Asia must get to grips with Airbnb and the growing 'gig economy' to make business competition fair

Jenny Peng says the growing popularity of Airbnb and other short-term rental services makes it necessary to regulate the industry, not least to even the playing field

PUBLISHED : Wednesday, 22 July, 2015, 3:29pm
UPDATED : Wednesday, 22 July, 2015, 4:55pm

Having recently rented my first Airbnb stay on a vacation, I've started looking into monthly sublets on the site and imagined making extra income from a spare room. It's easy to appreciate how companies such as Airbnb and FlipKey empower individuals to generate income on their own terms.

But the downside of short-term rentals has gotten far less attention. By participating, we are putting job security and affordable housing at risk. Asia's infrastructure and governments are also ill-prepared to enforce regulations. For instance, neither the Hong Kong, Japanese, Singaporean nor any Asian government has proposed viable solutions to regulate short-term rentals.

For the unknowing, the online platform connects people who have space to spare with those looking for a short stay at a competitive price. Services such as these, along with Uber, are driving the "gig economy". Their platform enables people to become freelance service providers without the inspections and legal oversight that traditional lodging and cab industries are subject to.

Prohibiting short-term rentals altogether is avoiding a new reality that's here to stay

With the rapid success of gig economies, governments in places where Airbnb and FlipKey have gained a substantial foothold are scrambling to catch up by providing regulations and proper enforcement - mainly in the US and Europe. Therefore, governments, industry professionals and users should learn about the alarming side effects that gig services are imminently bringing to Asia.

In Hong Kong, leasing agreements do not have clauses allowing short-term rentals. These properties are also unregistered, which makes enforcing regulations nearly impossible. A lawyer who rented out a spare room in his apartment revealed to Marketing magazine that the government's inability to reform fast enough is a sign that "laws are often too conservative and behind the times".

Like Hong Kong, the Singaporean government has yet to announce when new regulations, if any, will be implemented. In the meantime, they've reverted back to their iron-fist governance by evicting those who rent out their public housing homes - a punishment many say is too harsh. In Japan, citizens are caught in a tug of war between Prime Minister Shinzo Abe's push to relax strict rules imposed on short-term rentals as part of his economic growth strategy and ultra-conservative lawmakers at the city level. According to Reuters, Osaka legislators voted down a bill in September last year to loosen regulations, citing noise and safety concerns.

Prohibiting short-term rentals altogether is avoiding a new reality that's here to stay. It's better to design policies that evens the playing field for all.

Some small businesses are speaking up. A group of 10 licensed bed and breakfast operators in Canada wrote a letter to their city council claiming some in their community have closed. The group also noted that only 15 per cent of businesses on Airbnb follow city bylaws and operate with permits, which can cost more than US$1,500. Unlike Airbnb hosts, these licensed operators conform to a variety of health and fire safety regulations, including inspections involving public health officials.

Compared with Europe and America, the Asian short-term rental market is still young. In 2013, there were roughly 50,000 properties listed in such cities as Taipei, Hong Kong, Seoul and Singapore. Compare that with about 100,000 in the US and 250,000 in Europe. However, Airbnb co-founder Nathan Blecharczyk acknowledged "sustained growth" in the region. The company's ambitious goals of reaching two million properties in Asia moved closer to reality in June after raising US$1.5 billion in capital from at least four Asian investors.

As Hillary Clinton recently said, the gig economy will raise "hard questions" about what a good job will look like in the digital age. While old-fashioned secure jobs and affordable housing are quickly becoming obsolete or unattainable for a growing number of the population, governments in Asia need to start creating innovative solutions that will ease their transition to the new economy.

Jenny Peng is a Vancouver-based journalist