Home Sharing Industry

Report for SYDE 261, by Abigail Waterston, Aidan Bowers, Silja Walenius, Mathurah Ravigulan, Joy He

Introduction

Homesharing is the social practice where residents of a living space (hosts) will share their living facilities with others (guests), typically at a nightly or monthly cost. In recent years, a number of technologies have been developed to make homesharing easier for both guests and hosts. This rise in homesharing comes with the rise of the “sharing economy” in general, which refers to the increase in popularity of using and sharing spaces, services, and items amongst others, rather than individual ownership [1]. Other notable areas of the sharing economy include ridesharing (eg. Uber, Lyft) and workspace sharing (eg. WeWork, Center for Social Innovation).

Web platforms such as Couchsurfing.com and Home Exchange allow users to connect and share their spaces for no cost. Couchsurfing lets users browse lodgings listed on the site, and connect with their owners. Couchsurfing stays are typically in the range of a few nights, with the focus being on a genuine cultural experience and interpersonal connection rather than a particularly attractive location or private residence [2]. Home Exchange allows users of the site to list their residences as potential rentals, and then browse the site for other residences in different countries or areas of the world. Unlike other homesharing platforms, Home Exchange only allows listing of entire houses or apartments. Users can then connect with other home owners, and “trade” residences for a specified period of time, usually within the range of a few weeks. Neither of these platforms allow their users to profit off of sharing their space.

Other platforms such as VRBO (previously Homeaway) and Airbnb are generally advertised as paid short-term rentals. These services allow guests to book a room or entire residence for varying periods of time at a set price. Short-term rentals are typically used by tourists and travelers looking for affordable or specialized accommodations for the duration of a vacation or other event, but have also allowed for societal groups like “digital nomads” [3] to travel and reside in foreign countries for extended periods of time.

Homesharing lodgings have become increasingly popular in recent years as alternatives to traditional hotel accommodation. The homesharing sector is expected to continue to grow, predicted to reach USD 107 billion, or 10% of total accommodation bookings, in the US alone by 2025 [4]. As these platforms continue to gain increased adoption, their environmental and social impacts will be amplified.

Summary of Impacts

The primary users of homesharing technologies are the owner of the homes and the guests staying in these homes. Homesharing technologies have made accommodations more affordable, increasing the ability of individuals to travel [5]. With the abundance of listings on homesharing platforms, however, the lack of regulation, hygienic procedures and the rise of COVID have caused “70% of guests [to be] fearful to stay at an Airbnb” [6]. For hosts, homesharing technologies provide a source of supplemental income.

Homesharing platforms are often used as an alternative to hotels, and their widespread adoption has had a significant negative impact on hotel average revenue and occupancy rates [7]. Given that hosts typically hire fewer people at lower wages than hotels, reductions in hotel performance could translate to the loss of real and potential jobs and wages in this sector [8].

Airbnb and other similar homesharing platforms have significant impacts on the local societies where listings are found, specifically by inflating the cost of rent. In Boston it was found that increases in Airbnb listings are correlated with a decrease in available rental units, and resulted in a citywide mean monthly rent increase of $93 [9]. There is also evidence to suggest that, as housing units are converted from long- to short-term rentals, communities turn into tourist areas that clash with the established residents of the community, resulting in a lower quality of life [10]. The prevalence of Airbnb in a neighbourhood is also correlated to long-term increases in property crime, further impacting the quality of life of local residents [11].

Globally, homesharing technologies are poorly regulated in terms of tax policy [12]. Airbnb properties are typically not required to pay lodging tax and, in 2016, this lack of tax collection by Airbnb led to an estimated $110 million dollars of tax revenue lost in New York City [12]. In the same year, Airbnb guests in New York City only spent a combined total of $10 million on tourism [12]. In the long-term, this may lead to reduced services and public programming for residents. Platforms like Couchsurfing have a smaller effect on overall government tax revenue, as they don’t allow the host to earn any income [2].

