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Airbnb: The sharing economy company encounters resistance in Berlin

Airbnb is one of the biggest sharing economy success stories of recent years and along with companies such as Uber, Lyft and Task Rabbit, Airbnb has found a new way to use to a widely available resource by applying new smart phone technology. Essentially the program allows apartments, flats, houses and rooms to be advertised for rent, and visitors to a city to have a different experience to what might be provided by a traditional hotel chain. Local knowledge, unusual locations and a homely experience, are some of the reasons touted for why the experience is better than staying with a hotel. The company’s current slogan for instance is “Don’t stay there, Live there”.

However, in some places customers may be able to do neither with Airbnb, because of the implications that the service has on a very delicate and nationally crucial industry, that of the housing market. In Berlin, after a two year adjustment period, Airbnb has been effectively stifled, with measures that have been very close to a full on ban. Berlin has introduced the rule that no more 50% of a property may be rented out via these websites, meaning that whole properties cannot be rented any further and only rooms within lived in properties can be rented.

The reason for this legislation is one which is an issue with the whole service that Airbnb provides globally. Airbnb encourages property owners to rent their property temporarily, to tourists and short term stayers rather than people who are planning on living in the city or area. This is a factor in encouraging a shortage of housing in an area, as some Airbnb users buy property purposely in order to rent it out via these means, reducing the amount for housing available for those that live in the city. This is a factor which can aggravate housing supply problems and force up house prices, ironically causing issues for those that actually live in the locations advertised.

Airbnb and similar companies are cynical of this decision though, arguing that the government is taking sides with the hotel industry in its battles with the successes of Airbnb. It has been shown in some reports that where “Airbnb supply is highest, the causal impact on hotel revenue is in the 8-10% range”. Largely the hotel industry has been nonplussed with the rise of Airbnb, arguing that its service was small and niche and equally Airbnb itself tries to distance itself from the hotel industry saying that its locations are not near main hotel districts.

But what is becoming clear now is that Airbnb is an enormously successful service, with a $10bn valuation, (larger than many of the leading hotel chains) and actively working as a substitute for hotels in some areas. The stronger the social impact its service has, the more likely governments are to be forced to do something about it and so this may not be the last city to effectively ban Airbnb.