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Airbnb offers concessions to get home-sharing rules relaxed
HOME-sharing platform Airbnb is willing to let building managements in Singapore access its booking system to monitor the comings and goings of Airbnb guests, according to the company's co-founder and chief strategy officer Nathan Blecharczyk.
In an exclusive interview with The Business Times, Mr Blecharczyk said: "The primary concern is how to make sure that neighbours and residents feel comfortable with those who are in the building, even if it's on a short term basis."
As of June 30, private homeowners in Singapore have been barred from renting out their properties for less than three consecutive months. Before that, the minimum lease period was six months.
Explaining the reasons for the restriction on lease tenure, the Urban Redevelopment Authority (URA) points out on its website: "It is important that we preserve the residential character of private housing estates."
However, the URA also indicated that it will launch a public consultation exercise on the issue, which suggests that the policy could be further tweaked in the future.
Mr Blecharczyk said that concerns relating to short-term rentals by outsiders "have come up before in many places. Certainly, any large building would face this issue".
At least some concerns could be alleviated by what Airbnb calls its "friendly buildings programme", which it has been piloting in the United States for more than a year.
Explaining how it works, he said: "This enables building managements to be given visibility into the Airbnb system to see when guests are arriving and departing from that building, what kind of vetting has been done in relation to their backgrounds, as well as set some basic restrictions on how long people can stay and other criteria that the building (management) might care about - so it allows for some customisation."
He added that Airbnb would also be willing to share commissions on rentals with building managements. "The building (management) can define a service fee that gets collected on each transaction. That money can be set aside to help everybody in the building," he said.
Landlords who have tenants that want to be Airbnb hosts would also stand to benefit from the programme. Airbnb explains on its website that tenants would need to sign a "lease addendum" with their landlords on hosting terms.
Landlords would also be informed about guest check-in and check-out dates, the number of guests and host earnings - and would earn commissions on short-term rentals. Landlords and hosts can agree on the percentage of the hosts' profit the building management and/or the landlord will receive, alongside other conditions.
Although a relatively new initiative, Airbnb's "friendly buildings programme" has been deployed in cities in the US as well as Sydney, and is being extended to other cities around the world. "I think it's very relevant to Singapore," said Mr Blecharczyk.
As chief strategy officer, one of his key responsibilities is to work with different stakeholders in Airbnb's ecosystem, which include policymakers, hotels, hosts, neighbours, landlords and building managements.
"The question is how do we make sure we are existing in harmony with them," he said, "because if we don't offer them a value proposition, if we don't have a relationship, then they would not appreciate Airbnb and would push back."
In Singapore, the company's main preoccupation at present is to find ways to deal with the concerns that have led to the prohibition of short-term rentals under 30 days.
"From what I have heard from speaking with policymakers, the most important concern here is providing visibility as to who is in the building," Mr Blecharczyk said, adding that Airbnb's friendly buildings programme would address this concern. "Certainly there are other issues that have been raised, but relative to that first issue, those are much smaller."
Different tools for different concerns
"What we find is that in different places, there are different concerns," said Mr Blecharczyk. "More than 200 governments have passed home-sharing policies and each one is a little bit different."
After all the pushback it has faced in multiple cities, Airbnb has developed what it calls a "policy toolbox" which contains several options to accommodate its stakeholders.
"That list is getting longer and longer," said Mr Blecharczyk. "The friendly buildings programme is only one thing in the toolbox. But there are many others. We are willing to tailor our approach to the needs of the city rather than expecting a one-size- fits-all solution."
Thus for example in New Orleans - a city that regulates home-sharing sites more tightly than most - Airbnb has agreed to share data, including host names and addresses, with the city government. Hosts also need special permits. As a concession to the local hotel industry, Airbnb has banned almost all listings in the city's historic French quarter which is especially popular with tourists. In addition it puts a cap of 90 days' rental per year on hosts who rent out their entire homes.
