Councils must zone Airbnbs to avoid conflict between locals and tourists

The global rise of home-sharing platforms such as Airbnb has driven the process of ‘touristification’ in major tourism cities.

Touristification is a term used to describe tourism-induced gentrification or development, which leads to the unplanned transformation of a community into a tourism commodity with locals often forced to move out as rents rise.

Many well-known tourist destinations around the world have experiencing touristification: Paris, Berlin, California, Hong Kong, Rio de Janeiro and Venice are some notable cases.

In a few of these places, before the pandemic, there were demonstrations against tourists, some of which involved low levels of threat and a few extreme cases of violence.

Airbnb and similar platforms have contributed to touristification by creating a new tourism demand niche that enables customers to book flexible accommodation in urban areas as an option to hotels.

These platforms, and in particular the ubiquitous Airbnb, have opened up the untapped income potential of all residential properties which, in terms of gentrification and displacement, has the potential to substantially surpass the effects on neighbourhoods of traditional forms of hospitality accommodation.

Most previous studies on Airbnb-induced touristification have primarily considered the phenomenon from a perspective of whether it is good or bad. However, that perspective is far from sufficient to measure the genuine impacts of tourism in transforming urban neighbourhoods.

Such a one-sided perspective leaves many questions unanswered regarding how tourism policies work.

Our study, Cheung & Yiu (2022) in Tourism Management, published with Associate Professor Edward Yiu, provides a new perspective on Airbnb’s impacts on the urban housing market in relation to the neighbourhoods people want to live. We use a tourism-led rent gap model to argue that the touristification process can bring positive and negative external effects to a neighbourhood revealed by different magnitudes and directions of rent gaps.

When a large influx of tourists into a neighbourhood causes services, facilities and shops to be re-oriented towards the tourists’ preferences rather than local residents, these neighbourhood changes could increase or decrease their economic value – that is, how desirable they are to live in and how much it costs to live there.

Residential property rents, which may include either premiums or discounts, imply the revealed preference of locals about their residential location choices, after considering all factors involved.

Such a change may be positive if the touristification process increases neighbourhood appeal, if it draws better amenities and capitalises on the community’s assets and aspirations, creating a neighbourhood that promotes people’s place identity. In economic terms, this indirect benefit to an uninvolved third party (in this case, local residents) is known as a net positive externality.

But in contrast, if tourists become a source of irritation to local residents, the process may result in a net negative externality (the indirect cost to an uninvolved third party). In this case, local residents will vote with their feet and move elsewhere, leading to their displacement and hindering further placemaking developments.

Along with a series of research projects under the theme of “touristification,” our study uses more than 22,000 Airbnb and 200,000 residential rental listings in Melbourne, Australia, to provide new evidence on how touristification creates a tourism-led positive rent gap in high-density neighbourhoods and a conflicts-led negative rent gap in low-density neighbourhoods.

A rent gap is a commonly used measure to gauge a touristification process in urban science. The concept refers to the difference between the actual rent paid and what could be charged potentially if the land had ‘higher’ alternative use.

We provide an evidence-based result that can guide ongoing tourism policies in managing and regulating short-term rental accommodation by the type of property or neighbourhood across many global cities.

What does it mean for tourism management?

Tourism is a leading industry in many global cities, creating jobs and enhancing the financial well-being of destinations.

However, the touristification process catalysed by home-sharing platforms has created rifts between local residents and visitors, leaving governments worldwide to decide how to regulate Airbnb-style accommodation.

Christchurch City Council has recently introduced rules regulating Airbnb-style accommodation, meaning homeowners must now obtain resource consent to rent out properties as un-hosted visitor accommodations in residential areas.

The council can consider impacts on neighbours, including noise and traffic movements, before deciding whether to grant or decline the consent, though is such a ‘one-size-fits-all’ bed tax the best way to govern the Airbnb market?

In other tourist cities banning Airbnb is a consideration, but this limits the flexibility of this industry to respond to high tourist demands for accommodation during the peak season. Such bans also involve excessive enforcement costs to implement those regulations.

Instead, as our study demonstrates the effects of Airbnb listings in an area dominated by apartments are very different from those where houses dominate, we propose a policy agenda for regulating short-term rental accommodation by neighbourhood compatibility levels.

Given that apartment-type properties are more compatible with Airbnb in high-density areas, designated zoning for Airbnb could provide a city with more flexibility to supply tourism accommodation and avoid creating severe urban conflicts in low-density areas.

By simply identifying properties and neighbourhoods compatible with Airbnb, tourist cities around the world have a tool for strategic tourism development and management, and the means to avoid the negative effects touristification has brought to their communities.

Details of the paper referenced in the opinion piece are as follows: Cheung, K. S., & Yiu, C. Y. (2022). Touristification, Airbnb and the tourism-led rent gap: Evidence from a revealed preference approach. Tourism Management, 92, 104567 https://doi.org/10.1016/j.tourman.2022.104567

Dr William K. S. Cheung is a senior lecturer at the University of Auckland Business School.

This article reflects the opinion of the author and not necessarily the views of the University of Auckland.

Used with permission from Newsroom Councils must zone Airbnbs to avoid conflict between locals and tourists 13 September 2022

Media queries

Alison Sims | Media adviser
E: alison.sims@auckland.ac.nz