- The number of properties listed on AirBnb in major UK cities have been rapidly rising, with the number increasing fourfold in London since 2015.
- This had led to a debate around whether there are greater costs than benefits as a result of the trend. Some hold concerns around the “hollowing-out” of communities, antisocial behaviour by short-term tenants and differing tax treatments for traditional hotels.
- However, others point to the benefits, such as some extra income to help pay bills, the ease for tourists to visit otherwise expensive major cities and the resulting benefits to local businesses.
Analysis & Comments
- Both of todays’ demographics stories highlight the longer term risk corporates face around the increasing social interest in the environment & income equality. This has mostly been discussed in terms of say the oil vs alternative energy debate, but in our view the implications are potentially much wider.
- This analysis is more about the sustainability concept of maintaining the “right to make a profit”
- One of the criticisms of the new economy business models (sharing & gig included) is that they are often profitable because they avoid the extra costs that traditional firms face (regulation, non wage benefits etc).
- This situation is generally only sustainable if they can persuade society that the trade offs involved are worth it – in the case of Airbnb, it has faced legal challenges in places as far spread as Spain (Barcelona), the US & South Africa
- The Uber London licencing case shows that licences can be revoked and while political inertia can be a protection against punitive legal action, the increasing social pressures faced in our largest cities (housing costs, congestion etc) mean that corporates need to be better engaged with the regulatory process – which is becoming increasingly politicised.
- Its interesting that companies like Uber are now focusing more on this. In its IPO documents it talks about “rebuilding & strengthening our relationships with regulators around the world”.