Hotels can have a massive negative impact on the local environment at construction, such as through land-clearing [13]. Because homesharing platforms make use of existing development, the environmental impact is minimized during the material acquisition to production phases. During the use phase, hotels generally expend more energy and resources per guest than residential housing because of energy-intensive amenities [14]. Additionally, hotels require the continual replacement of furniture and decor every few years, along with larger renovations every 15-20 years, and generally only have a lifespan of 20-60 years [15]. In comparison, homesharing units consume 63% less energy, and consume and dispose of fewer material resources than traditional hotel accommodation [16].

Because home-sharing platforms are often more affordable than traditional vacation accommodations, they enable travellers to travel more often and further away [17]. At least 75% of emissions due to tourism are due to transportation, so by increasing travel rates, homesharing platforms may increase emissions during the transportation phase [18].

Social Impact and Defensible Recommendation

It is often more lucrative for landlords to rent out units to short-term guests on homesharing platforms than to long-term tenants [8]. This incentivizes owners to convert their properties to short-term vacation rentals, thereby reducing the supply of long-term rentals on the market. In Toronto, for example, an estimated 6500 units have been pulled from the long-term rental market and converted to homesharing units [19]. This reduced supply of long-term rentals should, by economic principles, drive up rent prices, impairing access to housing for locals.

The effect of homesharing platforms on housing prices has been realized in several large US cities. In Los Angeles, New York City, and Boston, studies have found that the presence of Airbnb listings in a neighbourhood has significantly increased rent prices [8, 20, 9]. In New York City, for example, Airbnb’s influence cost New Yorkers approximately $616 million in additional rent in 2016 [20]. These effects on rents disproportionately affect low-income communities and communities of colour, leading to displacement of long-time residents and demographic shifts [10, 21]. In neighbourhoods across North America, homesharing platforms are decreasing the supply of long-term housing, thereby increasing housing prices.

On the flip side, homesharing can offer an additional income source to put towards rent or mortgage, thereby making housing more affordable for hosts. Homeowners with an Airbnb listing “may gain almost a fifth of their median monthly rental or mortgage costs'' [22]. In a survey of hosts, over half responded that they would not be able to afford their home without the income from Airbnb [23]. The importance of homesharing as an income source for hosts has been demonstrated during the Covid-19 pandemic when 41% of hosts had to seek out and take on alternative revenue streams after tourism and stays plummeted [19].

Though homesharing platforms advertise themselves as providing supplemental income to everyday homeowners, evidence shows that the majority of income generated through these platforms actually goes to rental agencies, not individual homeowners. While these platforms promote images of shared spaces between hosts and guests, in Los Angeles, AirBnB earns 89% of its revenue from companies and lessors of an entire unit, as opposed to individual homeowners [8]. This is particularly striking when on-site hosts make up 52% of all hosts on the platform, but make 11% of the revenue [8]. It is clear, then, that the presence of homesharing platforms mostly benefits companies and those with the means to afford multiple properties, to the detriment of residents looking for long-term affordable housing.

To protect the supply of affordable housing for long-term residents, homesharing platforms must be more tightly regulated. Specifically, hosts should be required to register their properties as vacation rentals. This strategy has proven to be effective in Paris and San Francisco, where it led to a decrease in the number of homesharing listings and a number of landlords converting their properties back to long-term rentals [24]. Registering homesharing properties helps to reduce the incentive for landowners to remove units from the long-term rental market, preserving supply and affordable rental prices.

Environmental Impact and Defensible Recommendation

The tourism sector, including transportation, accommodation, and activities, accounts for approximately 5% of global carbon emissions [18]. As homesharing platforms become increasingly popular as tourist accommodations, they will have a significant influence on travel patterns and frequency, as well as the associated environmental impacts [17].

Homesharing options are generally less expensive per night than traditional vacation accommodations [25]. Airbnb, for example, can offer savings of up to 49% to book a private room as opposed to a hotel [26], while other platforms such as Home Exchange and Couchsurfing are completely free [27, 28]. By making travel more affordable, homesharing platforms may increase the frequency of travel and the associated negative impacts, such as transportation-related carbon emissions. Additionally, the money saved by using homesharing platforms has been associated with increased consumption while on vacation [4]. As predicted by the efficiency paradox, savings in one area translate to increased consumption in other areas, so the net impact on the environment is neutral or negative.

