Play along or enforce?
Proposed bill doesn’t seem to solve inconvenience by Airbnb tourists
Amsterdam has the largest number of Airbnb listings per inhabitant worldwide, even more than hotspots like London, Paris and New York. This has consequences: mass tourism affects shops and the housing market. More importantly, city residents complain about the inconvenience caused by partying visitors. New legislation should change this.
However, Coen Rigtering of Utrecht ľ¹Ï¸£ÀûÓ°ÊÓ School of Economics is skeptical: 'Airbnb has succeeded in avoiding its responsibility. Their service generates serious costs for the city and inconvenience for residents. In the proposed new regulation Airbnb is not forced to take responsibility. Enforcement will be up to the government and not to the platforms - the maximum within current legal boundaries, according to Minister Ollongren. The problem and the solution is Europe' according to Rigtering.
Airbnb is playing a game
The Dutch newspaper NRC Handelsblad investigated the recent developments and the new bill that should regulate the rental of holiday apartments in major Dutch cities. However, the newspaper concludes that 'Airbnb has won the day'. In , assistant professor Strategy and Organisation Coen Rigtering is also mentioned. Together with Bilgehan Uzunca and Pinar Ozcan, he published a paper entitled 'Sharing and shaping: A cross-country comparison of how sharing economy firms shape their institutional environment to gain legitimacy' in 2018, in which the researchers showed how platforms like Uber and Airbnb respond to the weaknesses of local governments.
'Sharing and shaping'
‘Our research looked at the strategy of these companies and how they try to circumvent or influence regulation,' says Rigtering. ‘The question is whether the proposed legislation is sufficient to counter their strategies and govern their actions. Thus far, Airbnb has been very successful in preventing governmental regulation. In the event of problems or nuisance, Airbnb proactively initiates solutions of their own; working with the fire brigade to improve safety, introducing a hotline for complaints and nuisance, etc. This worked reasonably well when Airbnb was still relatively small in Amsterdam. Currently, these solutions are far from adequate. Now, for the first time, there is an attempt to regulate private holiday rental. But: Airbnb has sat down with the ministry and has succeeded in preventing far-reaching measures.’
Airbnb earns good money from illegal hotels and apartments that are rented out for more than 30 days. In that sense, it's just a big company that doesn't take the consultations with the city of Amsterdam very seriously.
The problem with proposed legislation is the extent to which Airbnb (and similar platforms) are forced to share data with municipalities.
‘For efficient and effective enforcement, it is necessary that Airbnb and the municipality of Amsterdam exchange data about, for example, rental periods. This exchange of data is ensured by the current proposal, but is cumbersome and labour-intensive for the municipality. If Airbnb would be very collaborative it might work, but past experience has shown that Airbnb is very reluctant to share data, tries to delay, and does not ensure that renters comply with municipal regulations. Especially the latter makes sense; Airbnb earns good money from illegal hotels and apartments that are rented out for more than 30 days. In that sense, it's just a big company that doesn't take the consultations with the city of Amsterdam very seriously. They are playing a game.’
Costs by the platform, enforcement by the government
‘In 2016 Amsterdam still saw AirBnb as a "best case",' says Rigtering, 'but then they were still in the "preliminary phase of negotiations". After the conversation stopped at the municipality level and was taken over on a national level, Airbnb came back into the picture. Airbnb then 'demanded' that Booking.com and other small platforms would join, obviously to get more leverage over the government. The game started again. And now we have the bill, of which the Minister in the letter to the Chamber said: this is the maximum that can be done within European regulations.
Is that correct? I do not know. I think there is a bigger issue here: how do we want to deal with these kinds of platforms? In Europe, several cities are struggling with Airbnb. Barcelona is perhaps the most powerful example of this: a serious attempt is being made there to ban Airbnb, but so far this has proved very difficult. In the Netherlands effective control is made more difficult by what the minister writes in a letter to the House of Parliament: the enforcement task lies with the government and not with the platform.
The bigger picture is that a platform generates value for certain parties, but when the platform gets bigger it may also generates costs for other parties. Renting out rooms has been done for a long time, but if you do it so a very large scale, you get a nuisance and enforcement is needed. In the case of Airbnb we are talking about serious costs, which are borne by the municipality and the inhabitants of the city. At one point Amsterdam even had to create 'Airbnb cops' to combat illegal hotels. Airbnb easily evades responsibility by saying: we only mediate between supply and demand.'
Defining what a platform really is, is therefore an issue. In the coming years, there will be more and more platforms so we can expect similar problems in other industries as well.
Europe is the problem and the solution
‘Airbnb is a platform and different rules apply to platforms. The big difference between Uber and Airbnb is that at one point a judge defined Uber as a taxi company – and then existing Dutch taxi regulations could be applied. Defining what a platform really is, is therefore an issue. In the coming years, there will be more and more platforms so we can expect similar problems in other industries as well. In April, the European Parliament approved a law to protect platform workers. However, we need to look at platforms in a different way in general. I therefore agree with the Minister that this is also an issue at European level. However, this means that it may take quite some time before we have an adequate solution in Amsterdam.'
Coen Rigtering is, however, by no means opposed to the phenomenon of platforms: ‘There are a lot of useful and interesting (smaller) platforms with added value that you don't want to over-regulate. But large and commercial companies with mega-investments need to be controlled.'
Expertise
Utrecht ľ¹Ï¸£ÀûÓ°ÊÓ has a great deal of knowledge about the platform and sharing economy. Would you like to know more? Please contact Coen Rigtering: