Airbnb in Trouble in Prague, Other Parts of Europe

In Prague, the capital of the Czech Republic, residents made Airbnb a major issue during the October municipal elections, and have petitioned the local government to tighten regulations on short-term rentals. The petition stems from Airbnb’s incredible popularity among locals, who have so far listed 3,500 apartments on the home-sharing website.

To locals such as Josef Franc, a social media manager, the noise during summer is unbearable.

“Why do I have to listen to drunk tourists at my window all night?” he asked Bloomberg. “They’re in every building on our street, and I can’t sleep during the summer because of the noise.

As Prague has become Europe’s fifth most popular tourist destination, it’s understandable that room- and home-sharing services have become an attractive alternative to hotels and other traditional lodgings. It’s also understandable that some tourists may have angered locals, who have slowly seen Prague’s Old Town Square being invaded by foreigners.

But the “solution” to their headache, they decided, was to pressure local officials to restrict Airbnb-like services. As a result, municipal elections were marked by candidates vowing to raise taxes on short-term rentals, limit how many nights flats can be rented per year, and restrict residents from renting their own property further with additional rules.

But as the Czech economy changed over recent years, with manufacturing slowly leaving the country, the service industry got a boost. Tourism, it seems, is a huge part of that as Prague is relatively affordable when compared to other European destinations. More affordable yet is staying at somebody’s home instead of booking a hotel, one of the reasons why so many choose to travel to Prague in the first place.

In 2017, the local government reported that earnings from the tourism sector rose by 9 percent over the year, making the local economy 272 billion crowns, the highest earnings the country saw in the sector since it began to keep track in 2003.

With a record number of guests, the country saw over 20 million people stay in local lodgings in 2017, with over 7 million staying in Prague alone, spending their money in local shops and boosting the local economy in general. If Prague officials choose to tighten local restrictions on short-term rentals, the once-affordable destination may not be as appealing to visitors on a low budget.

European Countries Join Fight Against Airbnb

Despite the warnings made by many economists who urge officials to rethink putting additional restrictions on home-sharing services, residents from other European countries have also been pressuring officials to “do something” about all the prosperity the services have helped to provide.

In Dublin, a group of anti-Airbnb activists forced their way into the firm’s offices and demanded an end to the rental service. In Berlin, officials restricted rentals by forcing anyone who rents more than half of their apartment to first get a permit, and in Amsterdam, short-term rentals are capped at 30 nights per year.

In Paris, things could soon get ugly for Airbnb hosts as officials study a ban on locals offering their entire apartments.

But worse than local governments putting up barriers is what the European Commission is doing, as it is looking into implementing rules that would force home-sharing services to report hosts’ revenue to tax authorities.

If these rules pass, then Airbnb hosts would have to collect tourist taxes that hotels charge. Furthermore, the service provider would have to release data to officials regularly such as how frequently people rent their apartments. These rules could further pressure hosts to either completely give up on renting their space or severely cut down on how often they make it available, choking the supply for tourists while the demand would remain high at first.

Without much in the way of competition, hotels and other traditional lodgings would feel free to hike up the prices, making traveling to certain European destinations a less desirable option to many.

While it’s clear that in Prague, where the median cost of housing increased considerably thanks to the tourism boom, locals now feel overwhelmed by the rapid changes taking place, it’s important they stop and think what it means to seriously restrict the short-term rental market in the city.

After all, it’s not just Airbnb hosts who will lose their extra income; their competitors will also lose as cutting affordable lodging alternatives could mean that tourism itself will slow down in the region. In addition, cafes, shops, and local entertainment hot spots will also hurt as a result of the lower influx of foreigners. Worse yet, property owners will be told what to do and what not to do with their own property — a notion that is both unnecessary and, yes, immoral.