W h y A i r b n b is impacting housing affordability and how urban planners could respond to it Master in Urban Planning and Policy Design Politecnico di Milano 2019

STUDENT Maria Eugenia Iarlori PROFESSOR Massimo Bricocoli A mio fratello Luca , il mio più grande sostenitore che forse non ringrazierò mai abbastaza. Index

1. Introduction

2. 2.1 Introduction to the sharing economy 2.2 What happens when we share homes? 3. The case of 3.1 The bizarre way the idea started and has been accepted by users and investors 3.2 Typology of spaces rented via Airbnb 3.3 Controversies 3.4 What links Airbnb and the affordability market? 4. How airbnb is impacting housing affordability in Milan? 4.1 Data issues: privacy or convenience? 4.2 Airbnb presence in Italy 4.3 Why Milan became a good marketplace for Airbnb’s 4.4 Analysis of Airbnb data in Milan 4.5 The convenience or renting on Airbnb rather than on the traditional market in Milan 5. Airbnb and Urban policies 5.1 The urge of regulation 5.2 When Airbnb overtakes a city the case of New York 5.3 Comparing other policies 5.4 How Lombardy region tries to regulate Airbnb phenomenon

Conclusion Bibliography 1. Introduction

The rise of the “sharing economy” business model on which is based phenomenon and its exponential on, the market gap they identify growth is generating a variety and how they were able to respond of consequences especially in the the demand in chapter 3. most developed countries. As I will discuss in chapter 2, we are in the Airbnb is a home-sharing platform midth of a technological revolution that simplifies connections between that historically we never faced who would like to rent a place for a before, this is happening not only short term and who is in need of it. from an economical perspective but This system blurs the traditional in many others as well, not only boundaries between residential and on a macro scale level but also on tourists’ areas within a city. In the micro one, impacting the daily the past years Airbnb has been at routine of citizens. Often those the hub of debates for its impact externalities are unpredictable for on tourism, but more rarely those local governments, making obsolete political topics have expressed the traditional tools and labelling the impact that the hospitality the new ones as “risky” and revolution is having on cities. It unpredictable themselves. What role is an upbringing subject though, should urban planners assume when and even if there is not yet a games rules are changing rapidly literature on it, hundreds of papers following the balance of the offer- and interviews are discussing about demand in such a short period of it, trying to decide whether it is time? The platform my thesis is based an innovation we should embrace or on is Airbnb, which rase under the fear. Although it is a hit issues sharing economy umbrella. I will in many cities especially in the provide a definition, the reasons USA, Italian government is waiting that stand behind its success, the to bring this issue to the table. 1 It is in chapter 4 in fact that with the need of regulation, showing the analysis will start to focus that without a proper administration on Milan, with a foreword on the the Airbnb intensification can difficulty encountered in accessing lead to a series of problematic accurate data. Data in my possession situations. Between all the example are not the official ones, since I could select , I find New York to the website refuses to share its be the best suitable one, since is data even with the governments the place where it all started, therefore my analysis will be based reaching already a high peak point on alternative ones (as will be which has more visible consequences discussed in a dedicated paragraph). many protests from the resident Being based in Milan and having community will enhance joint with faced the need of short-term rental anti-Airbnb websites. While the accommodation myself, I decided to supporters of the sharing economy base my studies on the impact that claim that Airbnb is providing income the spread of Airbnb is having on opportunities that help residents Milanese long term rental price and to afford their housing rents, what consequences is creating for the opponents underline the reduction neighbourhoods where the presence of permanent housing supply and of tourists is getting tighter and the increase of rental prices. asphyxiating. Comparing the three Nevertheless, there are factors such data sources in my possession I as noise, congestion, competition was able to conduct an analysis of for parking and so on, that are in which neighbourhood, which type modifying neighbourhood structures, of accommodation, in which (and if leading to process of gentrification there is) period of the year that has which intensify the rise of rental faced a more intensified activity prices. In the same chapter it will of Airbnb in Milan and what target be discussed the policies solutions is increasing the demand. Although adopted by different municipality this platform is the most discussed around the world used as a defence one worldwide, it has competitors system to contain the home-sharing both globally and locally. I will repercussions, going in deep with dedicate a paragraph to those the approach that Milanese local since I consider to be unfair to authorities are adopting and the assume that Airbnb is the one and constraints that are facing from only responsible for the housing the European Union. affordability crises in Milan.

Since the tourism sector and the The final part of the work will need of short-term accommodation is discuss open questions that considered to be recent in town more challenge urban governance and or less coinciding with Expo 2015, planning in response to Airbnb I will examine a case in the USA in phenomenon in order to protect the chapter 5. This chapter opens up affordable rental housing supply.

