Regulators are beginning to notice companies such as Airbnb and Housetrip, but they still pose a challenge to your business, says Noel Josephides, chairman of Sunvil and Abta
Have you heard of Airbnb or HouseTrip? Very few of those attending the spring Abta regional meetings had heard of either.
Perhaps one of the reasons the industry is unaware of what these companies are doing is because we all tend to have complimentary accommodation or concessionary rates wherever we stay.
However, ask your neighbours and you will find many of them have already used such companies for accommodation abroad. In fact, Airbnb is so huge that its market capitalisation is more than Intercontinental Hotels’, the largest hotel group in the world.
New challenges
These companies are likely to pose a new challenge to your business, comparable to that of other online businesses. They are part of what is called ‘the sharing economy’, which basically means peer-to-peer marketing. You have a spare room or a spare house for some months of the year. You put it on Airbnb or HouseTrip and rent it out to make some money.
Airbnb now has over half a million properties worldwide and it is a very slick site indeed, far superior to anything the traditional industry has to offer. It charges commission to both sides – to the person renting out the room or property and the person renting it. It’s a technology-driven marketplace rather than a travel business as we know it.
But this new market raises some questions. At the moment it is unregulated, which could put the consumer at risk. While the 25,000 members of the UK Bed and Breakfast Association have to comply with a host of fire, health and safety, insurance and food and hygiene regulations, those posting their properties on these sites do not necessarily comply with any of the above.
Regulators respond
Airbnb is beginning to attract the notice of regulators. New York has demanded details of the property owners on its books. Barcelona has fined the company €30,000 for promoting unlicensed accommodation. Berlin is looking into the whole operation and Paris has raided some rental properties.
In London, where Airbnb has in the region of 35,000 properties on its site, questions have been asked in the House of Lords. In Westminster, some are worried about housing normally available for long-term letting now being featured on Airbnb, which may be depriving Londoners of already-limited rental accommodation.
There are also risks for those renting out properties. If they are leaseholders, they generally need the permission of the freeholder. If they have a mortgage, renting out the property is not allowed in some cases. There are also insurance and tax implications.
Yet the sharing economy is here to stay. It is a response to changes in consumer behaviour, fuelled by new technology, and it is creating a new type of travel experience.
It is still early days for the travel sharing economy and it will need to change as it matures. To help us understand the model, Zaid Al-Qassab, chief marketing officer of HouseTrip, will join us at The Travel Convention in Ljubljana from September 21-23.