Though homesharing rentals have the potential to increase tourism and related environmental impacts, their current impact seems to be minimal, with only 2-4% of users saying that they would not have travelled if homesharing were not an option [12]. Additionally, compared to hotels, homesharing rentals actually have a lower environmental impact. According to Airbnb, homesharing rentals consume 63% less energy, produce 61% less greenhouse gas emissions, and lead to 32% increased waste avoidance as compared to hotels [16]. Homesharing platforms enable sustainable lodging, making use of excess capacity to provide more energy-efficient accommodation options [29].

It should be noted that the above study showing the environmental advantages of homesharing rentals was paid for by Airbnb, and the data, assumptions, and methodologies are not publicly available [30]. This is not uncommon, as homesharing platforms are not generally open with their data, making it difficult to independently study the effect of these platforms on tourism and the environment [25]. While Airbnb has argued that the increase in transportation-related carbon emissions is more than offset by the energy-efficiency of Airbnb rentals [30], given that transport accounts for 75% of carbon emissions from tourism, it seems unlikely that energy-efficient rentals could completely offset increased transportation [18].

It is evident that more and better data is needed to understand the effect of homesharing on tourism and associated environmental harm. While homesharing platforms such as Airbnb and Vrbo have made their data increasingly open to the public, there still exist gaps in knowledge that prevent a full understanding of how homesharing platforms affect the areas they operate in [31]. Governments should continue to direct homesharing platforms to release their data, specifically regarding environmental effects and tourism patterns, to promote sustainable tourism and limit its impact on the environment.

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References

[1] T. Puschman. “The Sharing Economy,” Business and Information Systems Engineering, vol. 58, no. 1, pp. 93-99, Jan. 2016. [Online]. Available: https://core.ac.uk/download/pdf/301368187.pdf An examination of the pros and cons of the sharing economy, its various branches, and how it has changed societal behaviours and attitudes towards consumption, ownership, and social networks.

[2] J.Germann. Molz. “Couchsurfing and Network Hospitality: It’s not just about the furniture”, Hospitality and Society, vol 1, no. 3, pp. 215-225, Feb. 2012. [Online]. Available: https://www.researchgate.net/publication/272577455_CouchSurfing_and_network_hospitality_'It's_not_just_about_the_furniture' Examining the cultural and societal impact of Couchsurfing.com, and younger traveller’s attitudes towards hospitality and community. Couchsurfing is seen here as “network hospitality”, a reaction to the homogenization of the travel industry, and examines how relationships develop between guests and hosts.

[3] B.Y. Thompson. “The Digital Nomad Lifestyle: (Remote) Work/Leisure Balance, Privilege, and Constructed Community”, International Journal of the Sociology of Leisure, Mar. 2019. [Online]. Available: https://www.researchgate.net/profile/Beverly_Yuen_Thompson/publication/329776443_The_Digital_Nomad_Lifestyle_Remote_WorkLeisure_Balance_Privilege_and_Constructed_Community/links/5c7095b9458515831f67bd8a/The-Digital-Nomad-Lifestyle-Remote-Work-Leisure-Balance-Privilege-and-Constructed-Community.pdf A paper exploring the key aspects of the Digital Nomadic lifestyle, what it entails, and how it affects the community, leisure, and work of those who participate.

[4] Y. Yang, K. P. Tan, and X. Li, “Antecedents and consequences of home-sharing stays: Evidence from a nationwide household tourism survey,” Tourism Management, vol. 70, pp. 15-28, Feb. 2019. [Online]. Available: https://doi.org/10.1016/j.tourman.2018.06.004 A paper analyzing behaviour data from 34,649 vacations by US travelers to determine the factors that influence travelers to choose homesharing stays. It also looks at how homesharing accommodations alter the behaviour of tourists while on vacation.

[5] AirBnb, “Shared Opportunity: How Airbnb Benefits Communities”. [Online]. Available: https://www.ftc.gov/system/files/documents/public_comments/2015/05/01740-96152.pdf Report on how Airbnb benefits communities, covering the economics of the sharing economy, and positive effects on tourism, residents, and households.

