The Impacts of Short-Term Rentals and Hotels on Urban Environments
The Impacts of Short-Term Rentals and Hotels on Urban Environments
Over the past few years, short-term rentals (STRs), or Airbnbs, have become quite popular in cities worldwide. Many towns have fallen behind in legislation and are now dealing with the consequences. STRs are considered to be cheaper accommodation options. These platforms have started a revolution in the travel industry. However, their impact on urban environments has led to scrutiny and regulation challenges, with Barcelona planning to ban STRs in 2029.
Hence, it is a good time to research the actual impact of these STRs and Hotels in urban areas. By examining recent studies, we aim to give an unbiased perspective on both the positive and negative effects of STRs in urban areas.
We have split the blog into five sections:
Economic Benefits
Social and Community Impacts
Regulatory and legal impacts
Environmental Impacts
Technological Advancements
Economic Benefits
Short-term rentals, such as Airbnbs, significantly contribute to the local economies. They drive (more) tourism-related spending. Visitors staying in STRs often spend money at nearby coffee bars, restaurants, shops, and attractions. They boost the local economies. According to a study by the University of San Diego, STRs have led to increased economic activity in various other sectors, creating jobs and supporting local businesses.
As a side effect, STRs help increase property values. Homeowners renting out their properties generate an additional income stream on top of their existing income. This will lead to an increase in demand for housing, which, in the end, results in property prices. Besides, the increased property value and the additional income stream lead to increased maintenance and upgrading of their properties, from which the costs directly flow back into the local economy.
On the other hand, the increase in STRs can have negative effects on the local and national economies. As seen in many high-concentrated STR cities, the increased pricing will lead to the displacement of long-term residents as they find it increasingly difficult to afford housing in their neighborhoods, which is also highlighted by the Economic Policy Institute (EPI).
The financial benefits of local STRs often flow to nonlocal residents, meaning that the earned money goes outside of the local community. This can result in a lack of wealth from local communities and economies, which is a controversy within the local economies.
On a broader scale, STRs can result in a significant loss of tax revenue if not implemented properly. STRs mostly operate outside the traditional regulatory frameworks, bypassing hotel taxes and other levies typical to hotels and their industry. Ultimately, this impacts local communities as public services and infrastructure funding might need to be improved.
In summary, while the STR's drive can drive significant economic growth and benefits for local property owners, without having the proper and community-supporting regulatory infrastructure, the city will get out of balance, resulting in loss of tax revenue, displacement of residents, and uneven economic benefits. Whilst that can be seen as a threat, with an excellent regulatory framework, local economies can enormously benefit from STRs.
Social and Community Impacts
Not only economic benefits arise from STR's there are social and community benefits as well. STRs are primarily located in local communities and areas, each with its vibe and culture. This will lead to cultural exchange and education, increasing diversity. An interaction between two cultures can lead to a greater understanding and appreciation of the cultures, enriching both the visitors' and residents' experiences.
Moreover, STRs can provide financial support to homeowners in the form of an additional revenue stream. This additional income flows directly back into the local economy, spending on coffee, groceries, gas, maintenance, and so on.
Despite the benefits, there are social downsides to having STRs. Mostly in highly concentrated STR areas, people experience an increase in noise, traffic, and congestion, which can disrupt the daily lives of permanent residents. Even more, the high occupancy rate of the STRs can lead to a lack of continuity and stability in the community, making it harder for residents to build and maintain strong social ties.
With the rise of STR penetration in the neighborhood, there is an increasing chance of erosion of community cohesion and identity. More and more property developers tend to buy accommodations and turn them into STRs. The new owners are less likely to participate in the daily life of the community and neighborhood, diminishing the permanent inhabitants' neighborhoods, communities, and social lives.
In summary, STRs are a strong factor in promoting cultural exchange and diversity. Along with providing financial benefits to homeowners, they also pose challenges to community cohesion and stability. Most communities are afraid of increasing house prices and the unaffordability of places to live.
Regulatory and Legal Impacts
Since the rise of Airbnb, there has been a constant battle between the local and national governments and the homeowners. When the STR's platform started, they have been/were operating in gray areas, with many listings needing to adhere to the local zoning laws, safety standards, and tax obligations. With the lack of regulations comes a rise in safety concerns. Most properties must meet the safety and health requirements compared to what hotels must adhere to. Most of the STR platforms operate in a vacuum of anonymity, resulting in difficulties for local authorities in monitoring and enforcing regulations effectively and widespread non-compliance.
