Alternative to mass tourism? Sustainable tourism and the regulation of short-term rentals

Airbnb and other Short-Term Rental (STR) platforms are the phoenixes of today’s economies: they beautifully thrive and when they are at the risk of disappearance, they are reborn and fly up again, says URBACT Thematic Expert Laura Colini. Here, she presents the outcomes of the EU Urban Agenda for Culture and Cultural Heritage work on better regulation of short-term rental platforms and sustainable tourism, which includes a Study conducted with URBACT cities.

In recent years, we have seen Short-Term Rental (STR) appear on the market as a social innovation for sharing domestic spaces, turning houses, public spaces, entertainment, culture and heritage into a successful tourism machine all over the world. This produces profits for different types of stakeholders, from individuals to large enterprises, thus creating troubling issues for cities. First and foremost, STR platforms such as Airbnb thrive on a shallow mechanism that allows unlicensed properties to be listed; it encourages landlords to change long-term into short-term rentals, reducing the amount of affordable housing stock for locals; it reinforces mass- and hyper- touristisation, gentrification and Disneyfication of historical cities in Europe, and ultimately monopolising the tourism economy, overshadowing traditional and alternative ethical forms of tourism such as Fairbnb and others.

Inhabitants, social movements, and city administrations have voiced these detrimental  effects, creating measures to control the STR in their cities (for example banning illegal STR leasing in Berlin by law, capping the amount of days for STR in Amsterdam, and other cities, in France and elsewhere) while demanding better regulation of Short-Term Rental at EU level (for example the Eurocities initiative).

The COVID emergency knocked Europe’s tourist economy hard and just when Airbnb seemed to lose ground, it reinvented itself, turning investment towards digital nomads, diversifying its offers towards leisure and assuming an ethical approach for humanitarian causes. Nevertheless, as we look beyond COVID-19, tourism has come back with new soaring prices catching up for hotels and flights, with $1.5 billion realised by Airbnb in the first quarter of 2022, equal to an increase of 70% compared to the previous year, and with the same detrimental issues for cities as we knew before 2020.

URBACT cities supporting sustainable tourism

The EU recognises the crucial role of tourism in the European economies, and a range of different actions, funding and initiatives are geared towards fostering sustainable tourism. In particular, following the pressures for better regulations at EU level from cities, the EU Urban Agenda took an opportunity to dedicate an action led by URBACT to this aspect. In collaboration with cities from the URBACT networks Tourism-Friendly Cities and KAIRÓS, and in exchange with the European Commission’s Directorate-Generals for Regional and Urban Policy and Internal Market, Industry, Entrepreneurship and SMEs, the action for Sustainable Tourism and better regulation of Short-Term Rental is now in the Action Plan of the EU Urban Agenda Partnership on Culture and Cultural Heritage (EU UA C&CH). The scope was to outline potential perspectives for sustainable management of tourism at city level in relation to STR, respecting the definition of sustainable tourism of the UNWTO.

The main outcomes of this EU UA C&CH are:

1. A Memorandum 2021, a legal input analysing the bottlenecks at EU level in regulation of STR by Yolanda Martinez; Marimon Avocados ES 'Regulatory enforcement difficulties in the short-term rental accommodation sector stemming from the European legal framework on digital services’
2. The 'Sustainable tourism – Regulating phenomena of sharing economy’ Study by Prof Ugo Rossi, GSSI IT, and Dr Laura Colini, URBACT with the collaboration of URBACT cities
3. Peer-learning and exchange among cities, the researchers, the coordinators of the EU UA C&CH and external input from prof Claire Colomb UCL UK
4. Collaboration with the EU UA C&CH, DG GROW, DG REGIO and URBACT for the EU COM STR initiative to strengthen links between the European Commission’s work and cities.

Sustainable tourism – regulating phenomena of sharing economy

The Study 'Sustainable tourism – regulating phenomena of sharing economy’ focuses on a range of towns and cities that differ in terms of population size, geographical location, and tourism offers across Europe: from top tourist destinations such as Berlin, Bordeaux, Dubrovnik and Krakow to popular small towns such as Druskininkai and Rovaniemi, to emerging destinations such as Braga, Caceres, Dun Laoghaire, Šibenik. These cities have been selected from members of the EU UA Culture and Cultural Heritage, as well as two URBACT Action Planning Networks (Tourism-Friendly Cities, which explores the potential for sustainable tourism in medium-sized cities, and KAIRÓS, which looks at cultural heritage as a driver for sustainable urban development and regeneration). 

