Airbnb housing

Short-Term Rentals Are in Crisis, But Should They Recover?

As Czech borders closed and tourism came to a halt in March, short-term rentals of luxury flats popped up on real estate sites and Facebook flat-share and rental groups by the hundreds. Often the owners of the former AirBnb flats turn off comments under their posts due to endless harassment by other group members, laughing at their newfound misfortune. Little sympathy is to be found for these owners who, for years, have been restricting local access to affordable housing in centralized areas of Prague.

Key differences separate a full-time AirBnb host’s ad from the typical ads placed by locals. They usually feature professional quality photos, fully-furnished rooms with luxury accessories, and are in areas like Malá Strana or Staroměstská. Phrases like “short-term only,” “monthly basis,” or “only free until June” help confirm suspicions that these owners plan to return to running, essentially, illegal hotels once borders open and tourism resumes. 

AirBnb’s Role in the Housing Crisis

While locals are having a fun time mocking full-time AirBnb hosts, the presence of these online posts highlights a larger problem: the accessibility of housing for the local workforce. When large numbers of flats are sequestered for tourists, the price for available long-term housing rises beyond the reach of local wages. Long-term residents of Prague can attest to the rise in housing costs in recent years and the high turnover rate of their neighbors in residential areas. It doesn’t take long to realize why the newly renovated building on your street always seems to have a new stream of suitcase-laden travelers waiting outside. The highly-lucrative short-term rentals market is generally a better investment for property owners, but comes at the detriment of the neighborhood. Short-term rentals need better regulations to protect the integrity of the housing market.

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As Czech borders closed and tourism came to a halt in March, short-term rentals of luxury flats popped up on real estate sites and Facebook flat-share and rental groups by the hundreds.
Perfectly staged photos on newly-available flats are one of the signs that the poster is an AirBnb host recently cut off from an endless stream of tenants.

Long-term residents of Prague 1 have seen their grocery stores and neighborhood necessities swallowed up by tourist traps. Their neighbors were slowly plucked out and replaced by around-the-clock partiers visiting for the weekend. Unable to continue a normal life, many fled the center of Prague for affordable housing and a decent night’s rest. On a corporate level, locally-run shops are forced out of rental contracts by international conglomerates and rising prices. 

Good Intentions, Bad Outcomes

AirBnb is today’s scapegoat in the war for affordable urban housing, but it wasn’t always to blame. It started as a gig-economy answer for extra streams of income for homeowners with a guest room. In a different scenario, a homeowner going on vacation could make some extra money offering their empty flat for the time they were gone. A third user could save money on a hotel and stay in someone else’s guest room – all on AirBnb’s easy-to-use platform that brought together travelers and renters.

AirBnb originally marketed itself as a way to not just visit a city, but to “live like a local.” Ironically, it is the rampant misuse of AirBnb that is allowing tourists to live like locals beyond its original intentions. It did not take long for property owners to take advantage of AirBnb’s platform. The buying up of entire buildings and dedicating them solely to AirBnb and other short-term rental sites is displacing long-term residents, skewing tourism data, and negatively affecting the culture of neighborhoods. 

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Prague Officials Fight Back

City center streets are bare amid the coronavirus shutdown, but once borders open, it won’t be long before the tourists are back. Tourism benefits the economy and brings in foreign investment, but Prague is increasingly unable to handle the amount of tourists coming into the city. Measures to control the hostage takeover of the housing market could include regulations that are working across Europe. For example, Amsterdam introduced limits of 60 days a year that each property can be listed for short-term rental. Barcelona requires rental permits for owners, which are providing control of the industry and an additional stream of tax revenue.

In the meantime, prices for long-term flats are drastically falling as temporarily out-of-service AirBnbs flood the market. The pricing trend is expected to last exactly as long as the quarantine, but it gives us insight into what housing costs have the potential to become if the amount of housing in Prague were to accurately represent the population.

The COVID-19 crisis is giving Prague officials a chance to evaluate how much value AirBnb guests are bringing to the local economy and if it is worth the costs to local infrastructure and standards of living. The hope is they will be better equipped to balance the needs of local residents with the economic opportunities of tourism. 

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