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Sharing economy

Don’t forget the little guys in the Airbnb debate as Hong Kong weighs pros and cons of sharing economy

Bernard Chan says there are myriad interest groups to consider in the discussion about short-term rentals. Besides hotels, guest houses and Airbnb, there are also the thousands of users and small businesses that benefit, as well as residents whose lives are disrupted

PUBLISHED : Friday, 14 September, 2018, 7:33am
UPDATED : Friday, 14 September, 2018, 7:36am

In July, the government introduced a bill into the Legislative Council to amend the law on hotels and guest houses, to allow tougher action and penalties for unlicensed establishments. The amendment is essentially aimed at short-term rentals of private homes – or, in plain language, Airbnbs and similar flat-sharing platforms.

As with ride-hailing app Uber, the Airbnb model is disruptive and controversial. It is hugely popular among parts of the community, notably service providers and users. But other groups criticise it for taking business from existing licensed players, or for having a negative effect on society as a whole.

Different cities around the world are trying to find ways to respond. This is complex because it is not simply about one interest group against another. There are several distinct groups with opposing or overlapping interests on both sides of the debate. The loudest critics of the Airbnb model are the existing hotel and guest house operators, who have formed an organised and influential lobby.

Their main objection is, of course, that flat-sharing takes customers away from their own businesses. They believe that the competition is unfair, as unlicensed operators do not have to pay the costs of running a legitimate business, like complying with regulatory measures. They point out that unlicensed accommodation could pose risks to users owing to the lack of fire and hygiene inspections.

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One survey shows most Hong Kong flats listed on Airbnb are concentrated in the downtown core of northwest Hong Kong Island and the south of Kowloon, even in particular buildings.

This leads us to another source of opposition: residents in places where Airbnb-listed properties are located. Their concern is neighbourhood crowding, and especially the coming and going of sometimes noisy or messy strangers in the buildings.

Another group of critics say the Airbnb model takes flats out of the already pricey private rental market. Perhaps a fourth voice against flat-sharing would be that of the Inland Revenue Department, which must object to the fact that the informal flat-sharing business does not pay profits tax.

On the other side of the debate, we naturally have Airbnb and similar companies, which make profits from commissions through their platforms.

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We also have the flat owners, or “hosts”. One report suggests that about 60 per cent of local listings are from businesses that own and let out multiple (including subdivided) units full-time. But others are ordinary homeowners who occasionally offer a spare room as a way to help pay the mortgage and meet new people from overseas.

A third group of Airbnb supporters is, of course, the users themselves – some 450,000 in Hong Kong last year, according to one report. They must use the platform because it offers something that licensed accommodation does not. If you ask people who use Airbnb, they often mention value for money, and also a more authentic experience of local life.

These are mostly visitors to Hong Kong, so you may not consider them stakeholders. But if we want to diversify our tourism sector, such independent travellers could be an important market.

Would some of them have gone elsewhere without Airbnb-type accommodation to stay in? While here, do they spend money on different sorts of businesses from other tourists?

I have heard that in some districts like Western, small businesses like family restaurants are seeing new customers who are backpackers from nearby Airbnb places. However, these small businesses do not form an influential lobby.

But let’s make that eight separate interest groups – four on each side of the argument. We could probably think of more.

The big corporate interests on both sides have profits, shareholders and employees to protect – and they will no doubt lobby hard as the amendment goes through the legislature. Of the little guys, perhaps several groups deserve special sympathy.

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Residents surely have a valid complaint if a constant flow of Airbnb guests disrupt their living environment. Local renters also have a point if such lettings reduce the supply of housing. At the same time, many would say it would be unfair to forbid homeowners from having an occasional paying guest in a spare room. It also sounds impractical or impossible to enforce.

Many cities have tried to sort out all these stakeholders’ interests in tackling flat-sharing. Few have satisfied everyone. Can Hong Kong be one of the few to succeed?

Bernard Chan is convenor of Hong Kong’s Executive Council