In the hills in Thailand ’s northern city of Chiang Mai, guests can opt to stay in one of 10 wooden huts on a serene, naturally cool hilltop close to the homes of the local ethnic Hmong community. MonHmong, which offers guests what it calls an “authentic experience”, joined home sharing platform Airbnb ’s homestay training programme last year. The programme is supported by the local government in a bid to boost tourism in Thailand’s second-tier cities and benefit local residents. The owner of MonHmong, who declined to be named, charges 900 – 1,500 baht (US$30 – 50) for a hut for two guests per night which includes breakfast. Unlike a typical homestay where all meals are covered, guests here order meals from the kitchen. But MonHmong does not meet the tourism department’s definition of a homestay, which is when a host leases out up to four rooms in their home in exchange for a fee. Homestays in Thailand must register and comply with rules including receiving up to 20 guests at a time and a shared living space for “cultural exchange” between a host and guests. Other types of accommodation that provide short-term stays such as apartments or hotels are licensed separately. A commercial short-term stay at any private residence is illegal. MonHmong’s owner said the regulations make it difficult to comply: “I cannot register as a hotel because urban planning regulations state a hotel must be located within the city’s perimeter. And I’m not a short-term rental because my guests only stay for days at a time.” This regulatory grey area has caused consternation with Thailand’s major hotel chains. William Heinecke, CEO of Minor Group, one of Thailand’s largest hotel operators with a portfolio including Anantara and the St Regis in Bangkok, recently penned a letter to the Thai government slamming the training programme and Airbnb for operating “without a hotel licence [and not complying] with fire safety, security, and privacy standards at the expense of the residents and hotel operators”. Such friction between platforms like Airbnb and established hotel operators has arisen in cities around the world, especially as governments try to boost tourism by catering to younger travellers who want more unique experiences – but sometimes at the expense of enforcing regulations fairly across the board. John Brown, the CEO of travel booking platform Agoda, recently told Bloomberg that tourists in Asia looking for non-hotel holiday experiences grew 30-40 per cent faster than people booking hotels. Last year Thailand received 38 million tourists, of which 10.5 million were Chinese , and 43 per cent were under the age of 34. “They want to stay at unique places that look great on social media, and less in a hotel where every room looks the same,” said Pullawat Pitigraisorn, an analyst at the Economic Intelligence Centre in Thailand. But Airbnb says it should not be targeted. Its app is used by travellers going to popular destinations like Bangkok, Chiang Mai and Phuket, but it is also working with hosts in areas where there is not much tourism infrastructure, it argues. The good, bad and ugly sides to Airbnb Airbnb said 1.9 million travellers stayed at its listed facilities across Thailand last year and the popularity of off-the-beaten-track destinations grew 53 per cent year on year among its guests. “Our research also found that the Airbnb community generated over 33.8 billion baht (US$1.1 billion) in estimated direct economic impact in Thailand in 2018 and on average Airbnb guests say 46 per cent of their spending occurs in the neighbourhoods where they stay,” said Airbnb’s Head of Public Policy for Southeast Asia Mich Goh. For instance, guests spent over 6.8 billion baht (US$225 million) at restaurants and cafes in the country last year. Airbnb has battled regulatory issues globally, including in Asian cities where home-sharing has caused unhappiness among lodging operators and local residents. In Singapore, owners of public flats cannot rent them out to tourists, while Japan set up a new agency to specifically oversee and register home sharing businesses. In Sydney, hosts cannot operate short-term rentals for more than 180 nights in a year and in San Francisco, where Airbnb is based, a 90-day cap is imposed, as it is in London and Madrid, though hosts can apply for exemptions. Minor Group’s unhappiness with the training programme that helped Thais build their own businesses was “beyond disappointing”, said Goh. “It is proof their intervention is less about helping local families and communities and more about protecting their business interests.” Standardising the sector will benefit everybody in the long run because the sharing economy will only grow in the future Pullawat Pitigraisorn, an analyst at the Economic Intelligence Centre With both sides contributing to Thailand’s tourism-focused economy, the task is left with Thai authorities to issue regulations on the segment called vacation rentals, said Pullawat. “Obstacles to regulation in Thailand would be that authorities don’t really have the exact number of vacation rooms available or that they might not take this issue as a priority. Tourism is also not that bad now so they might not want to touch anything,” he said. Thailand’s tourism industry, which accounts for about a fifth of the economy, faltered earlier this year due to the strong baht, but it has recovered with Chinese tourists topping one million in August for the first time in six months – a surge of almost 19 per cent compared with August a year earlier. In the southern island of Phuket, Airbnb recently reported a 61 per cent increase in guests in the 12 months to January 2019, with arrivals surging to 320,000. But Kongsak Koopongsakorn, Thai Hotels Association president for the southern region, said while home sharing platforms are more suited to changing tourist behaviour, they make it difficult for hoteliers to accurately forecast the market. “There are 580 hotels registered in Phuket, with a combined 40,000 rooms on offer, but there are some 3,000 hotel properties listed on Agoda.com, generating altogether 250,000 rooms.” Thailand’s tourism industry gets jitters after currency surges Kongsak said this shadow supply could be why Phuket’s occupancy rate is now around 70 per cent, compared to 80-90 per cent during the holiday season normally. The strong baht and changing tourist behaviour also contributed to the change, he said. “We used to have guests from Europe, for example, who spent a significant period in a hotel for relaxation. But guests nowadays stay no longer than three to four days before moving on to other destinations, which is why they can spend 4,000 baht (US$132) a night in a four-star hotel that offers front services, concierge and meals, or they can spend the same amount for a three-bedroom house without those services that they might not really need,” he said. Exploring Chiang Mai’s peaks by bike: it pays to have a guide Mainstream industry players are also entering the vacation rental sector, with hotel chains launching their own platforms to accommodate travellers’ changing needs, said Pullawat of the Economic Intelligence Centre. Marriott International has launched Homes & Villas by Marriott. Accor SA is operating platforms Onefinestay, Oasis and Squarebreak, and Dusit International recently launched a villa rental platform Elite Havens, according to Pullawat. The unclear number of home sharing offerings in Thailand makes it almost impossible to determine how much the industry undercuts the hotel sector, said Pullawat. “Standardising the sector will benefit everybody in the long run because the sharing economy will only grow in the future. Homestay operators don’t have to hide or operate in the grey areas and hotel investors can make decisions based on the demand and supply of rooms on offer. It is fairer for them because they have more costs to shoulder,” Pullawat said, pointing out that costs for hotel operators usually include acquiring land, construction, decoration and employee recruitment. These costs have been shed almost entirely by a home sharing host.