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For many of us, holidays and travel have been transformed by affordable accommodation through Airbnb and its ilk. Once at our destination we gasp at the crowds, which seem to get worse each year. Europa United’s Frances Cowell looks at what all this means for local communities near tourist destinations.

Now that most tourists have packed their bags and headed home, some of us may breathe a sigh of relief. Tourism contributes plenty to the economies of many European regions and cities, and we would miss those tourists if they didn’t show up. But some of are asking if it is possible to have too much of a good thing.

Travel is more accessible now than it has ever been, so more and more people can learn from foreign cultures, appreciate history and marvel at nature. That it is no longer the exclusive privilege of the rich is certainly to be celebrated.

The “sharing” economy, offering cut-price accommodation, changes things even more. But all those extra people can be a strain for local communities in tourist areas. Whereas the number of licensed hotel rooms limited the numbers that could descend on a place at any time, the availability of Airbnb and its imitators blows that limit apart.

Competition and more choice from alternate sources of accommodation are good things in themselves and can help keep hoteliers and restaurateurs honest. But only if that competition is fair. One reason that rooms in private homes can be so much cheaper than even modest hotels is that they are not subject to the same taxes and quality controls. A predictable consequence is that investors are buying apartments and houses in popular destinations for the sole purpose of letting them to tourists. There are a number of things wrong with this.

It crowds out local rental markets, so ordinary people can no longer afford rent near where they work or called home for a long time, perhaps all their lives. The most vulnerable are the young and people who work in essential services, such as bus drivers, police and health workers.

Local businesses that rely on the custom of permanent residents, such as dry cleaners, dentists, veterinarians, cobblers and bookshops suffer, and even go bust when their customers have had to move out. Schools and crèches close and support groups for young, old and handicapped adults hollow out. This hurts everybody, even those residents who manage to hang on to their homes, as local services disappear.

Those residents are doubly hurt, as those businesses that may do nicely from the tourist spend, such as local delicatessens, supermarket butchers and bakers, find that tourists are happy to pay higher prices for things like fruit, vegetables and meat, sometimes 200% or 300% more. Locals can either pay up or move out.

And in the off months, when those tourist rentals lie vacant, once-bustling areas can feel deserted, losing all their character and charm as a result. Once its gone, its hard to get back a charm that took decades or centuries to build up.

Meanwhile, museums and historical monuments that form part of a local identity can become inaccessible to younger generations, while ancient flagstones, and edifices are subject to traffic they were not built to withstand. Places of natural beauty lose their beauty with too many people there all at once.

What can be done?

Some places have banned, or severely restricted, the number of hotel room equivalents that can be let via sharing accommodation sites. This sounds good, but can be circumvented easily enough by determined entrepreneurs. Meanwhile it can trap legitimate short lease providers, such as those who offer affordable student accommodation.

Bans can present other dilemmas, for example, where should limits be set? If its only the immediate tourist zones, then tourist share accommodation will simply spring up in the vicinity, with tourists piling into local transport.

Sometimes it seems that we need to limit the number of people who actually enter a popular tourist zone. One imagines tickets to enter, say, Amsterdam or parts of Barcelona, Rome or Paris, as for a long time they have done for the Al Hambra and is now being done for Venice. But how would that work for ordinary people who live outside a city and commute to work? Would they have to buy a ticket to get to work or to visit their mother? Seasonal passes would be an inadequate compensation. How do you decide who would be eligible for passes?

And for tourists themselves, set prices that are widely affordable, and you have the problem of queueing, where many people miss out on tickets altogether, as happens now for places at popular theatre shows and concerts. Worse, travel agents and other speculators can simply buy up all places on their release and resell them at huge mark-ups, just as scalpers now do for theatre and concert tickets. On the other hand, set the prices high, so that fewer people would be prepared to pay for available places and you return to the time when travel was a luxury that only a privileged few could afford.

However you allocate them, many ordinary people will be penalised while crafty entrepreneurs find a way to game the system.

As for local shops gouging their customers, price controls might sound like an answer, but they have a bad track record. Shop keepers unable to charge what they need to turn a profit will simply stop stocking the loss-making goods. History tells us that price controls simply give you empty supermarket shelves. That does nothing to maintain an area’s charm!

Perhaps the best – or least bad – might be the simplest: to regulate and tax properties marketed through sharing or tourist platforms as if they were hotel rooms. Many providers of share accommodation may then find the prospect much less attractive and return to letting their properties on longer leases to ordinary residents. And what can be said of shared accommodation can also be said of other shared services, such as ride-hailing. Tax and regulate them as for taxis and busses so that the competition they provide to traditional providers is fair.

This least-bad solution starts to look like a win-win: restrained and sustainable numbers of tourists, competition to keen all providers honest, minimum standards of health and safety, tax revenues to support local economies. And because it encourages a fresh look at regulation, perhaps a much-needed update there too! 

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Frances Cowell
Australian-born and European by adoption, Frances Cowell writes and speaks at conferences about investment risk and governance, financial market stability and business ethics in financial markets – and the implications for the wider political economy. She believes Europe must urgently assume the lead in protecting and preserving liberal democracy, the rule of law and the multi-lateral institutions and alliances that it depends on.

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