[6] L. Lane, “How Bad Are Covid-19 Pandemic Effects On Airbnb Guests, Hosts?,” Forbes, Jun. 9, 2020. [Online]. Available: https://www.forbes.com/sites/lealane/2020/06/09/how-bad-are-covid-19-pandemic-effects-on-airbnb-guests-hosts/?sh=455241b37432
An article reporting on the effects of the covid-19 pandemic on the primary users of homesharing platforms. It includes evidence from surveys to show the negative impact that the pandemic has had hosts and guests.

[7] T. Dogru, M. Mody, and C. Suess, “Adding evidence to the debate: Quantifying Airbnb’s disruptive impact on ten key hotel markets,” Tourism Management, vol. 72, pp. 27-38, Jun. 2019. [Online]. Available: https://doi.org/10.1016/j.tourman.2018.11.008. A paper providing evidence that homesharing platforms (specifically Airbnb) have a significant and noticeable impact on key performance indicators for hotels. Though the effect is relatively small, because homesharing platforms are growing so rapidly, it is noticeable.

[8] R. Samaan, “Airbnb, rising rent, and the housing crisis in Los Angeles,” LAANE, Mar. 2015. [Online]. Available: https://www.laane.org/wp-content/uploads/2015/03/AirBnB-Final.pdf A document from LAANE - an organization advocating for fair and responsible economic development - outlining the negative impacts of Airbnb on local communities.

[9] K. Horn and M. Merante, “Is home sharing driving up rents? Evidence from Airbnb in Boston,” Journal of Housing Economics, vol. 38, pp. 14-24, Dec. 2017. [Online]. Available: https://doi.org/10.1016/j.jhe.2017.08.002. A paper analyzing rental listings and data obtained from scraping Airbnb to determine the impact of homesharing platforms on rental prices in Boston. This study provides evidence that homesharing platforms are leading to increases in local rents.

[10] A. Gold, “Community Consequences of AirBnB”, Washington Law Review Association, vol. 94, no. 4, pp. 1577+, 2019. [Online]. Available: https://link.gale.com/apps/doc/A616903501/AONE?u=uniwater&sid=AONE&xid=a504208 Provides details on the effects of Airbnb in communities, such as the reduction in affordable housing options, higher average asking rents, and erosion of neighborhood social capital, as well as the racial implications and current regulations surrounding short term rental platforms.

[11] Y. Xu, J. Kim, and L. Pennington-Gray, “Explore the Spatial Relationship between Airbnb Rental and Crime,” Travel and Tourism Research Association: Advancing Tourism Research Globally, 2017. [Online]. Available: https://scholarworks.umass.edu/ttra/2017/Grad_Student_Workshop/5/?utm_source=scholarworks.umass.edu%2Fttra%2F2017%2FGrad_Student_Workshop%2F5&utm_medium=PDF&utm_campaign=PDFCoverPages. A paper analyzing the effect of Airbnb presence in an area on crime statistics to show a long-term change in crime patterns due to the effect of Airbnb. Airbnb leads to increased property crime in an area, lower violent crime, and higher crime rate.

[12] J. Bivens, “The economic costs and benefits of Airbnb,” Economic Policy Institute, Jan. 2019. [Online]. Available: https://www.epi.org/publication/the-economic-costs-and-benefits-of-airbnb-no-reason-for-local-policymakers-to-let-airbnb-bypass-tax-or-regulatory-obligations/ A report on the positive and negative effects of Airbnb from an economic perspective. The effects on hosts, travelers, neighbourhoods and the government are considered, and it concludes that Airbnb should be regulated as other vacation accommodations (eg hotels) are. Airbnbs are not typically subjected to lodging tax, which is a major revenue component of most large cities.

[13] IUCN Business and Biodiversity Programme. “Building and operating biodiversity-friendly hotels in the Caribbean,” International Union for Conservation of Nature and Natural Resources. [Online]. https://www.traffic.org/site/assets/files/5443/biodiversity-friendly-hotels_in-the-caribbean.pdf An overview of the environmental impacts of hotels and resorts in the Carribean on local biodiversity, and how hotels and resorts could mitigate these impacts. Gives insight into the build phase as well as the use phase in the product lifecycle.

