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THE AIRBNB EFFECT: HOUSING, RENT & HOTEL CRISIS

Thinking statue featuring the words to airbnb or not to airbnb
Pixabay / Canva

To Airbnb or not to Airbnb–a question which Shakespeare would likely scoff and roll his eyes at in disgust. First World problems, indeed. However, the decision to Airbnb or not has become somewhat of an ethical dilemma for travelers.

With Airbnb offering cheaper rooms for travelers than hotels–according to Travel Freak— saying no to Airbnb becomes harder and harder to resist. Airbnb offers the luxury of “living like a local” and instead of room service, the platform opts for fully equipped kitchens to cook meals in lieu of going to restaurants– giving the potential to save even more money.

Despite the positives of Airbnb’s innate set up, the platform has caused considerable damage to hotel revenue–and in the wake of its success, has displaced residents and has turned local communities upside down to an unrecognizable point.

Airbnb has enacted a category 4 earthquake so massive, its left detriment to housing, rent and hotels–all of which are slowly crumbling in its wake.

If hotels are the Titantic, then Airbnb is the iceberg that brought them down. The metaphors are endless.

The Wolf of Lodging: Destruction of Local Community & The Hotel

Airbnb has dominated the lodging industry in the past decade and continues to do so. According to Forbes, Airbnb’s total number of listings in 2018 was around 4 million, listed in 191 countries; this total was higher than the top five hotel brands combined. Now in 2021, there are 220 countries and regions with Airbnb listings–as reported by Stratos Jets. In just 2016, hotels lost “$5.8 million in revenue” to Airbnb–as reported from an article by the School of Hospitality Administration at Boston University.

Since then, Airbnb’s popularity has grown exponentially, which in turn, has increased the supply and demand for Airbnb listings. According to Forbes, this rise in supply and demand for Airbnb listings has caused landlords to convert their once long-term rentals into short-term lets for Airbnb. The New York Times is quoted saying: “You can earn more renting out apartments and houses on Airbnb than renting to locals.” Additionally, U.S. News reports investors are taking advantage of Airbnb’s lucrative business and purchasing entire apartment properties–whether apartments or houses–for the sole purpose of renting to Airbnb guests. This, is the foundational problem rooted in the ‘Airbnb Effect’.

Quote: What you should care about is whether Airbnb is making neighborhoods unaffordable. 
Airbnb is letting a handful of people eat up the entire housing market in America’s biggest cities. The law isn’t stopping that, even if it ought to. 
The more Airbnb grows, the more cities’ supplies of regular housing shrink. The more housing supply shrinks, the more housing prices rise.
Cracked Explains Quote

Ultimately, as the demand for Airbnbs increases, so does the supply–the Airbnb listings. This in turn displaces original renters, increases rent and housing prices due to scarcity whilst simultaneously disrupting local communities. This is an issue which has contributed to “overtourism”–an abundant influx of tourists that is considered too many for one area–as told by the publication Skift.

The ‘Airbnb Effect’ has been likened to the same effects of gentrification. Forbes states: “It slowly increases the value of an area to the detriment of the indigenous residents, many of whom are pushed out due to financial constraints.”

This in turn is affecting citizens all over the world–across American, Canadian, European and Asian cities–reaching global proportions. As The Guardian reports, Venice and Rome’s influx of tourists has led to an increase in Airbnb listings, which has unfortunately led to an increase in living costs and in consequence, has pushed locals out from the area. The complete obliteration of community has been replaced by tourists who deign to live like the very locals that were pushed out.

Sometimes, the disruption of local communities comes in the form of constant partying by vacationers Airbnbing in non-tourist areas– the blog Alternative Travelers gives thoughtful insights on how this predicament is affecting communities. In some cases, as told by The Mercury News these parties also cause an increase in crime.

The takeaway: It’s important to keep the integrity of local communities in tact–if not for the belonging, then for the safety and security it provides residents.

There is a lot to be said about how community can make residents feel. Take the television show Cheers for instance. Its entire premise was based soley upon community–and this proved to be successful, considering the show ran for 11 years–according to The Hollywood Reporter. The lyrics in the show’s theme song where everybody knows your name” ignite the warm fuzzy feelings of community that everyone longs for.

The Flip Side

Graphic featuring a flipped city with the words the flip side.
The Flip Side Graphic. Made with Canva.

Despite the piles of evidence which suggest Airbnb’s negative impact on communities, some positive impacts linger. According to the publication Skift, Airbnb “has contributed significantly to the world economy.” The article states “for 10 of Airbnb’s largest cities, Airbnb had a total economic impact of approximately $12.3 billion.” Additionally, hosts make a supplemental income of about “$3,900 per year.”

Hosts using Airbnb as a means of an additional supplemental income is up for debate, however. The New York Times reports one person stating, “by renting out their rooms, these people have found a way to pay their rents and mortgages”–while another states that “many hosts are professionals who are “speculating” on the housing market, not individuals looking to cover their basic needs.”

In wake of the Taliban’s takeover of Afghanistan, Airbnb decided to use their business to help fleeing refugees. According to multiple publications such as Time, The New York Times and NPR, Airbnb has temporarily housed over 20,000 Afghan refugees worldwide for free; a humanitarian effort that is unprecedented in corporate America.

Is Regulation The Answer To All Our Problems?

Airbnb is largely unregulated in many countries and cities, but some governments are working to change that. In 2018, Japan started regulating Airbnb listings and in doing so removed 80% of the listings in Japan on Airbnb–according to a report by CNTravel.

In addition, Singapore has one of the most strict regulations in place for Airbnbs–one which outright bans Airbnbs from being listed in the country, as told by the source Passive Airbnb.

Parts of the UK have yet to regulate Airbnb, however, residents and government officials in both England and Scotland are asking for the government to regulate Airbnb as the platform has recked havoc on local communities–as stated in this article by The Guardian.

The Thread Weekly offers a series of compelling reasons as to why Airbnb should be regulated–including:

  1. Airbnb increases the cost of living and reduces the quality of life for existing residents.
  2. The Airbnb business model mostly benefits real estate investors instead of traditional homeowners.
  3. The lack of oversight and regulation pose public health concerns, including congestion and cleanliness issues in residential neighborhoods.

(You can read The Thread Weekly’s article here.)

Additionally, as Economic Policy Institute has pointed out, since Airbnb “is clearly a business competing with hotel lodging, it should be subject to the same taxation regime as hotels.” As the report states, as people “shift from traditional hotels to Airbnb lodging” it in turn “leads to less-reliable tax payments to the city.”

In contrast, the publication Skift argues that regulation is necessary only to a certain point, stating: “completely wiping out Airbnb as an alternative for travel accommodation via regulation is not necessarily beneficial from an economic standpoint.”

Ultimately, we’re not looking for a Cinderella “bibbidi-bobbidi-boo” moment, where-in each city’s metaphorical shattered and torn dress transforms into a beautiful ball gown. There is no magical answer to reverting the foundation of issues Airbnb has created. However, regulation is likely a start in the right direction for many cities affected by Airbnb.


Whether you’re for Airbnb or against Airbnb, there are surely compelling arguments for both sides. What do you think about Airbnb’s impact on local communities and hotels? Let me know in the comments below.

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