Airbnb Case Study International Business

996 Words4 Pages
Since the emergence of AirBed&Breakfast in 2008, it has revolutionized the global hospitality industry. Today, Airbnb is a $25.5 billion business, listing around 1.5 million properties in 191 countries, attracting more than 60 million users worldwide (Airbnb.com). Despite growing interest from consumers, Airbnb does not operate in line with current regulatory frameworks. Some argue that private regulation will outperform government regulation as the private system would promptly adapt in different cases so that hosts may offer reasonably safe, quality rooms at affordable prices to consumers (Robert Murphy). However, the lack of government regulation on Airbnb’s business operation has raised concerns among hotel operators and authorities alike.…show more content…
As Airbnb is a relatively new service, the lack of regulation by the government gives the service an unfair economic advantage over hoteliers. Hosts of Airbnb’s listings do not need to comply with the same norms and regulations enforced on hoteliers. For instance, a large amount of the income generated by Airbnb’s businesses transactions are not taxed. Instead, only certain commissions are charged with 6% Value Added Tax (VAT) (netivist.org). In addition, Airbnb does not have to meet health, safety or disability compliance standards, which are required by brand inspectors, health inspectors, and other government agencies for the case of hoteliers (Robert Habeeb). Nonetheless, the unfair economic advantage that Airbnb possesses creates unnecessary conflicts in the hospitality industry. For example, The Financial Times reported that a French hoteliers association, AhTop, has filed a formal complaint against Airbnb, claiming that Airbnb competes unfairly in the country. While these conflicts have not escalated into deeper problems, it is best to curb them now with appropriate government regulations. As shown above, it is clear that Airbnb service possesses an unfair economic advantage over regular hoteliers and hence should be regulated by the…show more content…
The depletion of long-term permanent housing caused by Airbnb is unlikely to be addressed by deregulation or a framework self-regulated by Airbnb (Federal Trade Commission Workshop). Some avaricious landlords invest more in housing stock to be used for rentals purposes as Airbnb provides a profit incentive to landlords to rent their units out to tourists in lieu of tenants on a full-time basis. As proof, the New York City’s Attorney General’s analysis showed that there are 1406 Airbnb hosts referred as “Commercial Users” because they rent out anywhere in between 3 and 272 units – 124 of them operate ten or more units in 2015. The results proved that a large segment of the Airbnb’s host population is influenced by commercial interests renting out multiple apartments as short-term hotels. The seismic impact of Airbnb on housing market can be seen as The Los Angeles Alliance for a New Economy, estimated that in March 2015, more than 7000 houses have been taken off the rental market for the use as short-term rentals (The San Diego Union-Tribune). Other than that, Airbnb could impact the property market by reducing affordable housing available for the lower-income community. For example, in 2014, Airbnb removed 1% of the units from Los Angeles’s rental market— and extensively more in some districts—while monthly rents increased by 7.3%, reducing the affordable housing

More about Airbnb Case Study International Business

Open Document