2 2. Sharing economy 2.1 Introduction to the sharing economy

Definition of sharing economy

Nowadays many define turn formed by interconnected themselves under the sharing communities and individuals, economy umbrella. However in opposition to institutions researchers across the world are centralized, which transforms the struggling to find a common and ways in which we produce, consume, universal definition, or even finance and learn. Production, agreeing on how to title such new consumption, financing methods economic movement. In fact, often and education, in fact, are the we hear speaking about the sharing four areas that the collaborative economy, collaborative economy, economy hosts in its universe. collaborative consumption, peer to peer economy as synonymous - Collaborative consumption is of one another. According to one of the four key components of Botsman and Rogers (2010), they the collaborative economy. It can have instead be defined as an economic model specific meanings: based on sharing, exchanging, trading or renting goods and - The collaborative economy is services that privileges access the great whole that encompasses to property and it is redefining everything: an economy based on not only what we consume but networks, distributed and in also in which way we do so. Three 4 main activities are included in that the name “crowd-based the collaborative consuption: capitalism” is more appropriate the creation of new markets for to describe such economic system unused goods; the affirmation of rather than “sharing economy” lifestyles collaborative; the (Sundarajan;2017). However he establishment of product rental continues to use the latter systems. The focus here is not because it maximizes the number regarding what we consume, but on of people who understands what he the way we consume. According to is talking about (since there is the principle of collaboration: not a consensus on the definition it is an intermediate form between of sharing economy). Paul Romer reciprocity and exchange, in lamented in a June 2015 blog post which more people get in touch that “we might be loosing a good with the goal of achieving a verb” if we are naming as sharing project that everyone can benefit a commercial exchange! I take from; it is a notion that works the example of Sundarajan and on network logic. use the same title, this is why I decided to name this chapter - The sharing economy is also “Sharing economy” rather than a specific subset of the other possible candidate title. collaborative economy, in which under utilized resources, from According to the author, this physical spaces to professional economic system is based on the skills, are shared by some following five characteristics: users for monetary or symbolic benefit, allowing it to be used “1. Largely market-based: the more efficiently. The focus sharing economy creates markets here is more on sharing, which that enable the exchange of goods is an intermediate form between and the emergence of new services, reciprocity and redistribution, resulting in potentially higher in the which a group of people level of economic activity makes available its resources for the production of goods or 2. High-impact capital: the services . This becomes useful sharing economy opens new to the whole community, it is in opportunities for everything, fact a concept that works on the from assets and skills to time logic of community. and money, to be used at levels closer to their fully capacity. Arun Sundarajan, professor at New York University’s (NYU) Stern 3. Crowd-based networks rather School of Business and author than centralized institutions of “The sharing economy: the end or hierarchies: the supply of employment and the rise of of capital and labour comes crown-based capitalism” affirms from a decentralized crowds

5 of individuals rather than a broader sense to describe any corporate or state aggregates; sales transactions that are done future exchange may be mediated via online market places, even by distributed crowd-based ones that are business to business marketplaces rather than by (B2B), rather than peer-to-peer. centralized third parties. The sharing-economy evolved out of demand, culture and 4. Blurring lines between the technology. Today we share cars, personal and the professional: homes, bikes. If those concepts the supply of labour and services seem revolutionary, the question often commercializes and scales I am raising here: is “sharing” peer to peer activities like really something new? In 2011 giving someone a ride or lending Times listed shared economy as someone money, activities which one of the top 10 ideas that will used to be considered “personal” change the world. According to Marcus Felson& Joe L. Spaeth, 5. Blurring lines between fully the need of sharing started with employed and casual labour, the oil crisis of 1979, when between independent and dependent the scarcity of resources just employment, between work and soon after the economic boom of leisure: many traditionally the 60es, brought more and more full-time jobs are supplanted people to start to worry about by contract work that features alternative ways to use re-use a continuum of levels of time the resources already available. commitment, granularity, economic It is in this moment in which dependence and . people started to fantasy on “how beautiful would be do not waste”.

However, humans have always shared. The innovation consists Why and when it developed in the fact that now we are sharing with strangers. Technology helped to overcome trust issues via rating and reputation. The “pure” concept should rotate Sharing economy has a wide range of around the fact that the owner meanings, often used to describe has an excess of capacity, so economic and social activity he or she does not consume it involving online transactions. all times and therefore he or Originally growing out of the she is willing to lend it for a open-source community to refer short period of time to someone to peer-to-peer based sharing of else without any remuneration. access to goods and services, the term is now sometimes used in The “Nonownership collaborative

6 NONOWNERSHIP COLLABORATIVE CONSUMPTION

PURE SHARING Dual model, PURE EXCHANGE e.g.mothering (Habibi et al,2016) e.g buying bread (Belk,2017) (Belk,2017)

-Non reciprocal -Reciprocal -Social links -Balanced -De facto/de exchange jure -No lingering -Money -obligations irrelevant -Monetary -Singularobjects -Non singular -Network Sharing Balanced Exchange -Calculation inclusion dominant sharing dominant -Inspection -Inalienable dominant -Alienable -Personal -Impersonal -Dependent e.g e.g e.g -Independent -Sharing context Couchsurfing Airbnb Zipcar -Love,caring

