As vacation rentals make inroads into Asia, agents believe this sharing economy space can be good for tourism – but proper regulations are a must.
Home-sharing platforms such as Airbnb, HomeAway and Roomorama do not pose a threat to Asian travel agencies as much as OTAs do, but there is an underlying uneasiness about them among some players who worry they may spoil a destination’s reputation if not properly controlled.
Agents in Singapore such as Saravana Chandrasekar, director of sales at Josco Gsa Travel, are seeing an increase in the number of passengers using these short-term home rentals and have lost some revenue from hotel bookings. The alternative accommodation also poses operational headaches for agents, such as having to transfer clients to various residential areas.
Over in Malaysia, Adam Kamal, CEO, Olympik Holidays, sees a similar trend, mainly in Kuala Lumpur’s Klang Valley and in cities such as Malacca and Johor.
Said Adam: “We notice FIT clients want to be dropped off at private homes and apartments rather than hotels.
“In Malacca, renting out a shophouse with three or four rooms has become a full-time business for some. The impact will be greater in the future if the business is not regulated, which will also encourage new offerings (and players) in Malaysia.”
He pondered: “Do these types of accommodation have the safety measures and equipment in place in the event of a fire? Their promotions may also be misleading. One might say it is five minutes away to a shopping centre, when actually the shopping centre is a small one frequented by locals. Or it could say, five minutes away from the Light Rail Transit, which could be at a station far away from the city. It will cause harm to the destination if a tourist has a bad experience caused by misleading information and shares it with peers on social media.”
Agents are not opposed to home-sharing platforms but believe clear regulations must be in place. David Kho, CEO of Anaya Tour and Travel in Singapore, said these platforms in fact will help the medical tourism side of his business.
“Normally medical tourists seeking treatments in Singapore will stay more than five days and prefer places that allow them to cook. Actually, it will bring more business to us if the Singapore government really reduces the minimum rental time frame (currently six months). Our medical customers will then be able to rent the room legally,” he said.
Philippine agencies such as Marsman Drysdale Travel do include homes on a selective basis, if only because of a lack of accommodations in remote areas.
Said sales manager inbound Michael Kipping: “The DoT (Department of Tourism) allows us to use small accommodations in far-flung areas where travellers don’t really have an option. We try to market them (to partners) at trade shows.”
But a source believed the Philippines lacks quality homes in those areas. “While metro Manila may have them, with 7,100 islands in the Philippines, the farther you go, the more ‘rustic’ the accommodations,” said the source.
“We would want to work closely with the DoT to ensure the quality of sharing economy accommodations. They should be checked. At the end of the day, it is the reputation of the country that is at stake,” he added.
Raaj Navaratnaa, general manager, New Asia Holiday Tours & Travel Malaysia, also sees the likes of Airbnb and HomeAway as encouraging travel by providing more options for people to stay and by helping to open a new segment of younger travellers. The savings made on accommodation might go towards longer stays and increased spending on food, shopping and tours, he said.
However, the agency head too wants to see proper regulations by the governments of all countries where sharing economy operates, in order to protect consumers and the neighbourhoods in which it is present. “Neighbours might not like seeing foreigners walking in and out all the time,” said Navaratnaa.
Law can’t keep up
Worldwide, the pace of acceptance of sharing economy by travellers has been faster than governments’ ability to control them. Creating a level playing field for all parties and protecting the safety of consumers and neighbourhoods is not easy.
In Singapore, a dense city where the majority of people live in public housing flats, condos and apartments, security and disamenity – noisy tourists, strangers coming and going, loss of privacy, etc – is a big issue.
Last year, the Urban Redevelopment Authority (URA) received 608 complaints, 61 per cent more than the 377 complaints in 2015.
The Singapore parliament recently passed a legislation enforcing an existing guideline by the URA that prohibits short-term rentals under six months. Home-owners who violate the rules face a fine of up to S$200,000 (US$141,400) or jail time of up to a year.
Singapore’s minister for national development, Lawrence Wong, said in parliament: “Private residential properties should not be used for other purposes without planning approval, as there is a need to safeguard the living environment of residents in the neighbourhood.”
But the government is also looking into creating a new category of private residences that could host short-term rentals.
Wong said: “We do see a role for home-sharing platforms to continue operating in Singapore, so long as they are properly regulated and there is a level playing field between them and similar entities that provide short-term rentals like hotels and serviced apartments.”
It isn’t clear yet when the new law will take effect or whether it will be implemented together with changes the government is considering.
After two years of public consultations, there will only be more waiting for home-sharing platforms, homeowners, hotels, serviced apartments and the industry at large on clear-cut rules. The government plans to engage everyone further in the second quarter on questions such as how long can homes be rented out in a year, and whether the new category applies to homes in specific areas.
Airbnb could not hide its disappointment that there isn’t clarity even after consultations have been going on for two years.
Airbnb’s Mike Orgill, director of public policy for Asia-Pacific, said: “While the government has come up with a new bill that codifies existing guidelines, they also say that there may be some way for hosts to engage in home-sharing through an application for planning permission. But the bill lacks essential details, and it is this lack of clarity that needs addressing. While the penalties have been made clear, a way forward for our host community has not.
“We are not opposed to regulation – we absolutely support any clear regulation that makes it easy for Singaporeans to share their extra space in a fair and responsible way. But we believe that any steps required of hosts should be simple and straightforward, as we’ve seen implemented in places such as London and Tasmania.”
Both Airbnb and HomeAway said they are committed to work with the Singapore government to iron out specific issues, adding they have collaborated with governments worldwide to respond to each city’s unique set of needs.
This article was first published in TTG Asia April 2017 issue. To read more, please view our digital edition or click here to subscribe.