Scottish Expert Advisory Panel for the Collaborative Economy:

Submission by Airbnb
What data or evidence can you provide on the social, environmental and economic
impacts of the peer to peer accommodation market in Scotland?
To mark Scottish Tourism Week in March 2017, Airbnb published an impact report1, based
on data from all travel to and from Scotland between 1 March 2016 to 1 March 2017. A copy
is included to accompany this submission.
It shows the Airbnb community generated £361 million of economic activity in Scotland last
year, including an estimated £293m of guest spending and £68m earned by hosts.
Communities, local businesses and cultural venues across Scotland are seeing benefits
from Airbnb. Bringing both an increase in sustainable tourism and economic development,
home sharing helps hosts, families and individual households generate a little extra income
to help make ends meets.
●

In the past year alone, 12,600 hosts welcomed over 802,000 guests to their homes
across Scotland.

●

Airbnb guests stayed an average of 2.8 nights, and the vast majority (87 percent) stayed
for vacation or leisure.

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A typical host in Scotland earned £3,600 by sharing their space for 40 nights a year.

●

Almost half (41 percent) of hosts said they use the income from sharing space in their
home to help make ends meet.

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Over three quarters of hosts in Scotland (76 percent) share their primary or secondary
residence.

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Almost a third (30 percent) of guests would not have visited Scotland or stayed as long
without Airbnb.

●

During the Edinburgh Fringe festival, more than 70,000 visitors stayed in local homes on
Airbnb, helping the city accommodate increased demand.

How can we ensure that both hosts and guests are suitably protected, such as
knowing where to turn if something goes wrong and that health and safety standards
are adhered to? Where do we see best practice globally?
It is frequently pointed out that trust is the currency of the collaborative economy, and the
continued success of peer-to-peer business models is based on the strength of trusted
relationships between users and platforms – and between users themselves.
Existing EU legal frameworks regulate online platforms such as Airbnb across issues such
as data protection, electronic payments, unfair commercial practices and other aspects of
basic consumer law – and our experience is that Airbnb users do not find it difficult to
exercise their rights. The European Commission has recently begun reviewing the EU
consumer rights framework, and has been undertaking research into the implications of
peer-to-peer marketplaces. Airbnb has been providing input to this review, and we look
forward to continuing our discussions with the Commission.
The unique dynamics of consumer-to-consumer marketplaces require some new
approaches to augment this framework. Airbnb has created – and continues to develop –
some of the most powerful best practices for peer-to-peer marketplaces in the area of
consumer protection.
1

https://united-kingdom.airbnbcitizen.com/new-report/

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 Collaborative Economy platforms have contributed to significantly higher levels of
transparency, including peer-to-peer reputation systems that allow hosts and guests to
review each other after a stay. Potential guests can see what previous guests have liked and
disliked about a home. Hosts can make informed choices about who to accept as guests,
based on their prior reviews. Secure messaging allows for constant and transparent
exchange of information between the parties.
Establishing identity is crucial to building trust among strangers. Airbnb continues to
develop our ID verification processes to provide greater levels of trust within our community,
providing hosts and guests with confidence in who they are staying with.
Airbnb has also pioneered bespoke insurance and guarantees for home sharing, providing
all hosts with $1m of automatic protection against property damage2, and a further $1m of
protection from claims by third parties for damage or personal injury3. In 2016, there were
more than 30 million trips at Airbnb listings worldwide. Significant property damage (claims
that were reimbursed under our Host Guarantee program for over $1,000) was reported to
us only 0.009% of the time.
Airbnb has also made safety a priority. Hosts are required to provide safe spaces for guests
and agree to ensure that all applicable fire and safety regulations are implemented. As well
as providing links to all relevant guidance, we have run home safety workshops4 with hosts
and local fire services to equip our community with advice from leading experts. We have
also given out 36,000 free smoke and carbon monoxide detectors to hosts and have made it
easy for guests to know who to call if there is an emergency by providing hosts with online
safety cards containing important information – such as emergency phone numbers,
locations of fire extinguishers, and fire alarms, as well as emergency exit routes.
Finally, Airbnb has a skilled 24 hour customer service operation, equipped to deal
specifically with trust and safety issues and assist guests and hosts before, during and after
trips. The dedicated Trust and Safety team works both proactively and reactively to support
our community— using sophisticated technologies to model and flag potential risks, and
takes action to support hosts and guests whenever they are needed.
Finally, Airbnb has been a driving force behind the world’s first cross-industry trust
“kitemark”, developed for the UK’s collaborative economy association Sharing Economy UK.
Working with a panel of experts in trust and safety, and supported by research from the
University of Oxford, Sharing Economy UK launched the Trustseal in late 2016, and a
number of collaborative economy platforms have already been awarded the seal (including
Airbnb5). This sets a strong foundation for future self-regulatory industry work on trust and
consumer protection issues, which Sharing Economy UK will continue to prioritise.
What are your suggestions for mitigating any unintended consequences of the shortterm accommodation rental market and how they might be balanced with existing
priorities and policies such as Tourism Scotland 2020?
One of the main strategic pillars of Tourism Scotland 2020 is a focus on “providing authentic
visitor experiences” –  and we know that this is one of the most powerful reasons that guests
choose to stay with Airbnb hosts. A recurring theme when we talk to guests – and hosts – is
how they enjoy seeking out local food and drink recommendations, finding less-visited local
attractions, and seeing their destination through the eyes of a local. In a world where the
millennial generation will soon be the dominant cohort of travellers and consumers, and who
2

