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Airbnb might be coming under growing pressure in major cities but the market for vacation rentals and homestays is anything but dead. Sally White reports

Airbnb founder Brian Chesky may not like references to ‘disruption’ – it sends out too many negative signals – but more of whatever-it-is will be a major feature on the 2017 travel scene. That is to go by his year-end Twitter tweets.  And where Airbnb goes, experience has shown, there will be a large number of clones.

Airbnb is already into trips. Next could come flights. Chesky responded positively in his Twitter session to calls for Airbnb to offer loyalty programmes, its own properties, add a luxury category, formalise quality control, give more virtual assistance, a concierge system, cater for group travel and add food to come along with the rental. Overall there will be more marketing, and with growing regulatory pressure in the west, geographically, there will be a ‘big push’ into China.

In Asia, the early stage of development of the modern travel industry leaves plenty of room for growth in the market for Airbnb and the like with no protests. In China, nearly 1 million guests have already arrived at Airbnb listings. The company’s 2016 target was 100,000 listings. To push for faster growth it is increasing staff numbers ten-fold over the next two years to 300-plus and doubling its investment there.

The company recently expanded to Cuba and is now the largest accommodation provider in the country, according to Geekwire. And about a quarter to a third of all people who travelled to Rio de Janeiro for the Olympics or World Cup stayed in an Airbnb because all the hotels were full.

Always seeing the upside, two years ago Chesky told McKinsey Consultants that: “It means that people all over a city, in 60 seconds, can become micro-entrepreneurs”. Now it has over 2 million listings in 34,000 cities and 191 countries. But, and this is a big but, in 2017 there is every sign that resistance to growth of alternative accommodation will escalate.

In 2017 there is every sign that resistance to growth of alternative accommodation will escalate

Airbnb continues to be accused of contributing to rising rental prices in cities, which have relatively low numbers of suitable properties. Although the company claims to be doing its best to just be a platform for hosts and guests to do business, and thus to have no impact on local cities, the reality has been somewhat different with professional landlords and owners of other properties, like hostels, flocking to use the platform to reach a wider number of customers – and boost rental yields in doing so. As the Financial Times (FT) reported in December: “Rents on ‘Airbnb buy-to-let’ properties are often cheaper than a hotel room, but much higher than the equivalent daily rent landlords could charge a longer term tenant’.

The result is that from this year in London landlords using Airbnb will only be able to let properties for longer than 90 days if they get permission from their local council in the form of a licence to do so.

In a letter sent out to UK hosts a few weeks ago Airbnb said: “We want to help ensure that home-sharing grows responsibly and sustainably, and makes London’s communities stronger. That is why we are introducing a change to our platform that will create new and automated limits ….. ”

A wary eye

Elsewhere, the alternative rental industry is keeping a wary eye on other major western cities. Despite a strong fight from Airbnb, San Francisco’s Board of Supervisors opted for one of the most stringent restrictions on short-term rentals in the US. It barred hosts from having paying guests in a room, house or entire apartment for more than 60 days a year.

In Paris, Berlin, and Barcelona, vacation apartments and the agencies that market them are being categorised as the source of housing crises! As the FT reports in December, a group of millionaire investors and owners of large hotels had won a series of battles to tighten French laws governing the online short-term home rentals. This is a major new challenge to Airbnb and its peers in the second-largest market.

The lobby group, which includes companies such as Best Western and prominent French businessmen such as Philippe Villin, has convinced parliamentarians to vote to toughen tax rules and make it harder for users to avoid tax on rental income.

“The rules are designed effectively to end professional Airbnb rentals in France. Paris City Hall has estimated 60 to 70% of Airbnb’s accommodations in Paris contravene the laws and are rented for more than 120 days, although Airbnb maintains this is an overestimation,” said the FT.

While the objectors say they are targeting ‘professional’ landlords who are renting out properties on a commercial scale, everyone is, of course, hit.

Increasing PR attacks have been a major factor in a change of strategy at Airbnb when it comes to dealing with official blocks on its growth. Bowing to pressure from regulators across a range of its biggest markets, it is now agreeing to restrictions that it previously fought hard against. Now, the company has started limiting hosts in New York and San Francisco to one listing only, and in London and Amsterdam Airbnb it prevents hosts from exceeding legal limits on annual rental.

Here to stay

Unfairly, its vast size (estimated to worth $30 billion) means that it is always Airbnb that is named by anti-private rental lobbies. Yet its very success is pulling in competitors by the handful and home-stay is now established as a travel sector. Just a few of the 24 mentioned by Crunchbase are HomeAway, FlipKey, Flat4Day and Couchsurfing. Conde Nast Traveler’s list includes OneFineStay and Cancelon. Every country seems to be growing its niche version. Even established hotel chains are recognising they might have been missing a marketing. Wyndham, which has for decades had an established vacation rentals presence in the European market, is one. Kelly McGuire, Vice President, Advanced Analytics, Wyndham Destination Network, for example, says that Airbnb has opened up a whole new market for the group in the US. “Airbnb did us a favour by making our Amercian customers aware that this sort of travel exists,” she says.

Its very success is pulling in competitors by the handful and home-stay is now established as a travel sector

Elsewhere, its acceptance is indicated by the moves by Expedia (HomeAway’s owner) to combine it with its overall offer. It has begun integrating HomeAway listings into Expedia, and is marketing these agressively. Depending on which kind of trip is being booked, Expedia will display a different array of results. Someone going to New York alone for a night, probably on a business trip, will see Expedia recommendations that are hotel-heavy. But a week-long trip, for a bunch of people is likely to trigger entire home-stay listings.

There is no fighting it, home rental may be disruptive but it’s now part of the establishment!

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