The impact of Airbnb on traditional Indian hotels

USA, France dissents unfair competition


News - India & You


June 24, 2016

/ By / Kolkata

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Amidst tough opposition in France and USA, Airbnb is making sizable expansion in India

Amidst tough opposition in France and USA, Airbnb is making sizable expansion in India

While the hospitality industries in the United States and France have almost declared a battle of fair business laws against community driven hospitality website Airbnb, what could be the possible impact of Airbnb’s steady expansion on India’s incumbent short-term stay market?

It will be hard to deny that the advent of American website Airbnb revolutionised the idea of community-driven hospitality and sharing economy globally. It had never been like this before, until a disrupting idea started connecting travellers seeking authentic experiences and hosts offering inspiring spaces around the world.  However, why hospitality associations of the two largest home sharing markets (USA and France) voiced their dissent against Airbnb?

Disruption is now the key motivation for any start-ups, while unique digital solutions in traditional industries have been their USP (Unique Selling Proposition). Four years back, there was not much buzz when Airbnb started operations in India. However, the country is now a growing contributor to Airbnb’s global activities which raised USD 1.5 billion raised last December.  Airbnb has strategically positioned itself to unleash the potential of the fastest growing digital population, as a key source market in the Asia Pacific region.

Airbnb takes the driver’s seat in India

The short-term accommodation market in India is probably witnessing the most competitive period in the history of the hospitality sector. While Indian start-ups such as OYO Rooms, Stayzilla or Zostel strive to regenerate their business models to stay in the race, Airbnb is quietly taking the driver’s seat.

The major dissent against Airbnb in the US and France, its two key markets, largely revolves around allegations of tax evasion and unfair competition. While the online platform allows anyone and everyone to list their properties and host travellers, the value for money and authenticity have slowly become an impossible feat for the traditional hotels, witnessing drop in their occupancies.  However, Airbnb’s India country manager Amanpreet Bajaj said that they aspire to connect Indians with the world with authentic experiences and allow them to be micro-entrepreneurs showing the incredible hospitality the country has to offer.

Thus the expansion of Airbnb in India is definitely going to be a tough challenge for the conventional accommodation businesses in the long run. The increasing popularity of this peer-to-peer model is presumed to bring a reaction from the Indian hotel owners sooner or later. While Airbnb India already enlists over 18,000 homes – Nathan Blecharczyk, the co-founder of Airbnb recently remarked that the Indian market has reached a critical position where they intend to respond with more investment.

American Hotel & Lodging Association opposes Airbnb

The American Hotel & Lodging Association (AH&LA) raised concerns about the amount of Airbnb revenue that comes from commercial operators in cities such as Phoenix or San Francisco. The hotel association maintains the position that it wants a level playing field in which all lodging operators play by the same rules. Collecting taxes from Airbnb guests and operators has been an ongoing issue for the sharing economy companies in the United States. Airbnb has long been defending its practices, stating that the company has always tried to collect and remit transient occupancy taxes on behalf of its hosts.

Airbnb faces legal challenges in France

In France, the association of hospitality and tourism companies (AhTop) filed a complaint against Airbnb for unfair competition. This happened while the French lawmakers are considering an amendment that would allow cities with more than 200,000 residents to require the registration of short-term apartment rentals on the Internet. The head of AhTop association was quoted saying that it is necessary to have an equal footing with these online platforms, for a healthy competition which will also guarantee transparency for consumers.  The hospitality sector in France is speculating several violations of French regulations including declaration of tax and properties by Airbnb. However, the website responded to the criticism citing statistics reporting a positive economic impact of EUR 2.5 billion every year in France.

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