Caps on the number of days of rental, licensing requirements for hosts, prohibitions on the renting of entire homes and responsiblity for collecting and remitting tourist taxes are among the policies in Airbnb's toolbox which it applies in varying degrees in different places, depending on the demands of local governments and lobby groups.
"We've tried to figure out what innovative solutions can address the issues that have been raised while still allowing the activity (of short-term rentals)," said Mr Blecharczyk. "It shouldn't be the case that in order to address the concerns, a prohibition of the activity is necessary. That would be a rather draconian approach."
In Singapore, Airbnb recognises the sensitivity around public housing and is not targeting that segment of the market. For the rest, it is willing to be flexible and to compromise. "But it should be a compromise," said Mr Blecharczyk. "We're very happy to tailor our business and put some constraints in place. But we have to acknowledge the reality of what's already happening. And that reality is quite positive. Guests are having great experiences. Hosts are benefiting - these are local people. Money is flowing into neighbourhoods that normally don't get tourists, who are spending money. So there is this overwhelmingly positive development."
Although Airbnb rentals under 30 days technically violate URA guidelines, there are more than 300 active listings, ranging from tents on campsites to luxury penthouses.
Based on data it has collected as well as feedback from guests, Airbnb has found that during the 12 months to August 2017:
- 317,000 visitors to Singapore stayed in Airbnb rentals;
- Hosts rented out their properties for 39 nights - about three nights per month - on average;
- Hosts earned an average of S$5,300, or about S$440 per month;
- 33% of Airbnb guests’ spending are contributed to local neighbourhoods. This amounts to an average of $74 a day. For 2016 as a whole, Airbnb estimates that its community in Singapore - including hosts and guests combined - generated S$323 million worth of economic activity;
- 1.25 million travellers from Singapore have used Airbnb for accommodation when going overseas.
Targeting business travellers
With more than four million properties on its platform, Airbnb recently started to target a travel segment that has traditionally been the preserve of hotels: business travellers.
It has created company accounts so that bills can be paid directly by companies, which can also specify what kinds of accommodation can be booked.
The number of business travellers from Singapore who use Airbnb has risen four-fold during the last year, with many using corporate accounts.
Mr Blecharczyk pointed out that there are different types of business travellers, and some prefer to use Airbnb rather than hotels. "Where we are seeing adoption is from travellers who are on extended stay - one week or two weeks," he said. "Also, from business travellers who are travelling with a significant other, and those who are combining business and leisure - as opposed to people who are just spending a single night, which is also very common among business travellers."
He suggested that Airbnb's value proposition is, therefore, distinct from that of hotels - and vice versa. Moreover, the majority of its hosts are in locations where there are few or no hotels. In Singapore, for instance, more than 80 per cent of Airbnb listings are outside the areas with high concentrations of hotels such as Raffles City, Marina Bay and Tanjong Pagar.
Although some hotel associations have complained about Airbnb, Mr Blecharczyk claimed that there is little evidence that hotels have been hurt by home-sharing platforms. He pointed out: "Since 2008, 220 million guests have used Airbnb. If you look at the hotel industry over that same period, there haven't been any adverse effects - this has been a period of prosperity for hotels as well. So I don't think you can say this huge success story has come at the expense of the hotel industry - I think there's room for both."
Hotel rates in Singapore have not dropped in the five years in which Airbnb hosts have been active - they have, in fact, increased.
Airbnb has big plans. Having become the biggest accommodation facilitator in the world, having already launched features whereby tourists and even locals can book offthe-beaten-track experiences ranging from wakeboarding to dumpling-making to pottery, the company wants to go beyond.
"We are positioning Airbnb to be the platform for an entire trip," said Mr Blecharczyk. "Whatever you need for your trip, you will eventually be able to do all of it on Airbnb."
But for now, its main focus in Singapore is to ensure that regulations on rentals catch up with the reality that Singaporeans and visitors alike have already embraced home-sharing platforms.