Thomas Allemann, hotelleriesuisse

1. 03.12.2015
Shadow hospitality:
the view of the hoteliers
Thomas Allemann,
Member of the Management Board
hotelleriesuisse

2. 03.12.2015 Folie 2
Agenda
• The sharing economy: a new phenomenon?
• Global development
• The position of HOTREC
• The situation in Switzerland
• The reaction of Airbnb

3. A New Phenomenon?

4. 03.12.2015 Folie 4
The origins of the hospitality industry

5. Evolution of tourism in Switzerland
Folie 503.12.2015

6. 03.12.2015 Folie 6
UBER started in the USA in 1946
Source: Credit Suisse: The Sharing Economy, Nov. 2015

7. 03.12.2015 Folie 7
The drivers of the new economy

8. 03.12.2015 Folie 8
High potential in the emerging markets
Source: nielsen-global-share-community-report-may-2014

9. 03.12.2015 Folie 9
High potential within the millennials
Source: nielsen-global-share-community-report-may-2014

10. 03.12.2015 Folie 10
Global development

11. 03.12.2015 Folie 11
Sharing is caring

12. 03.12.2015 Folie 12
Airbnb is dominating the global market: (9/2015)
• In 2015, Airbnb accounted for around 80 million bed nights
*Estimate
Source: HOTREC, own graph; Valais Tourism Observatory, November 2015
Airbnb
Tujia
Wimdu
One Fine
Stay
House Trip
Couch‐
surfing
Luxury
Retreats
Only‐
apartments

13. 03.12.2015 Folie 13
The development of Airbnb

14. 03.12.2015 Folie 14
Number of listings (global)
Source: Valais Tourism Observatory, Nov. 2015
0
200'000
400'000
600'000
800'000
1'000'000
1'200'000
1'400'000
1'600'000
2011 2012 2013 2014 2015
Valuation
$25bn
Airbnb Funding
$7.2m
Airbnb Funding
$450m

15. 03.12.2015 Folie 15
Number of bookings
Credit Suisse: The Sharing Economy, Nov. 2015
- Increase in bookings (fourfold)
- Decrease in growth

16. 03.12.2015 Folie 16
The position of HOTREC

17. 03.12.2015 Folie 17
The position of HOTREC

18. 03.12.2015 Folie 18
Analysis of short-term private accommodation rentals
• Accommodation bookings through P2P platforms
GO MAINSTREAM
• Renting whole units GO MAINSTREAM
• High intensity, one-host multiple-unit rental
GO MAINSTREAM
• Renting often and for long periods on a large scale
GO MAINSTREAM
 P2P platforms expanded to cater to business travellers
 The rise of host support companies

19. 03.12.2015 Folie 19
Types of short-term renting:
 «consumer to consumer» (P2P)
 «business to consumer» (B2P)
 Occasional renting (30-60days/year)
 Permanent renting (longer than 60days)
 Professional businesses (permanently several properties)
What is the role of the public authorities?
 «level of legislation»
What is the role of the private actors?
 (consumer) associations, platforms, etc.

20. 03.12.2015 Folie 20
Is commercial renting sharing?
Source: HOTREC Policy Paper on the Sharing Economy, Nov. 2015

21. 03.12.2015 Folie 21
Do you know this woman?
Jasmine Salihovic, manager of the biggest hotel in Switzerland

22. 03.12.2015 Folie 22
And that’s her hotel
500 rooms in 105 apartments from CH 45 to 720

23. 03.12.2015 Folie 23
Position of HOTREC
• "Hotrec, the European hotel umbrella association, sees a risk
for consumer protection in the sharing economy.
• According to HOTREC, the "current legal vacuum in Europe
in relation to the sharing economy leads to enormous risks in
terms of consumer protection and guest safety".
• In addition, there is unfair competition and economic grey
areas.
• Outstanding points included the necessity for registration and
statistical measurement of economic activities, the
maintenance of security standards and risk prevention, as well
as tax obligations, protection of employees' rights and the
preservation of the quality of life in local neighbourhoods."