https://www.airbnb.co.uk/guarantee

3

https://www.airbnb.co.uk/host-protection-insurance

4

https://united-kingdom.airbnbcitizen.com/airbnb-puts-on-meet-the-experts-event-to-promote-trust-and-safety/

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https://united-kingdom.airbnbcitizen.com/airbnb-receives-sharing-economy-uks-trustseal/

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 consistently choose authentic experiences over mass-market options, actively involving real
people in delivering true Scottish hospitality seems like an obvious opportunity. Platforms
like Airbnb can also help to deliver flexible accommodation supply that allows places to cope
with seasonal demand, or the needs of a major event or festival, by using existing and
underutilised capacity.
However, we must always be mindful of the challenges this may present to neighbourhoods
that have not traditionally experienced tourism footfall, and to busy urban centres where
rental prices are already high and pressure on housing stock is growing.
We know from research conducted in multiple European and US cities that Airbnb’s true
impact on housing costs is negligible, especially when considered alongside much more
powerful factors – such as the historic underinvestment in new housing, the shift from
suburban to city living, urban regeneration projects that quickly “gentrify” neglected areas,
and the number of empty properties being held as investments, rather than places for people
to live.
Airbnb takes this issue very seriously. We first addressed the question head-on in 2015, with
the publication of our Community Compact, which commits us to action in places with acute
housing shortages in order to ensure that hosts are sharing the homes in which they live.
Proper, accurate data must always crucial to these determinations, and we urge the
Government to rely on proper, accurate sources of data rather than unreliable third party
websites who draw misleading conclusions based on inaccurate assumptions. For instance,
it is commonplace for “data scraping” sites to infer that properties are booked far more
frequently than is actually the case – they confuse availability with nights booked, and
typically assume that a host’s calendar is blocked because they have a booking, rather than
because they and their family are at home and their place is unavailable for guests.
Ultimately, introducing clear home sharing policies will allow proper assessment of impacts,
and so that unintended consequences can be isolated, monitored and mitigated. Across the
world, home sharing regulations are still in their early days – and Scotland would do well to
learn from the experiences of other countries, as well as finding ways to innovate for
Scotland’s particular needs.
What solutions are there to ensuring that the relevant taxes are identified and
collected and that regulations are adhered to?
In the context of taxation, the most relevant for home sharers is income tax – although we
note that for some businesses offering accommodation on online platforms, VAT and
corporation tax may be more applicable. In many other jurisdictions, we are also engaged in
the collection of occupancy taxes on behalf of hosts, but we recognise that these do not
currently exist in Scotland.
The position of short term rental and income taxes is already fairly complex, made more
complex for those engaged in professional and semi-professional lettings. The situation is
also under active review by the current government in Westminster.
It remains the responsibility of an individual host to understand, declare and pay all taxes
that are due. Only hosts have the full context of their circumstances to understand what
applies to their earnings. Airbnb sends an annual reminder to all hosts, notifying them of the
need to declare their earnings if relevant, and pointing them to official sources of information
– such as to the guidance on the rent-a-room tax scheme, the announced (but not yet
implemented) sharing economy tax break, and the existing property tax breaks such as the
furnished holiday lettings scheme.
To ensure that they continue to keep pace with new sources of potentially taxable income,
HMRC consulted last year on new powers to source taxpayer data from a range of new
sources, including electronic payment providers and “business intermediaries who facilitate
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 transactions, usually online”6. We understand that the new provisions, as outlined in the
Finance Bill, are providing HMRC the tools they need to identify and close income tax gaps
that may derive from sharing economy activity. For the most part, the online nature of the
transactions provides them with the visibility they require.
How can we ensure that any regulations are proportionate, taking account of the
range of hosts on platforms – occasional use individuals, professional landlords,
estate agents and hotels, whilst ensuring that there is no competitive advantage
between platforms and traditional business models?
and
What are your suggestions for any amendments to existing regulations or new
regulations?
All towns, cities and countries are unique. Factors such as tourism demand, population
density, trends in the private rental sector, local land use laws and other legal frameworks,
and cultural variances make it impossible to propose a single set of regulations that would
be appropriate for everywhere. This is equally true in Scotland, where the balance of public
interests in a dense urban centre such as Glasgow will be very, very different from a more
sparsely populated coastal destination.
We would suggest that there are a number of issues for consideration here:
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Examining whether, and to what extent, short-term rentals are having an impact on
housing supply in certain areas of certain cities – and how significant this impact is when
compared with other factors that could also be contributing to that trend;

