Sarah Gainsforth: "There's no bargaining with Airbnb"

Published on November 2, 2020

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E.M.

Our city landscapes are changing. Small businesses that were once focused on meeting the demands of residents are now transforming to become better able to respond to the needs of tourists. This is known, in jargon, as “gentrification.” The name on everyone’s lips when discussing this topic is Airbnb. In her recent book, Airbnb, the city as a commodity. Testimonies of resistance to digital gentrification (2019, Derive Approdi editions) the journalist and researcher Sarah Gainsforth has analysed the phenomenon in detail.

Gentrification, neoliberal cities, tourism. How does the Airbnb phenomenon fit into this framework?

In a neoliberal world everything can potentially become a tradable commodity: a house, our time, even experiences. Airbnb is one of the building blocks – or better said, one of the tools – of the process of commodification and intensification of inequalities. This is especially true when it comes to the “financialisation of housing”, which was not just promoted by Airbnb, but accelerated by it. Increasingly, housing is seen less as a basic right than as a financial asset.

With this in mind, it's crucial that we interrogate Airbnb’s rhetoric and, on a larger scale, the rhetoric of the sharing economy as a whole. We need to distinguish between those who decide to rent their room, or their home, in order to make ends meet and those who exploit ownership of multiple properties in order to take advantage of the market the platform has created.

I analysed the birth of Airbnb in depth in my book because I wanted to show in the clearest possible way how the notion that Airbnb was created to satisfy a specific demand of the market is, in fact, a lie. Platforms such as Couchsurfing, which were actually based on a principle of sharing, have been around for a while. Airbnb, by contrast, created business opportunities for real estate owners by incorporating a payment system into the application.

"It's crucial we interrogate Airbnb’s rhetoric and, on a larger scale, the rhetoric of the sharing economy as a whole"

In addition, Airbnb is linked to a series of policies that private and public actors have developed as a means of increasing tourist flows. This is considered an instrumental factor in the economic development of a city to the point that the experience of tourism itself has become something to be marketed. The consequences have transformed urban space by intensifying the polarisation between a city centre which is ruled by trade and “consumption”, and areas where people with fewer financial resources end up living (which goes hand in hand with the disappearance of businesses dedicated to the city’s residents). This is a standard step in the gentrification process.

We’re already falling behind, but we need to take action as soon as possible to correct and regulate these processes. First and foremost, we must begin by conducting investigative research and collecting information. This will allow us to shed some light on the most critical issues.

There is a section in your book that I found particularly interesting, in which you reflect on the relationship between Airbnb and the world of finance. Firstly, you point out that, despite the much-mythologised idea of the company as a garage startup achieving sudden success, Airbnb has been able to grow largely thanks to private investments. The second point you make, and explain extensively, is that Airbnb’s market appears to be highly condensed.

That’s exactly right. Airbnb went knocking on the doors of those big private investors. The venture capital firm Sequoia Capital, for example, made a big contribution. It's only by recognising the role of these economic actors that we can fully understand the platform's internal mechanisms. This holds true for other digital platforms too, such as Amazon. These platforms do a lot more than just providing what the user is searching for: they create supply, thereby transforming financial and economic dynamics in a way that enables a very small number of people to benefit from the profits.

"Airbnb is so much more than just a platform"

As I say, we are still very far from being able to fully grasp the weight of this phenomenon, and we do not yet have the political and legal means of regulating it. We keep defining Airbnb as a tool that allows people to make some extra cash by renting their room - or their house - in the short term, therefore reconciling supply and demand. But the truth is that Airbnb, as a company, is a fully developed economic actor that provides and manages services, as the judgment on the case of Santa Monica, California, in March 2019 made clear. Airbnb recruits the hosts and manages the ads, the ratings and the payment system. It is anything but a neutral actor.

The question of how many hosts there really are is also something that we’re still leaving out of the picture to some extent. There are “occasional” hosts that fit Airbnb’s description just fine, sure. But if we pay closer attention we soon discover that many of the houses promoted via different ads are in fact owned by just a few individuals.

At the same time, parallel to this, the market is saturated. Let’s take the Italian case: cities like Florence, Venice, Rome. Even Naples would do, even though I personally think that there is still a good chance of reversing the trend. Faced with this crowded market, Airbnb is now trying to adapt its strategy by distancing itself from the practice of short term renting to focus on “experiences.” There is a “cooking experience", for example, which offers the customer the chance to learn how to make pasta by hand with a certain 'Nonna Nerina' in Rome. Airbnb is trying to become an all-round travel agency.

Let’s go back to the relationship between Airbnb and tourism for a moment. As recent statements by Dario Franceschini (Italian Minister for Cultural Heritage and Tourism) have made clear, this is a sector that is often seen as a magic ingredient that might bring the south of the country – and, more generally, all of the areas in the country that are at risk of depopulation – back to life. Yet, the majority of jobs created by tourism are characterised by low wages and an incredibly narrow capacity for innovation.

