I have yet to see a response that is favourable to Airbnb, but it’s a daily occurrence to see people expressing very negative thoughts about this company. Why?
To quote the Airbnb website “And so it all started with an email: Gebbia wrote Chesky with an idea: What if they made turned their loft into a designer's bed and breakfast, complete with a sleeping mat and breakfast? It was a way to "make a few bucks." 12 years later, that idea is worth $31 billion”.
Well, that establishes that it was good for the founders, but is it good for Portuguese tourism? Airbnb would seem to be competition to the established tourism industry. Recent studies found that it was 21 percent cheaper to rent out an apartment on Airbnb than get a hotel room, and 49 percent cheaper to rent out a private room. That makes Airbnb a threat to the established tourism industry, and they have invested millions in promoting visitors to Portugal.
Airbnb renters are at risk
Hotel chains offer a consistent experience. If something does go wrong, the person at the front desk will answer your call any time of the day or night. And however far in advance you reserve your hotel room, you don’t have to worry about losing it right before you’re scheduled to leave.
An Airbnb host could cancel your reservation any time for any reason. To put it bluntly, you are in the hands of tourism amateurs, not professionals. Also note, if your Airbnb reservation were to get cancelled at the last minute, you could end up spending more money to find a substitute. And if you show up and don’t find the Airbnb suitable, you may not get all your money back.
Damaging the normal rental market
The other complaint people frequently make is that Airbnb hosts tie up properties that could be used for the normal residential rental market. This forces prices up for people looking to rent long term rather than buy. It might make a quick profit for ‘hosts’ but it clearly damages the normal rental market. According to Bloomberg, Lisbon City Council is introducing measures to turn Airbnb-style homes into affordable housing, but Airbnb hosts are resisting. Airbnb are a little ‘shy’ about revealing how many properties they have available in Lisbon, but it runs into thousands.
According to the Airbnb website, most Hosts pay a flat service fee of 3 percent of the booking subtotal plus a 14 percent service fee. However, this is not always the case, Airbnb themselves say “When one starts to dive into the Airbnb commissions and service fees it might feel like trying to find one’s way through a jungle”. Recently Airbnb seem to have established a flat rate of 15 percent commission.
Properties such as villas, apartments, etc. that are made available for rental through travel agents, tour operators and rental agencies are all highly regulated and subject to strict standards. Airbnb properties are not subject to the same standards.
Many Airbnb properties are not properly licensed
According to e recent report by The Portugal News in December 2020, almost 50 percent of accommodation in Lisbon registered on the Airbnb digital rental platform does not have a valid license, with 30 percent of the properties not even having permission to be used for this purpose, according to this study.
Proposing the implementation of a license approval process by Turismo de Portugal, the authors explain that they found “cases of licenses whose spaces are left blank or are filled with ‘Airbnb123’”, according to Lusa News Agency. “In the most extreme case, we found the same license to be used for 24 properties.
According to a recent study, the data, collected in October 2019, revealed the existence of a “strong growth” business. “Since 2016, the number of properties listed on this platform, in Lisbon, has more than tripled, from 8,000 to 25,134 properties by the end of 2019”
The government are reported to becoming concerned by the growing diversion of apartments and houses from regular rental to short-term leases managed by Airbnb and similar services. One of the reasons is the tax advantages granted to short-term leases. The taxation rules seem to stipulate that only 35 percent of touristic or short-term leases are subject to taxation, which means a final tax bill that is no higher than 13.5 percent in the highest tax brackets for individual investors. This contrasts with regular leases paying a flat 28 percent rate on income. If you add arcane legislation and snail-paced courts that make difficult, costly and lengthy to evict defaulting tenants, it is no wonder that investors are flocking to buy whole buildings to convert into short-term rentals.
Is Airbnb good for the tourism market?
I think that has to be a resounding NO! Portugal’s tourism market is well regulated and well run. Villa rental companies are regulated, with proper customer service and backup to meet the needs of the customer. They have had many years of experience building the market and their work has resulted in Portugal having a very good reputation for quality of accommodation and service.
If something goes wrong, and it happens, such as a plumbing leak, a failure of the air con or kitchen equipment, not to mention the swimming pool, they have the technical people on hand to resolve problems fast. In the vast majority of case, villa complexes are well run, well maintained and offer a guarantee of service for the guest.
It seems to me that Airbnb ‘hosts’ are ‘cashing in’ on the years of hard work by the local tourism industry and trying to offer cut price accommodation for the budget conscious visitor. It seems they even get a tax advantage. The tourism industry employs many thousands of people who take care of visitors to a high standard.
Airbnb is a very slick operation, but it cuts out the tourism professionals, and they have been developing the market since the mid 1960’s. It’s difficult to guess what will happen to the market if this trend continues, but it’s not good news.