Eurocities And The Platform Economy (1): The Airbnb Never-Ending Crusade

The rise of the platform economy was a revolution: letting people pool resources via the internet to make society more cooperative, the economy more horizontal, and the individual more autonomous. But the shine has worn off quickly, and the platform economy is showing its true colours: erosion of local communities, unfair competition, poor working conditions,… Nevertheless, the platform economy remains beloved by many and is regularly praised for its convenience. This is forcing European cities to find a way to keep the good and toss the bad — with varying success.

Episode I: The Airbnb Never-Ending Crusade

The City by Fernand Léger (1919), Philadelphia Museum of Art.

Win-win: The short-term rental platform Airbnb started as a hippie utopia. The idea was to let locals rent out their room or entire apartment when they weren’t around so that travellers could live ‘like a local’. Not only would that help them make extra money, but it would also offer a cheaper alternative to hotels for travellers.

Fairytale is over: As is often with new technology, well-intentioned concepts can go out of hand, and Airbnb is no exception. Despite its noble intention, the US company is now a symbol of peak neoliberalism: it has made it more profitable to rent out the same apartment 30 times to 30 different visitors rather than to one single tenant throughout the year. For that reason, the platform has rapidly become a playground for real estate investors and professional speculators, who use apartments as cash machines to maximise profits at the expense of local and low-income residents. And while the platform remains extremely popular among travellers, its impact is causing troubles on the ground:

• Dark Disneyfication: The incentive to transform long-term rentals into hotel rooms for visitors has turned popular neighbourhoods into tourist-only theme parks; some areas in Amsterdam have more than 10% of Airbnb apartments; the city centre of Prague lost 15’000 apartments to Airbnb. In these tourist ghettos, you can’t get a cup of coffee for a normal price, local bakers have become souvenir shops, and every restaurant is a tourist trap. This Disneyfication fuelled by Airbnb is destroying what visitors come to see: an authentic city full of charm and character.
• Living like a local devours locals: Tourists used to stay in tourist-specific infrastructures like hotels and hostels. Airbnb allows them to stay ‘with the locals’. This sudden proximity means increasing nuisances for residents: a constant stream of strangers, loud parties, rubbish left behind,… Not to mention the curse of booze tourism fuelled by Airbnb, which destroys the social cohesion of local communities.
• Yuppification: Short-term rentals contribute to higher housing prices. Several studies have shown the impact of the ‘Airbnb effect’: Airbnb’s presence has increased housing prices by 13% in Berlin and 17% in Barcelona. In Amsterdam, house prices increase by 0.42% whenever there is a new apartment sublet on Airbnb within a 1km2 area. For people who can’t afford it, it usually means getting kicked out of the neighbourhood. For local businesses, it means getting crowded out by expensive hip cafés and ‘up-and-coming’ businesses. These urban enclaves for yuppies are ruining the city.
• Precarisation: Because hosting hundreds of guests requires a significant amount of work, Airbnb has become a major provider of ultra-precarious jobs: housekeeping, laundry, emergency services, airport pick-up,… These jobs are often undeclared and carried out by people paid under the table and required to be fully available for minimal remuneration. Not the best way to boost the local economy.
• Off the book: Airbnb indirectly motivates hosts not to play by the rules. The platform’s refusal to share its data makes it impossible for local policymakers to check who’s complying with the laws and who’s not. Around 80% of Airbnb rents in Berlin are not in line with local regulations. More than half of the rents listed on Airbnb in Amsterdam were probably illegal in 2018.
• Unfairbnb: Airbnb has a knack for tax optimization, a core feature of US big tech business model: the company channels its profit through Ireland and pays almost no taxes in the European countries it operates. Airbnb France paid only €200’000 in corporation tax last year despite generating more than 16 million euros in France.

The Euro-city strikes back: When Airbnb started building its empire in Europe over the last decade, city councils turned a blind eye. But when the damage became visible and locals started raising their voices, they were forced to step in to stem the tide, with more and less success:

• Barcelona: Under Mayor Ada Colau’s leadership, the City council of Barcelona has banned private room rentals and suspended the issuance of licences for short-term entire-apartment rentals. There has even been a threat of banning the company altogether. The number of illegal sublets in Barcelona was cut down by 70%, and the Airbnb supply has been decreasing since 2016.
• Paris: Since her 2014 election, Paris Mayor Anne Hidalgo made it her plan to crack down on Airbnb: registration by the city hall is mandatory, apartments cannot be rented out more than 120 days a year, and there have been talks of introducing quotas in several neighbourhoods. The Airbnb supply in Paris has stalled since.
• Amsterdam: In 2018, the city council reduced the rental period to 30 days. In 2020, short-term rental was banned in 3 central districts; however, the ban was rapidly scrapped by a local court because it had no legal basis. Since 2021, mandatory registration by the city has considerably reduced the number of apartments available on the platform.
• Berlin: The city passed a law in 2016 requiring landlords to get a special permit to rent out their apartment on Airbnb. This led to a 40% decrease in Airbnb listings in the city, and 8000 apartments went back to the long-term rental market.

Winning the battle, losing the war: The urban guerilla between European cities and Airbnb has been raging on for years, yet it’s still not clear who’s winning. While stricter oversight and better regulation do directly impact the Airbnb supply, they might not be effective in the long term. Because let’s face it: Airbnb is not a passing fad and can’t be blamed for everything:

• Convenience: Airbnb is cheap, accessible, fun, and ideal for people that don’t care about hotel-style comfort. This is especially true for the younger generation, which has now adopted Airbnb as the go-to place to stay when travelling (60% of Airbnb’s guests are millennials). People will always do what’s more convenient, and blaming them for that won’t do much as long as there is no realistic alternative.
• Nomad 2.0: Getting tough on Airbnb won’t make cities less crowded. Travel habits in Europe have considerably changed over the last two decades: the explosion of cheap short-haul flights, the Schengen area, and the common currency have made Europe the perfect place for city breaks. Despite the pandemic, mass tourism in Europe keeps on growing, and going after Airbnb won’t stop this trend.
• Housing crisis: Airbnb can’t be a scapegoat for bad policymaking. Gentrification happened long before Airbnb. The housing crisis in most Euro-cities is the result of decades of neoliberal politics that failed to increase the housing supply or build enough affordable housing. Airbnb is thriving in the current malaise but can’t be blamed for it.

Who’s to blame? Yes, Airbnb has done a lot of damage to European cities. But this is not where the real problem lies. The big question is about who’s responsible for this mess: the guest enjoying some quality time abroad? The host using a service to make extra money? The real-estate investor for maximising profits within a legal system? The platform for coming up with a very profitable service? Or the prevailing system for promoting the commodification of housing?

The problem is not Airbnb itself but the environment in which it operates.

Endless crusade: City authorities across Europe are trying to fix something that is out of their hands. There are so many forces that play into the current mess that it’s hard to do much about it. Yet not making a move is not really an option, especially since the issue is gaining more and more attention among the public. Therefore, bashing Airbnb has become the only way for local authorities to give the impression that they’re trying to do something about the issue. Yes, they may mean well by doing so, yes, it might certainly increase their popularity, and yes, it’s definitely better than doing nothing. But sadly enough, they might never win, as the environment in which Airbnb is blooming seems to be here to stay.

Red herring: Bashing Airbnb won’t solve the structural problems. Euro-cities need a long-term vision to reform the tourism industry and improve their housing market policy. The current housing crisis and the tsunami of tourists in most Euro-cities this summer show that there is still a long way to go.

Next episode: The Impossible Reform of Uber