After Barcelona City Council conducted inspections and imposed sanctions on illegal tourist rentals in the city, Airbnb responded by announcing restrictions on multiple listings in the downtown area.
In its press release, the company said hosts located in Barcelona’s Ciutat Vella (Old City) district would only be able to rent out one place on the Airbnb platform (no restrictions apply to listings in the city’s other nine districts).
According to Inside Airbnb, a website that tracks Airbnb listings in several cities, there are 17,369 listings in Barcelona — that number rises to nearly 20,000 during the summer — and 57.5% of those are from hosts with multiple units to rent. In addition, over 50% of the listings are for entire homes or apartments — not exactly the sharing economy. By comparison, Madrid, a city with double the population, has only 7,446 listings on Airbnb. In Europe, only London and Paris have more Airbnb rentals than Barcelona, with 49,000 and 55,000 respectively.
After Airbnb announced the new rule, the city council responded bluntly. Tourism councillor Agustí Colom called the rule “a joke” (“una presa de pèl”) and demanded that Airbnb immediately take down all illegal listings — ones without a tourist license — from its site. “The only agreement possible with Airbnb is that the platform agrees to comply with the city regulations, which are absolutely clear,” he said.
Per al govern d l'Ajuntament d Barcelona, la proposta que avui ha fet Airbnb és una presa de pèl. Ha de deixar de publicitar pisos il.legals
— Agustí #BCNenComú (@acolom_) February 7, 2017
Airbnb has claimed in the past that its service is necessary to address the lack of tourist accommodation in Barcelona.
Barcelona is a densely populated city and at the same time one of the most popular tourist destination in the world, receiving over 11 million visitors a year. So to some degree it has become a victim of its own success. However, what the city needs is not just a more sustainable tourist business and to reduce the flood of tourists, but also to attract more up-scale visitors who spend more and behave better.
Holidaymakers, especially during the summer, inundate the downtown areas and beaches, and disrupt daily life for full-time residents. Some locals are being forced out by rising rents and investors are buying properties with the sole purpose of renting to tourists, even if the city has stopped issuing new tourist accommodation licenses. As the Barcelona city council has stated, its role is to regulate and strike the right balance between ensuring stability and allowing citizens to run their own lives. That is something that Airbnb and similar platforms have ignored.
To make its point more forcefully, last year the city levied fines of €600,000 ($620,000) each on Airbnb and HomeAway, for listing properties that do not have a license for tourist accommodation. Those fines are pending a court ruling after Airbnb appealed, claiming that it is not responsible for its hosts’ compliance with local rules.
That is a surprising defense since Airbnb establishes the rules for becoming a host, collects payments and pays the host for the rental after taking its cut.
Barcelona has been asking for residents’ help. Last year they distributed a letter to each household asking people to inform the city if they suspect any of their neighbours are engaged in renting accommodation to tourists, without a license. The city also has a website where people can check active licenses at any address. Legal tourist rentals are required to display a license number, have liability insurance and regular inspections.
Airbnb is no stranger to conflict, battling cities like Berlin and Paris that argue that its business increases rental prices, reduces available housing stock and, as a result, pushes locals out.
Recently, the home-sharing platform changed tactics. As its business model is challenged by several cities for damaging the housing market and disrupting the legal tourist business, Airbnb has stopped negotiating with city administrations and continues to allow as many listings as possible, while complaining that some cities have rules that are impossible to comply with.
“Airbnb had said it wanted to talk candidly with cities, to play by the rules, to be a partner. But in the end, there emerged an unavoidable fact: Chesky was every bit the warrior Travis Kalanick was. He believed so much in the promise of his company that he was going to fight for every inch of territory.” says Brad Stone, author of “The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World”
In the company’s home town of San Francisco, for example, Airbnb is at odds with the city since the introduction last summer of a rule that makes the platform pay $1,000 per day for each listing that is not registered with the city. But Airbnb has sued the city and ignored the rule. “Despite the absence of a permit, which, according to law, one must have in order to rent for under 30 days, San Francisco residents are still illegally listing personal homes and apartments for less than the required number of days on Airbnb,” wrote Madeleine Johnson at Zacks.
Airbnb is not going to let its lucrative European business be regulated. As the company prepares for the biggest IPO of 2017, keeping as many listings as possible, even if it means breaking local and national laws, is key to attracting investors and having a successful public offering.
“Look at its historical game plan: It’s sort of an ‘ask forgiveness, not permission’ approach to moving into cities,” says Mike Issac in The New York Times.
Just last August, in a regulatory filing, Airbnb disclosed raising an additional $850 million in capital, pumping the company’s valuation up to $30 billion. At the time, according to the Wall Street Journal, the company was seeking additional investment to push off an IPO until this year. Airbnb is not profitable yet, losing about $150 million a year, according to reports.
Both Airbnb and Uber, the largest privately held startups, want to delay IPOs to stay free from quarterly earnings reports and questions from regulators about their legal challenges, which both companies face all over the world. Once Airbnb goes public, it will have to deal with the SEC and questions from investment funds over allegations of illegal practices.
What Barcelona and other European cities want is that the so-called “sharing-economy” platforms comply with local rules, which are designed to protect residents and visitors alike.
The Catalan capital is getting ready to receive over 100,000 delegates for the Mobile World Congress at the end of this month, and Airbnb is one of the most popular ways to look for accommodation. For many people, it is the only way to afford staying in the city during the show, but it needs to be regulated, and the hosts need to obtain the necessary license.