24. 03.12.2015 Folie 24
The 10 steps of the HOTREC Chart 1/2
• Integrate Short-Term Private Accommodation Rentals in
Legislation as Tourist Accommodation
• Establish Processes for Registrations, Permits
• Measure Short-Term Private Accommodation Rentals in
Tourism Statistics
• Enforce Requirements and Carry Out Inspections for
Safety and Security
• Comply with Fiscal Obligations

25. 03.12.2015 Folie 25
The 10 steps of the HOTREC Chart 2/2
• Verify Visitor Identity according to Schengen Convention
Requirements
• Protect Employees’ Rights and Benefits
• Protect Quality of Life in Neighbourhoods
• Clarify and Ensure Proper Distinction between
Residential and Commercial Property
• Control the Dispersal of Short-Term Private
Accommodation Rentals

26. 03.12.2015 Folie 26
The position of hotelleriesuisse

27. 03.12.2015 Folie 27
Position of hotelleriesuisse on the sharing economy
• Sensible expansion of tourist services (compensation for lack
of available beds during large events)
• Specific tourist target groups to be approached
Higher gross added value in the entire tourist industry
Source: Switzerland Tourism (Picture)

28. 03.12.2015 Folie 28
Challenges for the (traditional) hotel industry?
 Customer requirements:
How should the hotel industry adapt to suit new
requirements?
 Even greater proximity to customers, strengthen host
role
Bring the advantages offered by the hotel industry to the
forefront
 New technologies:
How should the traditional hotel industry use ICT?
 Daily challenge of the hotel industry
> Trial and error principle
 Further challenges:
Pressure on overnight room prices
 Daily business, but on a level playing field please

29. 03.12.2015 Folie 29
Challenges for the (traditional) hotel industry?
General conditions:
Only the traditional hotel industry is subject to statutory
regulations in these areas:
Health/hygiene
Fire safety
Taxes
Statistical records
Employees' rights
Recording identity of guests
Fair competition in accommodation sector?

30. 03.12.2015 Folie 30
Equal treatment is not guaranteed everywhere:
• Tenancy Law
Legal grey area in Switzerland as sub-letting occurs which must be
advised to the lessor
• Tax Law
Rental income as taxable income
VAT obligation in case of income over CHF 100,000
• Copyright
No control of commercial suppliers of private dwellings / (Radio and
TV reception)
• Safety and consumer protection
Fire safety, hygiene, liabilities, etc.
Duty to report guests (Schengen), statistical records
• Employee protection
Minimum wages, according to Collective Labour Agreement (hotel
and catering industry), Employment Law and Swiss Code of
Obligations

31. 03.12.2015 Folie 31
“It is now up to the authorities to make the
“sharing” economy a sustainable and responsible
integrated model, ensuring consumer safety and
security as well as tax income, as does the
hospitality industry, which, together with tourism,
represents the 3rd socio-economic activity in
Europe and employs 13 million people.”
Source: Hotrec Levelling The Playing Field. Policy Paper On The “Sharing” Economy. Nov. 2015
The position of HOTREC

32. 03.12.2015 Folie 32
Position of the European Parliament

33. 03.12.2015 Folie 33
The position of Eric Scheidegger, SECO
AirBnB and UBER typically use the new clout of the IT-
based economy of sharing: Through Internet applications
the search costs of consumers are massively reduced. In
addition credible assessment systems provide the
necessary confidence in unknown providers and users.
In economic terms thus fall away earlier information
asymmetries, which served the justification for regulations
And are not novel cheap accommodation forms a promising
alternative to the often complained predicament price-
performance ratio in the simple hospitality industry?

34. 03.12.2015 Folie 34
Who has taken what measures?
Measures Towns
Obligation to register San Francisco, Santa Monica,
Amsterdam, Berlin, Barcelona,
Limitations on use San Francisco, New York, Santa Monica,
Amsterdam,
Collection of hotel/tourism taxes Santa Monica, Quebec, Amsterdam, Paris,
Milan, Berlin,
Bern, Basel City, Basel Country, Montreux-
Vevey (Zurich, Geneva in planning)
Agreement of landlords necessary Berlin, Barcelona
Switzerland: guidelines in Tenancy Law
Controls New York, Quebec
Recording identity of guests Milan
Recording statistics Milan
Fire safety regulations Amsterdam
Source: Hotrec, Nov. 2015
There exists ambiguity regarding the type of and necessity for regulations

35. 03.12.2015 Folie 35
Airbnb (November 2015):
“We are 100 percent committed to being constructive
partners with regulatory agencies and policymakers.”
Promise:
– Proceedings against illegal hotels
– Cooperation in the collection of taxes
– Provision of anonymous data
– Publication of statistics in key markets
– Cooperation in prevention of short-term lets
(combatting housing shortage)
Source: Press release Airbnb: http://publicpolicy.airbnb.com/compact/, 11 November 2015
[17.11.2015]
And the reaction of Airbnb

36. 03.12.2015 Folie 36
Und wie Weiter?

37. 03.12.2015 Folie 37
What strategies can be adopted

38. 03.12.2015 Folie 38