[14] S. Gössling et al. “The eco-efficiency of tourism,” Ecological Economics, vol. 54, pp. 417-434, 2005. [Online]. Available: https://www.sciencedirect.com/science/article/abs/pii/S0921800904003994 A quantification of the environmental and emission impact of different tourism and transportation options. Also focuses on the relationship between environmental damage due to tourism and the economic gain that it offers to communities and countries.

[15] S. Rushmore. “Hotel Life Expectancy,” Canadian Lodging Outlook, Mar. 2005. [Online]. Available: https://www.hvs.com/Content/1326.pdf Outlines typical hotel life expectancy and the amount of upkeep required to prevent hotels from becoming obsolete, offering insight into how hotels extend the use phase, as well as insight into the end-of-life phase.

[16] Airbnb,“New Study Reveals A Greener Way to Travel: Airbnb Community Shows Environmental Benefits of Home Sharing,” Jul. 2014. [Online]. Available: https://www.airbnb.ca/press/news/new-study-reveals-a-greener-way-to-travel-airbnb-community-shows-environmental-benefits-of-home-sharing?locale=en
A study paid for by Airbnb that presents a summary of reasons why Airbnb lodgings are more environmentally sustainable that hotels. The results focus on energy-usage and waste-production of Airbnb units as compared to hotel rooms, concluding that Airbnb is the more sustainable option.

[17] I. P. Tussyadiah and J. Pesonen, “Impacts of Peer-to-Peer Accommodation Use on Travel Patterns,” Journal of Travel Research, vol. 55, no. 8, pp. 1022–1040, Nov. 2016. [Online]. Available: https://doi-org.proxy.lib.uwaterloo.ca/10.1177/0047287515608505. A paper investigating the effect of homesharing platform use on travel patterns, including travel frequency, destination, and length. Results are based on theoretical knowledge of market forces and a survey of travellers.

[18] M.C Simpson, S. Gössling, D. Scott, C.M Hall, E. Gladin. “Climate Change Adaptation and Mitigation in the Tourism Sector: Frameworks, Tools and Practices” UNEP, University of Oxford, UNWTO, WMO, 2008. [Online]. Available: https://wedocs.unep.org/bitstream/handle/20.500.11822/9681/Climate_Change_adaptation_mitigation.pdf?sequence=3&amp%3BisAllowed= A publication from the United Nations Environment Programme on the impact of the tourism sector on climate change, as well as recommendations and practical guidance for the tourism sector on how to adapt to and mitigate climate change.

[19] D. Malapit. “The “Airbnb Effect” on Affordable Housing”, The Mcgill International Review, Aug. 5, 2020. [Online]. Available: https://www.mironline.ca/the-airbnb-effect-on-affordable-housing/
An article providing an overview of the negative impact of homesharing platforms on affordable housing, and how cities have begun to respond. It focuses on impacts to Canadian cities, such as Toronto and Vancouver.

[20] L.Ferré-Sadurní, “Airbnb Drives Up Rent Costs in Manhattan and Brooklyn, Report Says,” The New York Times, May 3, 2018. [Online]. Available: https://www.nytimes.com/2018/05/03/nyregion/airbnb-rent-manhattan-brooklyn.html A news article describing the results of a report that showed Airbnb increasing rent costs in various New York neighbourhoods. It also discusses the response from Airbnb, who has critiqued the methodology of the study.

[21] D. Wachsmuth, A. Weisler. “Airbnb and the Rent Gap: Gentrification Through the Sharing Economy,” Environment and Planning, vol. 50, pp. 1147-1170, Jun. 2018. [Online]. Available: https://journals-sagepub-com.proxy.lib.uwaterloo.ca/doi/full/10.1177/0308518X18778038
Examining the impacts of Airbnb on neighbourhoods in New York over a period of three years. Airbnb income flow is geographically uneven, exaggerating the pre-existing rent and income gaps even more. BIPOC communities are disproportionately affected by rising rent prices.

[22] N. Gurran, P. Phibbs, “When Tourists Move In: How Should Urban Planners Respond to Airbnb?”, Journal of the American Planning Association, vol 83, no. 1, pp. 80-92, 2017. [Online] Available: https://www.tandfonline.com/doi/10.1080/01944363.2016.1249011 Discusses the planning and regulatory concerns of Airbnb, and addresses neighbourhood impacts from the platform such as rental housing supply, increased rental prices, or incomes generated by hosts. Focused on Sydney Australia.

