Saturday, May 06, 2017

Airbnb Myths: Correct Or Not?

The study, "Myth and Reality of Holiday Rentals in the Balearic Islands", should be an important contribution to the holiday rentals' debate. The work of two researchers at the university, Professor José Luis Groizard and Associate Professor William Nilsson, it is valuable because it deals with facts. It is also a product of the university's applied economics department, which has been responsible for excellent tourism research in the past.

Groizard and Nilsson know how to hook their audience. The full report, of which I have a copy, starts by saying: "the negative consequences of holiday rentals (and of Airbnb in particular) have been exaggerated." Straight to the point, therefore.

They examine eight myths and generally speaking dismantle them all. Holiday rentals generate an unsustainable increase in tourist stays; they create an underground economy and tax evasion; they lead to residents leaving urban centres (the so-called gentrification); they increase the price of housing; they reduce the availability of rental accommodation in the long term; they destroy the landscape by enabling speculation on rural land; they provide unfair competition to hotels; they create wealth outside of the Balearics.

To get to the nitty-gritty of the facts, the researchers establish that in August last year there were over 15,000 properties in Mallorca on the Airbnb website. Debugging this data (for duplications for example), the number was 12,136 offering some 63,000 places. These numbers are in fact very similar to those provided by the environmentalists Terraferida, based on Airbnb data for January 2016.

When Terraferida made its announcement, there was sensationalism attached. The tone of the university's research is different. But it should be noted that Terraferida then updated its research. In March this year, the group revealed that the number of places in Mallorca had climbed to 110,000 and the number of properties to getting on for 15,000: in the region, therefore, of an 80% increase in places in the course of a year.

For a piece of academic work, which might typically be devoid of headline-grabbing statements, Groizard and Nilsson are prone to doing just this. In addition to that opening statement about the exaggerated consequences, they state under Myth One: "It isn't Airbnb, it is the Arab Spring and Islamic terrorism!" (the exclamation mark is theirs). They say that since 2011 there has been an increase in the number of tourist stays in the Balearics and Spain and point, rightly enough, to a 15% increase in tourism to Spain which has been a consequence of the problems in other destinations.

But what they don't show is the growth of Airbnb since the time it first became a feature in Mallorca. I recall doing an article about Airbnb, which must have been about five or six years ago, that referred to a very modest number of properties. It was around fifty, if I remember rightly; whatever the number, it was negligible. So while geopolitics is unquestionably a reason why there are more tourists, Airbnb is also a factor. It isn't one or the other.

Airbnb isn't of course the only means of publicising properties. It may be the best known, but there are numerous other means for owners to advertise, always accepting that they may well be promoting the same property on different sites. As the two professors provide some evidence that Terraferida's figures for 2016 were rigorous, it is legitimate to assume that Terraferida's latest figures are also reasonably accurate: an 80% increase in places cannot be put down solely to those geopolitics.

The study is important, and the professors do make very valid points, but perhaps the main issue they overlook is the propensity for the growth of the rentals' market. And its very sudden growth and all the consequences this has.

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