Ref. Ares(2016) /08/2016. SHARING vs SHADOW ECONOMY, WHAT ARE WE TALKING ABOUT?

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1 Ref. Ares(2016) /08/2016 SHARING vs SHADOW ECONOMY, WHAT ARE WE TALKING ABOUT? RAMÓN ESTALELLA 17 SEPTEMBER 2015

2 SHARING vs SHADOW ECONOMY, some questions Is it an economic activity for the platforms? Is it an economic activity for the owners? Are only owners renting residences involved or also real estate companies? Are they creating a new demand or are they cannibalizing the regulated industry? Is it harmful to set up legal requirements? Can the hoteliers compete with the legal framework? Ramón Estalella CEHAT 2

3 P2P WEBSITES Are they just a neutral data base or do they take active part in the commercialization? P2P websites are very profitable 5000% growth in 5 years Looking for all type of clients including business travel implementing pricing/revenue management to get even more profitability 429% increase in purchase of private homes by companies in three years ( ) Ramón Estalella CEHAT 3

4 SHARING ECONOMY, where does the economic profit go to? 93% of the private homes transacted by P2P platforms received economic compensation Ownership structure 44% of the private homes are rented by companies or by owners who own more than one flat Most of the commercialized properties are not private residences where the owner lives Often rented/available 365/365 Ramón Estalella CEHAT 44% 56% Private owners Companies/ multiowner Source: Impacts generated by exponential growth of tourist accommodation in rental housing in Spain, driven by marketing platforms P2P, EY

5 THE REALITY OF THE HOSPITALITY SECTOR Opening a new establishment must comply 400 requirements (hygiene, H&S, environment, security, accessibility ) Increased costs due to excessive regulation Several bodies-administrations with regulatory competences Legislation has been approved by Authorities in order to achieve great permanent protection Each different type of lodging should comply different rules: hotels, resorts, rural homes, campings, hostels why not consider private homes a new category? Ramón Estalella CEHAT 5

6 IMPACTS ON THE HOSPITALITY SECTOR Study of the University in Boston, USA 10% increase in sharing economy supply results in 0.35% of decrease in hotel revenue, in some cases up to 13% Lower priced hotels and hotels not catering to business travel most affected Ramón Estalella CEHAT 6

7 LACK OF REGULATION CONSECUENCES Labour and economic (taxes) fraud Lack of guarantees to consumers Lack of employment generation: regulated sector creates 1 legal job per 7 beds Ramón Estalella CEHAT 7

8 HOTREC POSITION VIS-À-VIS THE EMERGING SHADOW HOSPITALITY ECONOMY IN EUROPE In order to allow for a level playing field of competition, to ensure at least a minimun level of protection of guests, no matter the type of tourist accommodation chosen, HOTREC considers that the following requirements should be complied by all players: 1. Registration of business activity 2. Reliable statistics 3. Residential areas-use of land 4. Rights of neighbours 5. Hygiene and cleanliness 6. Health and safety 7. Food & beverages 8. Internet platforms liability 9. Fiscal obligations Ramón Estalella CEHAT 8

9 HOTREC POSITION VIS-À-VIS THE EMERGING SHADOW HOSPITALITY ECONOMY IN EUROPE 10. Provision of information 11. Environment 12. Protection of consumer right s 13. Accessibility 14. Collective agreements 15. Registration of guests 16. Copyright 17. Official controls Ramón Estalella CEHAT 9

10 What s happening in our neighbourhoods? Ramón Estalella CEHAT 10

11 AS A CONCLUSION Competition authorities pretend two solutions: To create soft regulation for sharing economy To eliminate regulation to regulated establishments Public administration (european, national, regional and local) will not soften lodging legal framework and thus creates unfair competition Ramón Estalella CEHAT 11