Based on Airbnb’s official data, the holiday let rental business is already earning over €218 million a year from Airbnb “hosts” in the Portuguese capital, comprised of 8,752 landlords and 20,509 properties

The annual income figures highlight the strength of this tourism phenomenon and the associated digital economy. Researchers alert that each of these Airbnb hosts operates an average of more than two properties, with earnings significantly more than the average monthly wage for Lisbon workers (€1,552 in 2016). This data corroborates the thesis that Local Lodging is an attractive business, generating high returns. “AL” permits a rapid recovery of investments and fuels an associated service economy, from cleaning and laundry to catering. For this reason, this business activity is increasingly developing into a bonafide profession rather than just part of an occasional “sharing” activity.

Short-term lets via Airbnb are generally more advantageous than long-term leasing. However, this phenomenon can also aggravate social and urban identity dilemmas associated with a shrinking resident community base and a growing temporary floating population. Economist Luis Carvalho warns of the rapid expansion of Local Lodging, driven by rent liberalization, recovery of a growing economy, low interest rates, the growing attraction to foreign investors or the emergence of digital platforms. Along with other platforms, Airbnb has been the spark that ignited this urban change, producing a radical transformation in just five years.

Researcher Professor Carvalho now fears the effects of a monoculture that is settling into the city. Too much tourism could prove to be a harmful mistake. Urban management must recognise when income generated today can become a disadvantage tomorrow, similar to what happened in many cities with rent control. He advocates possible solutions: a) stronger public regulation against increasingly professionalised Local Lodging hosting; or b) return to the original concept of the peer-to-peer economy – as Amsterdam is currently trying to do – or else the activity should be treated as a bonafide enterprise, most likely a hotel business.

Sharing Economy?
Co-author Thiago Mendes goes further, stating: “This is no longer a sharing economy, but a pure and hard platform economy”. He confesses to be another economist caught off guard by the rapid proliferation of Airbnb in Portugal. “Several solutions exist. But the real question is what kind of urban centre do we want in five or ten years from now. Do we want a city for people or a city to attract investment from China or Brazil?”

Dennis Swing Greene is chairman and International Tax Consultant for