Unlicensed Accommodations & the Sharing Economy
Criticism of the sharing economy often relates to regulatory issues, and here in Newfoundland and Labrador, the biggest impact is occurring in the accommodations sector.
The Sharing Economy
The sharing economy is defined as an economic model in which individuals are able to borrow or rent assets owned by someone else.1 While this sort of model has existed for many, many years, technology and the Internet have allowed the peer-to-peer (P2P) rental market to flourish, making it easier than ever for people to connect and facilitate the sharing of assets. These assets are oftentimes considered underused and the sharing economy allows physical assets to be shared as services (i.e. short-term rental of a vehicle or apartment when not in use by the owner).
The online platforms that are essential to the sharing economy are no longer newcomers in the market, but have over the past number of years, grown into leaders in their respective sectors of service, transportation and hospitality. Two of the most popular and relevant platforms in Canada are Uber, a ride sharing service that connects drivers and users, and Airbnb, a platform for sharing accommodations that connects hosts and guests. Airbnb was founded in 2008 and in the last eight years has grown to showcase over 2.3 million accommodation listings globally.2 Other examples include Etsy, a marketplace where people around the world connect, both online and offline, to make, sell and buy unique goods, and JustPark, an app and website that allows drivers to find, reserve and pay for parking in underused spaces.
Criticism of the sharing economy often relates to regulatory issues, and here in Newfoundland and Labrador, the biggest impact is occurring in the accommodations sector. Businesses that offer accommodation services are often regulated by federal, provincial and municipal laws. For example, under the Tourist Establishments Act in Newfoundland and Labrador, roofed accommodation providers must meet several requirements and obtain a Tourist Establishment License in order to operate. Platforms such as Airbnb make it easier for unlicensed accommodators to operate without following regulations or paying associated costs. This not only gives them an unfair advantage over licensed accommodators, but an unregulated environment puts consumers at risk and has the potential to negatively affect the overall quality of tourism offerings, not to mention the effect on already tight housing markets in larger cities. As a result, regulatory and policy conflicts continue to arise in towns, cities and provinces across Canada, including Vancouver, Toronto, Quebec and New Brunswick.
On November 17, 2016, Airbnb unveiled a new development on the platform with the launch of Trips.3 Trips moves beyond just accommodations and incorporates other aspects of a guest’s stay, including “experiences” and “places” (guide books, meet-ups and audio walks). With this expansion, and plans to include flights and other services in the future, Airbnb and the sharing economy culture has already begun to impact the broader tourism and travel industry.
Hospitality NL maintains that the key to success in the new reality of a sharing economy is EQUITY – ensuring all tourism and travel product providers operate in the spirit of legitimate competition and abide by all regulatory and licensing requirements in order to operate in the province. This includes regulatory, legal, taxation, health and safety and insurance laws. An in-depth review of existing regulations (i.e. the Tourist Establishments Act) in NL is required and collective solutions must be identified to ensure a fair and equitable business environment in which all businesses operate under proper regulation.
Plenty more research is required in order to determine how all stakeholders can continue to be successful in this operating climate. Major cities and jurisdictions across Canada, like Quebec, Toronto and Vancouver, are still struggling to find a successful method of regulating the sharing economy.
Next steps for Hospitality NL including collaborating with partners and stakeholders to understand the full impact of the sharing economy and how the provincial tourism and travel industry can address challenges and ultimately, thrive within it.