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Identifying areas of the country where limits on home sharing or short-term rentals
cannot be justified on the basis of housing concerns and where such restrictions may
restrict the growth of much-needed tourism revenue;

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Where restrictions might be justified, establishing where the boundary should be drawn
between non-professional activity that doesn’t constitute a formal “change of use”, and
professional activity that should be more tightly regulated – and how this should be
reflected in formal planning guidance to provide a solid legal underpinning;

●

What self-regulatory protocols can then be established with short-term rental platforms to
assist people and businesses in Scotland in understanding and complying with those
rules.

Airbnb has worked at hyper-local level with hundreds of public authorities across the world to
define their specific set of policy issues, and work on potential solutions that work for the
new world of the Collaborative Economy. Many of these efforts are detailed in our recentlyupdated Policy Toolchest7, which describes many of the ways we have partnered with
governments to establish clear rules for home sharing.
Some principles underpin all of these discussions:
A clear definition of the objectives being sought. In the case of London, for instance, the
Government wished to deregulate 1970s-era legislation that made all short lets subject to
change-of-use planning permission. This was being interpreted differently by each of the 33
London boroughs, making for an unpredictable and fragmented picture for ordinary people
who wanted to generate some extra income from their homes. The resulting policy change
permits home sharing for up to 90 nights a year, before it is considered a “change of use”,
thus seeking to prevent the conversion of long-term to short-term rents without planning
permission.
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https://www.gov.uk/government/consultations/tackling-the-hidden-economy-extension-of-data-gatheringpowers-to-money-service-businesses
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https://www.airbnbcitizen.com/home-sharing-policy-approaches-that-are-working-around-the-world/

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 In contrast, the Portuguese Government wanted to encourage a growth in tourism, and
reformed its tourism laws to recognise and include home sharing, not just as a valuable
source of income for individuals, but also as a catalyst for regeneration in dilapidated areas
of cities like Lisbon.
The Scottish Government needs to consider – very carefully – the goal of any new regulatory
framework, and consider the most appropriate solutions to achieve that goal.
Target regulation where it is required – based on accurate data. As noted, Scottish
hospitality is diverse. What is appropriate and fair in a city may be unduly burdensome in a
mountain village. Equally, regulations need to be based on accurate data. If preventing the
loss of permanent housing stock is the main goal for Scotland’s bigger cities, a foundational
question is when it becomes more lucrative for a landlord to switch from longer term lets to
short term rentals. In our experience of doing this analysis in a number of places, that tipping
point is often higher than policymakers expect. For example, if it only becomes more
favourable for a landlord to switch if they can be assured of 180+ booked nights a year,
setting much lower thresholds may result in a loss of opportunity for non-professional home
sharers, and for the Scottish tourism sector as a whole.
Ensure that rules are fair, proportionate and – above all – enforceable. This has been a
key focus for all of the recent EU (and global) regulatory approaches. Traditional industry
regulation has been effective because the regulated actors are typically businesses. When
attempting to regulate individuals, the challenge becomes harder. In our experience, simple,
clear and easily understandable frameworks are much more likely to drive higher levels of
compliance. If rules and regulations are disproportionately burdensome – e.g. requiring
complex registration or business licensing requirements, or reams of paperwork to be
provided in person to local offices – then these frameworks do not succeed. In fact, they
have the opposite effect: to drive this activity back into the shadows where the consumer
protection is far less assured. The European Commission provided some relevant guidance
in 2016. Among a number of recommendations, they urge member states to differentiate
between individual providing services on an occasional basis, and providers acting in a
professional capacity8.
Consult widely. As already noted, peer-to-peer models are driven by ordinary people, who
do not usually follow formal government consultation processes, or understand how to
participate in them. Industry bodies (especially those with powerful lobby groups and
established relationships with those in power) use these channels very effectively, but the
Panel should recognise that new regulations will have most impact on the lives of regular
Scots who are unused to these processes.
Avoid a company-specific approach. As the Panel can appreciate from the diversity of
stakeholders giving evidence to this process, the STR sector in Scotland is diverse –
encompassing traditional business models that have been in place for decades, plus newer
“digital first” platform-based businesses. Not all have a presence in the United Kingdom or
Scotland – but all are providing services here. Airbnb recognises that our brand recognition
makes us a natural focus of attention, but this is a large industry and whatever regulatory
changes are introduced need to be equally relevant for the rest of the sector. The most
effective industry self-regulatory solutions are underpinned by clear statutory or regulatory
positions that apply to everyone engaged in the market. The Scottish Government should be
encouraging – and incentivising – responsible action by the whole industry, based on clear
legal and regulatory foundations.
Airbnb
June 2017

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http://ec.europa.eu/growth/single-market/services/collaborative-economy_en

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