When tourism affects the locals.
As a hotelier I encourage tourism and always see the benefit of this beautiful business and how it has a positive impact on several cities, creating new communities and supporting the local economy.
But what happens when the boom starts affecting the community, is it good or should we stop it?
The growth of short term rentals have shaped the economy and dynamics of the real estate market all over the world. Several countries & cities have sued short term rental platforms like AirBnb for several reasons, sometimes just to tax this new economy, and some others for regulatory issues, however no one has done a significant study on how it may affect the real estate market and how it negatively affects the locals.
Problem 5: Overtourism
Probably the main issue related with the rapid expansion of short term rentals it overtourism. With a greater supply of affordable lodging, more people are inclined to visit popular destinations, leading to saturation of public services and urban infrastructure.
Problem 4: Increase in Property Prices
The short term rental business can be very lucrative, specially in tourist areas, this new economy incentivizes property owners to convert their residential properties into short-term rentals. As a result, the availability of long-term rentals or properties for purchase decreases, driving up prices and complicating life for local residents.
Problem 3: Security Challenges
Safety is another concern for both hosts and guests. Cases of theft or vandalism have highlighted the need for stricter regulations, adding another layer of complexity to an already complicated landscape. As a guest there is no guarantee that the room or apartment you are booking complies with all the regulations. In case something bad happens, you contact the platform to solve the problem, meaning, there may be on-one to support you.
Problem 2: Market Oversaturation
Hotels are typically constructed based on well-thought-out business plans, designed to effectively position the establishment and maximize the owner’s returns on investment. In contrast, independent developers are increasingly constructing multiple units tailored for this business model, often without a comprehensive market strategy to justify or support the investment. Also this saturation can lead to a bigger challenge.
Problem 1: Impacting the Locals
Airbnb’s rapid expansion in tourist-heavy regions is contributing to a disconnection from local communities, particularly in Latin America. While the platform offers lucrative opportunities for property owners, it inadvertently diminishes housing availability for long-term residents and drives up local real estate prices. Moreover, the cultural fabric of communities is eroded as local businesses are supplanted by establishments catering solely to tourists. Thus, Airbnb’s growth not only strains local housing markets but also jeopardizes the unique local culture that originally attracts travelers.
At first blush, short-term rentals may appear to be a win-win for local economies. But dig a little deeper and you’ll find a different story: far too often, it’s the locals who are getting the short end of the stick. Pushed out by deep-pocketed investors and swanky new developments, they find themselves marginalized in their own neighborhoods. And that’s not all — this rampant growth can spiral into a demand that cities just can’t sustain. So, while the allure of quick cash might seem tempting, it often comes at the expense of the very community that makes a place special in the first place.
