Regulation catches up with innovation – the case of short-term rentals

The World Tourism Organization (UNWTO) has published the first systematic overview of how both national governments and local authorities are addressing and managing new business models in the accommodation industry. The so-called “sharing economy” has experienced significant growth over recent years and is poised to outpace the growth of traditional accommodation.

Drawing on 21 case studies from around the world, ‘New Business Models in the Accommodation Industry – Benchmarking of Rules and Regulations in the short-term Rental Market’ analyses existing rules and regulations for the sector. The report notes that most of the measures implemented refer to areas of ‘fair competition’ and ‘consumer protection’, specifically measures related to taxation and registration and permits.

In comparison, measures relating to ‘planning and sustainability’, are less commonplace. At the same time, the report highlights the challenges destinations face in implementing rules and regulations, with a lack of local capacity and a lack of clarity over whose responsibility it is to monitor and regulate short-term tourist accommodation.

“There are significantly more regulations than we thought and it is encouraging to see destinations taking the initiative. However, many challenges remain, including the practical implementation of rules and regulations relating to the short-term tourist rental market. Good governance and effective cooperation between the public and private sectors are key to successfully meeting these challenges,” says UNWTO secretary general Zurab Pololikashvili.

Case studies analysed for the publication include European countries such as the Netherlands, Italy and Spain, which are home to some of the world’s most popular cities for tourists, as well as countries in the Americas such as Mexico and from across Asia as is the case of Japan.

Several factors explain the rise and growth of the so-called sharing economy in the tourism sector in the past years, including the 2010 global economic crisis, digitalisation and new trends in travellers’ behaviour and preferences, says the UNWTO publication.

The practice of sharing goods and services amongst members of a community is not an entirely new phenomena, however the appearance of digital platforms, powered by the latest technologies, has provided a new global dimension and led to the emergence of new business models in different areas, it explains.

To create a regulatory environment that allows communities to benefit from the opportunities offered by digital platforms while tackling issues of fair competition, safety and security, consumer and workers protection, as well as sustainable destination planning and management, UNWTO says, “it is imperative for stakeholders to strengthen their cooperation”.

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