Short-term rentals: Airbnb in the press, from New York to Paris

The Airbnbbust was a post-Covid wake-up call for some US landlords whose plans to pay off the mortgage on a second home depended on a steady influx of cash from short-term renters, but who seem to have preferred Rome to Orlando.

But even those fortunate enough to own properties in the hottest tourist spots have their own problem with a condition called the “Airbnb boom”: a backlash against short-term accommodations that exacerbate housing costs, Bloomberg reported in an article. New York is the latest city to join the fray, forcing short-term rental hosts to register in the city and follow strict restrictions or face fines, which Airbnb claims is a de facto “ban.”

Now, as mentioned, cities are scrambling to find the right way to regulate platforms like Airbnb and VRBO, either by setting caps on the number of days a property can be rented (in London or Paris) or blanket bans on certain types of rentals (Barcelona). It is also a test of the economic growth potential of these leases as pandemic trends fade.

price jump

What makes short-term rentals a justifiable target in cities is the shrinking supply of housing that could house local residents. A 2023 study by economists at the University of Graz found that weekly rent via an Airbnb in Sydney is almost double that of the long-term market. A similar picture can be seen in Paris, where lower supply and higher regulatory costs have led to higher prices. High rents make it easy for landlords, but hard for locals. In New York City, the city estimated in 2018 that for every 1% increase in Airbnb listings, rents in the same neighborhood increased by 1.6%.

Meanwhile, there are nearly twice as many listings for entire properties as there are rooms in New York and 12 times as many in Paris, according to AirDNA. French speculators expect a boost in business from the Olympics, and the French government has said platforms such as Airbnb should look out for overpricing. (Airbnb says current French regulations are “effective” and that 75% of supply in Paris consists of basic accommodations, adding that the new Olympics initiatives only make sense if they apply to hotels as well.)

Crackdowns are certainly not the right tool, and the history of politics in this area suggests that no city’s housing crisis will magically be solved by focusing on short-term rental platforms. This requires building more housing, not just releasing it.

Amsterdam has around 5,000 short-term rental listings, according to AirDNA, but that pales in comparison to an estimated shortfall of around 45,000 homes. Amsterdam’s crackdown on short-term rentals may have already been felt by the hotel industry, which faces less competition.

But the current unfairness of the housing market is making many horizontal policy tools increasingly popular. So why are cities once again faced with the question of who they really cater to: tourists, whose numbers soar in the summer, or locals who pay taxes year-round?

New York’s move is an important step toward answering that question, even if a fatal blow against Airbnb and similar platforms is unlikely in the short term. Madip Singh and Nishad Chidala of Bloomberg Intelligence estimate that even a full ban in New York would cost between 2% and 3% of the company’s bookings. The example of Denmark is instructive: when a new tax was introduced on short-term rentals, individual listings fell but prices rose as multi-landlords filled the gap.

The short-term rental economy is growing

The bigger question in the longer term is whether cities will start to act in a more coordinated way if this starts to look like a global issue. The steps the EU is taking to get Airbnb and others to provide more data could also help authorities improve regulation.

Airbnb as a company is clearly a success, as it approaches its first full year of earnings in 2022 and is poised to join the S&P 500. However, post-COVID-19 trends are weakening and revenue growth is expected to slow this year, from 40.2% to 40.2%. %. 17.2%, then to 13.1%. And if the tougher stance on the part of the regulators coincides with the easing of so-called “retaliation travel”, we may be heading towards a different reality even for a hotspot like Paris when the Olympics are over.

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