Airbnb started life with a rented air mattress on the floor of an overpriced San Francisco apartment during a sold-out convention in 2007, a way for the founders to cover their rent. Little more than a decade later, the home-sharing company has booked 500 million guests into properties in more than 100,000 cities around the globe. It’s one of the world’s largest private companies, with a market value estimated at $31 billion.
European counterpart Booking.com boasts an even greater roster of listings, with 29 million holiday homes to pick from globally. The Amsterdam-based company books 1.55 million room nights, every night. Homestay.com has a large and growing number of followers, too.
Asia has its own counterparts, like Tujia.com in China, which sets itself apart by managing all the properties it lists on its site. It believes it can cater better that way to large groups of Chinese travelers, who often want to eat familiar food on the road.
Oyo Rooms has taken the fragmented three-star hotel industry in India and revolutionized it. The company ensures minimum standards and a branded look, all backed by a suite of software and an app that makes booking easy. Airbnb itself has backed Oyo to the tune of US$150 million.
Resistant rules in Asia
Yet all these peer-to-peer booking alternatives face an uncertain future in Asia. They contend with a patchwork of regulations across the continent. Zoning requirements are rarely clear, and hardly favourable if they are. The entrenched and powerful hotel industry brings an entirely new meaning to “hotel lobby,” one that staunchly resists change and competition.
Asia now accounts for 1 out of every 3 traveling households. The continent will generate an estimated 270 million outbound international trips in 2021, according to MasterCard. But will Asia and its millions of host properties be left behind, as the region’s travelers look to get a better deal elsewhere in the world?
The governments of many Asia Pacific countries continue to create a hostile environment for home-sharing platforms. This neglects the positive impact such platforms can have on the local economy.
It is of course important for the government to regulate the activities of the hospitality industry. The problem is that the laws in Asia are outdated. They were created with traditional licensing in mind, a multi-room hotel the standard form. Online operators have disrupted that model, and transformed the industry to the benefit of travelers. Legislators have been left behind.
Japan sees sudden decline in rooms for rent
Japan has at least tried to address this. The government in June 2018 rolled out a new law to govern minpaku, private residences rented out by owners for the short term. It’s an update of a long-established system of minshuku, rooms in private homes that are offered as lodging.
But the minshuku rules were strict about the size of rooms, and a management-type person needed to be on site at all times on the premises with a license. Minpaku properties have no room limitations, and don’t require full-time staffing from owners.
The new rules do require owners to register their property with the government, and get a license number. Local authorities can also impose their own restrictions over and above the national laws. Owners associations can also banish minpaku from condominium projects. Most important of all, the maximum amount of time a minpaku lodging can be rented out is 180 days per year. Airbnb only lists minpaku or proper hotel-licensed rooms now – and lost 80% of its homes as a result. After the new law went into effect, the number of Japanese listings on the platform plummeted from 62,000 to 13,000.
Thai court creates uncertainty
In Thailand, a court in the royal holiday destination of Hua Hin has ruled that short-term rentals of less than a month are illegal. Anyone renting rooms by the day or week violates the 2004 Hotel Act, the court said, which requires owners of condos to have licenses to run a hotel business before they could rent out their rooms.
The Thai Hotels Association has been fervently lobbying the military government to punish non-registered hotels, including Airbnb listings. The association considers room-sharing platforms a threat to the tourism industry. It has, in some cases, sponsored dubious signs at condos stating that the Hotel Act prohibits short-term stays.
Yet the tourism industry is thriving in Thailand, and the law is certainly fluid and not settled on the issue. The government, now transitioning to civilian rule, has offered multiple amnesties for small-hotel “violators” of the rules who come clean and register their properties.
Airbnb says it operates legally in Thailand. The platform has even started cooperating with Thai authorities, to train officials on how to manage “homestays” and use them to build the local tourism business. The Thai authorities are reportedly considering amending the Hotel Act to include room-rental platforms.
Patchwork around Asia
Singapore mandates that “short stays” must be at least three months. There have been moves in Hong Kong and Indonesia to crack down on lodging laws in ways that would make short-term rentals very difficult to arrange. Meanwhile, Airbnb-style business is growing fastest in Indonesia, the Philippines and India.
The World Bank projects that the “peer-to-peer” accommodation sector will grow globally at 31% per year through 2025. That’s six times the growth rate of traditional hostels and bed-and-breakfasts. The World Economic Forum predicts that by 2025, 17% of the global hotel sector’s annual revenues, a slice worth US$8 billion, will come from short-term rentals, up from 7% now.
Peer-to-peer room rentals, and home-sharing platforms are not a universal good. They can raise questions over noise, security, sanitation and safety standards.
At the same time, this segment of the hospitality industry can bring important income to small-time property owners and local communities. It promises to spread the wealth of travel and tourism far beyond the brands of the five-star hotels that span the globe.
It is the job of good government to protect and serve the public, while also enhancing their economic prospects. Sometimes, governments needs to take a step back, to avoid getting in the way of progress. Let’s hope that Asian nations can find a successful future that incorporates peer-to-peer accommodation rentals – which we can all agree are here to stay.