[23] iGMS. “Sharing is Caring: The Positive Influence of the Airbnb Sharing Economy,” Medium, Jul. 9, 2018. [Online]. Available: https://medium.com/@airgms/sharing-is-caring-the-positive-influence-of-the-airbnb-sharing-economy-61671d83e5e3
An article from a vacation rental website providing anecdotes and data that show the positive effects of homesharing for hosts and local economies.

[24] C. Jelski, “Homesharing shake-up,” Travel Weekly, vol. 79, no. 16, Apr. 2020. [Online]. Available: https://go-gale-com.proxy.lib.uwaterloo.ca/ps/i.do?p=CPI&u=uniwater&id=GALE%7CA642526661&v=2.1&it=r
An article providing an overview of current criticism for homesharing platforms, both from academic papers and interviews. It describes global impacts by cities to control homesharing platforms and how effective various regulations have proven in limiting homesharing activity.

[25] N. Gurran, “Global Home-Sharing, Local Communities and the Airbnb Debate: A Planning Research Agenda,” Planning Theory & Practice, vol. 19, pp. 298-304, Nov. 2017. [Online]. Available: https://doi.org/10.1080/14649357.2017.1383731. A discussion of the current known and presumed social impacts of homesharing platforms, identifying the need for more research to inform urban planners.

[26] Priceonomics,“Airbnb vs Hotels: A Price Comparison,”, Jan. 2013. [Online]. Available: https://priceonomics.com/hotels/ A comparison of room rates from Airbnb and hotels in various popular US cities. Also looks at the availability of Airbnb rentals across the US and breaks prices down by entire houses or single room rentals.

[27] HomeExchange.com, “How does it work?” [Online]. Available: https://www.homeexchange.com/en/ The main page for Home Exchange that serves to advertise the company and inform travelers how they can use it.

[28] Couchsurfing.com, “Stay with locals and meet travellers.” [Online]. Available: https://www.couchsurfing.com/ The main page for Couchsurfing, a platform that connects hosts with prospective travelers looking for a free place to stay. The webpage serves to advertise Couchsurfing as cost-effective and safe for travelers, and exciting for hosts.

[29] C. Midgett, J. S. Bendickson, J. Muldoon, and S. J. Solomon, “The Sharing Economy and Sustainability: A Case for Airbnb,” Small Business Institute Journal, vol. 13, pp. 51-71, Oct. 2017. [Online]. Available: http://search.proquest.com.proxy.lib.uwaterloo.ca/scholarly-journals/sharing-economy-sustainability-case-airbnb/docview/2077000368/se-2?accountid=14906. A paper arguing that homesharing platforms offer a more sustainable alternative to traditional travel lodging. It looks at sustainability issues of traditional accommodations, and compares these to the more efficient use of resources that homesharing platforms can facilitate.

[30] J. M. Skjelvik, A. M. Erlandsen, and O. Haavardsholm, Environmental impacts and potential of the sharing economy. Denmark: Rosendahls, 2017. [Online]. Available: https://books.google.ca/books?hl=en&lr=&id=QYU9DwAAQBAJ&oi=fnd&pg=PA5&dq=impact+of+home+sharing+on+environment&ots=FjuqnOuhSw&sig=E1fI4ky2PxnTZVCWpf9r3Z5irmY&redir_esc=y#v=onepage&f=false A book funded by the Nordic Council of Ministers to provide an overview of the environmental impacts of various sharing economy initiatives, including homesharing. Its focus is on the impact to Nordic countries, but it includes sources and data from various North American cities to predict environmental consequences.

[31] C. Ayotte, A. Barclay, and A. Sinclair, “Measuring private short-term accommodation in Canada,” Latest Developments in the Canadian Economic Accounts, Mar. 2019. [Online]. Available: https://www150.statcan.gc.ca/n1/pub/13-605-x/2019001/article/00001-eng.htm A report from Statistics Canada using available data on homesharing platform use to estimate its effect in Canada. The report includes a discussion of gaps in current data availability and methodologies that should be addressed to give a more accurate picture of homesharing use.