You’re right. In fact the majority of positions that Airbnb creates are linked to the field of housekeeping, and these individuals are often very poorly paid. I’ve met people whose job was to clean houses for Airbnb, and their wage was EUR 3 per hour. The polarisation we discussed before can also be found within the tourism sector itself. As is the case in the food industry, the ownership of businesses that provide services is becoming increasingly concentrated in very few hands. Meanwhile waiters and waitresses, shop assistants and housekeepers try to keep themselves afloat on salaries that are decreasing.

At a push we could say that Airbnb is a reflection of the intensification of inequality. On the one hand there are people who are becoming richer, maybe because they already owned real estate and are taking advantage of the business opportunities this affords. On the other, as I mention in the book, there are those who go as far as to let out their own rooms because they see short-term renting as a way of keeping the wolf from the door. These are personal and often heartbreaking ways of dealing with a crisis.

Regarding tourism: we have to acknowledge that part of this field is characterised by jobs with very low wages. The majority of tourism expenditure is invested in private businesses that bring no real benefit to the community. According to a 2018 report by the Bank of Italy, tourism expenditure amounted to EUR 88 billion (almost 6% of GDP) in 2015, and one-third of this was invested in properties to be used by tourists. The question is: “What impact does this have on locations that happen to be tourist destinations?” Well, the Bank of Italy itself pointed out that the economic effect of these businesses is generally limited and in the case of some events – such as the Vatican's Jubilee or the Olympics – is actually temporary.

In the meantime, as tourist flows become more and more intense, the businesses located in these same destinations transform: so those which were once focused on selling whatever might be used in daily life for residents end up closing to make way for others linked to consumption and retail. These kinds of changes to the urban landscape are counterproductive both to the fight against depopulation and the promotion of development in the South. And not only that. I personally think we spend far too little time thinking about the consequences in terms of costs for the community. In a city like Rome, for example, the sheer number of tourists requires additional expenditure on waste management. Do you think that these costs are taken into consideration when the topic of promoting tourism comes up?

In the book, as in your journalistic work, you place a particular focus on the issue of legislation surrounding Airbnb and data. Why is that issue so important?

Regulating these platforms is a very difficult task. We could, though, request licences that limit the number of stays or nights in a property (via an identification code for example), or create municipal bureaus dedicated to monitoring short-term rentals. Compared to Airbnb, however, cities are in an unequal position because they have to invest a lot of resources to remain up-to-date and to ensure proper checks and balances are in place.

Then there's the fact that Airbnb doesn't even publish its data at all. This fact makes it very difficult to keep track of the flow of tourists – i.e. their actual numbers – and as such it's hard to figure out whether or not guests were actually registered. We're at a point where it's even become difficult to determine if the municipalities are in a position to collect revenues from the much-lauded 'tourist tax'.

Not to mention the fiscal issue: Airbnb's European base is in Ireland, which is generally known for its low taxation of big companies. Moreover, Airbnb angered Federalberghi, Italy's association of hotel agencies, by refusing to pay the authorities the 21% flat-rate tax intended for hosts. This basically means it bypassed legislation and it ended up being caught up in several lawsuits as a result.

This is why we need to acknowledge that Airbnb is so much more than just a platform, as was stated in the judgement regarding the case of Santa Monica. Yet despite this, the EU seems to be moving in the opposite direction. At least that's what its position seems to be following a recent dispute for unfair competition which was opened by an organisation representing French hoteliers.

In December 2019, the European Court of Justice defined Airbnb as a mediation service that cannot be compared to a real estate agency. This allows the company to avoid complying with legislation which regulates that particular field. It was a very serious judgement that may bring about disturbing consequences in the years to come.

Can we touch upon the anti-Airbnb movements? What's the situation like in Italy?

When it comes to those movements, one size does not fit all. The way they act and develop is closely linked to the context of the individual cities. In spring 2019, at a European level, ten cities (Amsterdam, Barcelona, Bordeaux, Berlin, Brussels, Krakow, Munich, Paris, Valencia and Vienna) officially requested EU intervention in order to regulate Airbnb, and to ensure housing rights.

Equally relevant in this regard is SET, a network of South European Cities, established in 2018, that came together to face these changes. This is a network of Mediterranean cities, collectives and associations. As I explained in the book, there are multiple instances of urban coalitions that have succeeded in restraining and controlling Airbnb.

In Italy it's Venice, Bologna, Naples and Florence that are most active in this regard. Venice, for example, have set up a Civic Observatory on Housing and Residency (OCIO) which is conducting a very important research project. In Florence we find an initiative called Per un’altra Città (For a different city), and the magazine La Città Invisibile (The Invisible City), while CGIL (The Italian General Confederation of Labour) and Sunia (The Unified Trade Union for Tenants and Recipients) recently organised a conference for policy proposals on sustainable tourism. In Bologna, activists have collected signatures pushing for a public investigation into the issue of housing.

The network of urban movements has to become stronger in order for them to be able to present their demands on a larger scale and to succeed in tackling the Airbnb problem. With this in mind, I personally find it very interesting to see the network of institutions that is forming and the battles that public administrators, such as those in Paris, are carrying out. When I interviewed Murray Cox, the founder of Inside Airbnb – a website whose main objective is to monitor the company's impact on the urban environment – he rightly observed that it's crucial to create partnerships between cities both at a movement and an administrative level. There's no bargaining with Airbnb.