality & Society», 1 (3), pp. 215–225.
  • Geron, T., 2013, “Airbnb and the unstoppable rise of the share economy”, Forbes, [http://www.forbes.com/sites/tomiogeron/2013/01/23/airbnb-and-theunstoppable-rise-of-the-share-economy/].
  • Guttentag, D., 2013, “Airbnb: disruptive innovation and the rise of an informal tourism accommodation sector”, in «Current Issue on Tourism», 18(12), pp. 1192-1217.
  • Lee, D., 2016, “How Airbnb Short-Term Rentals Exacerbate Los Angeles’s Affordable Housing Crisis: Analysis and Policy Recommendations”, in « L. & Pol’y Rev», 10, pp. 229-255.
  • Mammone, L., 2017, “Cultura: la desertificazione dei centri storici italiani e il fenomeno delle sponsorizzazioni dei beni culturali. A chi giova?”, LaRiscossa [http://www.lariscossa.com/2017/02/24/la-desertificazione-dei-centri-storici-italiani-ed-fenomeno-delle-sponsorizzazioni-dei-beni-culturali-cui-prodest/].
  • Picascia, S., Romano, A., Teobaldi, M., 2017, The airification of cities: making sense of the impact of peer to peer short term letting on urban functions and economy, Proceedings of the Annual Congress of the Association of European Schools of Planning, Lisbon 11-14 Luglio 2017.
  • Sans, A.A. e Quaglieri Domínguez, A., 2016, “Unravelling Airbnb: Urban Perspectives from Barcelona”, in A.P. Russo, G. Richards (a cura di), Reinventing the Local in Tourism: Producing, Consuming and Negotiating Place, Channel View Publications, Bristol, pp. 209-228.
  • Semi, G., 2015, Tutte le città come Disneyland?, Il Mulino, Bologna.
  • Steylaerts, S. e O’Dubhghaill, S., 2011, “CouchSurfing and authenticity: Notes towards an understanding of an emerging phenomenon”, in «Hospitality & Society», 1 (3), pp. 261–278.

 

 

[1] Among others see http://labgov.city/thecommonspost/the-city-the-commons-the-flower/; http://labgov.city/thecommonspost/city-mayors-worldwide-forge-alliance-in-response-to-airbnb-uber/; http://labgov.city/thecommonspost/sharing-economy-between-market-and-human-rights/.