As mentioned before, cities generate income through tourists, not only through parking fees or permits to allow tourist attractions but also through housing and the so-called city or hospitality tax. These are crucial parts of the revenue stream and contribute to funding public services, such as the development and maintenance of infrastructure. According to the Economic Policy Institute, the inability to collect the appropriate taxes from the Short Term Rentals can lead to a drop in funding for local services, resulting in increased financial pressure on local governments to find alternative revenues. Which, in the end, could affect the "normal" citizen.
Despite all these downsides, some cities have successfully implemented regulations to manage the impact of the STRs. For example, San Francisco and Amsterdam first dealt with a significant STR invasion and later successfully adapted to stringent measures. Measures that include STRs to register their properties, comply with safety standards, and pay relevant taxes. These applied measures create a level playing field between the traditional hotels and STRs and protect the needs and interests of residents.
When STR operators adhere to local regulations and pay their taxes, the strain on public services is reduced, and the benefits of having STRs are more likely to be felt across the community. A robust regulatory framework that balances the needs of residents, businesses, and visitors will create a sustainable environment where STRs and hotels coexist harmoniously.
Environmental Impacts
Travel is one of the most nature-disrupting activities we know. STRs can contribute to a positive impact by reducing the amount of new hotel construction. When more and more tourists stay in apartments and houses, there will be less demand for large-scale hotel developments, which require significant land, energy, and other resources. By " re-using" or "repurposing" already-built spaces, STRs help preserve urban green spaces and reduce the urban footprint.
As a trend, we see more and more STR platforms and individual homeowners adapt to eco-friendly practices to attract environmentally conscious travelers. Examples include replacing appliances with more environmentally friendly ones, promoting recycling, home automation, and encouraging transport use. The shift towards sustainability in the STR sector can set a positive example for the hospitality industry.
On the other hand, STRs can hurt the environment. One significant concern is the increased waste and resource usage, which goes hand in hand with high
turnover rates. With a high turnover rate, short-term rentals require more cleaning, laundry, and maintenance to prepare for new guests. This leads to high consumption of water, energy, and cleaning products. Moreover, the frequent arrival and departure of guests will lead to high traffic in dense STR areas.
Technological Advancements
Over the past years, technology has drastically transformed many industries. One of the industries needing more is travel. With all innovations, the travel industry is ready for a technological evolution. The industry is adapting more and more technology to ensure a smooth guest experience. Apps, such as hotel apps and check-in technologies, are now accessible directly from guests' smartphones. This not only enhances convenience for guests but also streamlines the hosting/hotel operations itself, resulting in reduced staff needs and smoothened operations.
Short-term Rental platforms have also begun to adopt similar technologies, compete with traditional hotels, and offer hotel-like applications. Many of these apps include features such as automated check-in, smart home devices, and personalized guest communication. With these advancements, the STR industry is playing catch-up with the larger, more significant hotels.
When guests travel, they experience greater trust between them and their hosts. Many apps include features like verified reviews, secure payment systems, and 24/7 support, providing a safer and more reliable booking experience.
Conclusion
We can conclude from the research that both STRs and hotels significantly impact the environment, culture, and finances. While STRs contribute more to local economies by accommodating tourists and providing homeowners with additional income, they also pose challenges such as constantly increasing property prices and the displacement of inhabitants. Socially, STRs will contribute to cultural exchanges but can disrupt community cohesion and stability. Effect regulatory frameworks are essential to balance these impacts, ensuring safety and fair taxation.
Many cities are looking for some ban, with Barcelona leading with a complete ban in 2029; observing how they adapt and manage the transition closely will be essential. This phased approach will allow continued research and debates on equitable hospitality practices. Other cities should embrace the results and develop strategies on how their city can benefit from the STRs.
Policymakers, residents, and industry stakeholders should collaborate to create concrete solutions that address the impacts of having STRs in your city. Effective regulation, community engagement, and technological innovation will be key to achieving a balanced and sustainable sector.
