Comment: sharing economy rules ‘almost totally unfit for purpose’

Kate Nicholls, chief executive of UKHospitality, says the sharing economy has caused substantial headaches for the hospitality sector

The rise of the sharing economy has had an enormous effect on the travel and tourism industries and has widely been seen as a positive by customers.

Increased affordability has provided greater choice – and flexibility for travellers, outwardly, seems to have helped revolutionise affordable travel.

The reality, probably unbeknown to many customers, is that the sharing economy has caused substantial headaches for the hospitality sector, put it at a disadvantage, potentially put customers at risk and, in some cases, operated at the boundaries of legality.

For customers, the increased choice at a competitive price is a huge bonus, but like anything that seems too good to be true, it unfortunately is.

Unreliable claims

Online travel agencies have lacked transparency, sometimes made unreliable claims to customers and ultimately made business more difficult for accommodation providers.

Cities in Europe such as Barcelona, and many countries around the world including the US, Australia and Japan legislate to ensure transparency and fairness and we are pushing UK authorities to do the same.

Arguably the most rapid and substantial change to the sector has been the relatively recent rise in home-sharing platforms.

Naturally, the increase in home-sharing has had an effect on the hospitality sector; but the reaction of other accommodation providers ought not to be mistaken for sour grapes at the success of a competitor.

Unfair advantage

Currently, such platforms operate at an unfair advantage that undermines hospitality businesses.

Although home-sharing businesses are subject to rules, they still enjoy a relatively unregulated operating climate and little enforcement of the sparse regulations in place.

For instance, the lack of information regarding where these properties are, and who is letting them out, means that enforcement of existing legislation is almost impossible.

In many cases hosts and their properties meet the thresholds which trigger regulations, those applied to hotels, bed-and-breakfasts, serviced apartments and other accommodation providers, but are able to be non-compliant.

Relaxed health and safety rules put customers at risk and there can be a lack of support for guests and the potential for last-minute cancellations by hosts.

In other jurisdictions, such as Barcelona and San Francisco, systems have been developed to register platforms to ensure a level playing field.

In these cities where platforms have agreed to supply digital data directly, the legislation appears to be successful.

Moral argument

Then there is the moral argument: with affordable housing in such short supply in the UK, can it be permissible that wealthy property owners deny people the chance to own a home by renting much of the available space on a short-term basis?

Nobody is suggesting that the sharing economy be stifled, or customers given less choice, only that those businesses operate on an equal footing to hospitality businesses.

The current tax system in the UK was devised at a time when the majority of business was done in the “old-fashioned” way.

The legislation currently in place has essentially been devised for a pre-digital era which is now almost totally unfit for purpose.

The reality is that hospitality businesses now shoulder a disproportionate tax burden compared to digital businesses and that is seriously hurting the sector.

The sharing economy has helped transform the landscape of travel and tourism, not just in the UK, but across the world, but it must do so within a revised legislative and tax framework that supports all aspects of business equally.