As the sector saw largely unregulated growth during the second half of the 2010s and a popularisation of digital platforms in the holiday rental business, cities across the world – and especially Europe – witnessed an unprecedented acceleration in the influx of tourists and the rapid expansion of the digital platforms industry, exacerbating the housing crisis in Europe and elsewhere. This expansion poses a threat to urban societies, as fast-growing numbers of homes move from standard rentals for residents to short-term rentals for platform users. This tends to drive permanent residents and indigenous businesses out of urban districts and neighbourhoods that attract large numbers of short-term rental listings, due to a shrinking supply of affordable housing.

The outbreak of the COVID-19 pandemic dramatically impacted cities, and particularly their service-oriented economies. Departing from the assumption that pandemics and similar threats offer opportunities for substantive change, this unprecedented slowdown posed by the COVID-19 pandemic to the global economy may represent a unique opportunity to correct the distortions of the standard pattern of economic development, including the urban tourism industry.

In the Northern hemisphere, the summer of 2021 saw urban tourism getting back to pre-pandemic levels, especially in environmentally attractive destinations like coastal cities, while in other cities it is still well below those levels.

Community-led rental platforms?

The Sustainable Tourism study is based on exploratory research into how to pursue a stronger, socially supported regulation of short-term rentals, using the debate in 2021 about the need for recovery from the pandemic slump of 2020 as an opportunity to achieve more sustainable urban tourism. In particular, the study proposes combining a prescriptive approach to regulation with a proactive strategy that considers the role of risk management and community engagement in the pursuit of sustainable urban tourism. The study emphasises the role of municipalities and local communities, stressing the importance of the local context not only as a site for policy implementation, but also in a generative sense as a breeding ground for the development of deeper institutional capacity.

The study involved a qualitative survey based on in-depth, semi-structured interviews conducted with city officials of the selected cities on the regulation of short-term rentals from the perspective of sustainable urban tourism. It tested the interest and availabilities of these cities to experiment with locally managed, community-led rental platforms, following a multi-scalar approach with three main founding principles:

• Prevention is better than cure: in tourism policy, an anticipatory approach seeks to avoid the reproduction of a systemic risk of over-tourism.
• Community engagement is key to success: cultivating a sense of belonging to the local community means embracing an approach to tourism that places the needs of the local community at the centre of local policy strategies committed to economic diversification and urban sustainability.
• Local power matters: the local scale is crucial not only from the point of view of societal impact and policy implementation, but also in terms of institutional empowerment of local communities.

Departing from these principles, the policy approach put forth a '3Ps strategy’: Prepare, Preserve, Platformise. The goal of the study is to deal with the regulation of short-term rentals from a wider perspective, linking regulations to risk management and the experimentation with local alternatives to corporate-owned platforms. In particular, ‘Prepare’ means working side-by-side with local communities to prevent the risk of over-tourism; ‘Preserve’ means implementing regulations aimed at preserving urban areas and their communities particularly exposed to the risk of over-tourism; ‘Platformise’ means experimenting with community-led short-term rental platforms.

The study proposes to re-think urban tourism as a process of sustainable transition where new regulations call for a socio-ecological approach that incorporates the needs of local communities, as well as their institutional capacities and that relies on three main aspects.

First, the issue of risk awareness and preparation of communities: when not effectively regulated, tourism is no longer a resource for local communities, but becomes a threat that requires general awareness of the consequences of an unbridled tourist sector. Second, the socialisation of regulation is essential for making regulations implemented successfully to contextual constraints and demands. Third, municipal experimentation should be encouraged to further innovate on municipal-led platforms and peer learning as in the philosophy of URBACT.

In conclusion, short-term rental platforms can be re-thought to bring inhabitants, businesses, and tourists closer, re-considering platforms as a positive potential for a more sustainable tourism.

Visit the Cities engaging in the Right to Housing platform.