Image 1. Model from Habibi “Nonownership collaborative consumption”. (Habibi;2014)

consumption” of Habibi (2016) is buying bread in a shop. The make a clear distinction of what point I want to make, based on is hailing and what is sharing. Habibi studies, is the fact that Pure sharing should have the it is impossible to categorize following characteristics such as applications as just black or non-reciprocity of the activity white but some of them can belong and the unnecessary remuneration to greys zones (or activities) since it should be based on loving which are in between, some of and caring principles. The best them have the tendency to go example of this “philosophy” is closer to pure sharing, other mothering. Opposite to this is tend more to pure exchange. the “pure exchange” which is Couchsurfing, for example, which based on monetary transaction, offers an excessive good (couch/ is alienable, reciprocal and bed/ extra room) for zero money impersonal. The example given of course belongs to the first 7 category while Airbnb where that one would like spontaneous and people offer the extra room for another that would be critical and money is of course moving along conscious1, the design practices the horizontal line towards the are however animated by an pure exchange. How to create the intentionality different, which distinction? A useful help is the is reflected in the ways in which difference between hailing and sharing comes represented, and sharing. If we take as an example then designed” (Territori della transportation hitchhiking you condivisione, E. Giannotti; 2014). occupy a seat that otherwise it will remain empty, same thing The logic on which the sharing happens with Blablacar, the only economy is based, in reality, difference is that it includes are not so innovative: sharing, money exchange and you can check barter, the exchange of goods the reputation of the driver and services or the loan already before trying yourself. In , existed since antiquity. However, instead, you demand a ride, there the sharing economy that we know are almost no possibilities that today, writes Vaccari (2016), the Uber taxi driver was going is growing and has developed in to go in that direction without recent times, since the beginning you requiring it and willing of the 21st century. It turns to pay for the service. This out to be innovative thanks to is why it belongs to hailing. the platforms with which these practices are implemented, possible only thanks to new technologies and modern methods of communication. If in the past, in fact, sharing, exchanges Online community and exchanges could only take place between acquaintances or people physically close to each other, today, thanks to these platforms born on the “In different forms, sharing web, it is possible to "shorten phenomena are appearing in many distances" and communicate urban settings. This is not and share goods and services only born from the initiative with people never seen before. of inhabitants, who cultivate Therefore, another fundamental collective gardens and take aspect is the research and the possession of spaces abandoned. importance of the experiential Sharing is rapidly becoming also dimension connected to the use a project theme. Apart from of the service. In fact, it is simplification distinctions also investing in relational, between a civil society action social and organizational

8 fields, generating values, bringing us back in time; we opportunities and changes. live in a village ... global. As Rachel Botsman states at TEDx "The sharing economy proposes Sydney in 2010: "We were born itself as a structural rethinking and raised to share and cooperate of the relationship between and we did it for thousands of economy and society, based years, when we hunted or raised on the creation of a social in cooperatives, before the bond as the basis of economic arrival of this great system of exchange" (Mainieri, 2013). hyper-consumerism. And we built these defences and created these It is also and above all, little fiefdoms. But things are therefore, the mirror of a society changing. We are moving from that is changing its values, an ego culture to a culture of its culture and its lifestyle. ourselves"(Botsman, 2010). One An aspect that needs to be of the reasons that incentives underlines here is the “emphasis people to form a community is, as on the ability of civil society Bricocoli writes “The protection to organize itself and self- the community offers is premium for regulation: moral or civic a tendentially all-encompassing resources are valued solidarity of membership; it rests on strong individuals, action and voluntary bonds and focused trust, on an organization and in general the orientation to closure in a world forms of associationism, while apart, which excludes outward and the same is true they value the requires loyalty to his own resources freed from the market indoor” (Bricocoli; 2014). In as a form of social organization” other words, “one protects (Bricocoli, De Leonardis; 2014). oneself between similar ones”.

The new lifestyles promoted by this The sharing economy's mission is economy favour socialization. the enhancement of sharing rather These companies that operate than the object of sharing: its in the perspective of sharing philosophy is not based on things economy are united by the in and of itself, but on the need ability to unite people, to form they satisfy or the experiences consumer communities (through they offer. When we trust, an online platforms, as already in possibly risky situations underlined, which allow to share, (entering a stranger's car, exchange or rent unused resources delivering the house keys to with limited transition costs). a stranger), says the scholar, Nowadays people are experiencing we build a more trusting an extremely important phenomenon society: exposing oneself to with enormous commercial and these situations restores the cultural implications that are interpersonal connections that

9 have been lost with capitalism. (2007) points out, the effort According to Sundararajan, the that collaborative lifestyles economic exchange, in fact, has require is to put aside some of become excessively impersonal. our hyper-individualism to make He believes that the appeal room for the sociability that we of sharing economy lies in the have lost. Beyond the money saving fact that people feel happy to that these practices allow, the connect with other human beings experience gives, as we have seen, as part of daily activities. unique advantages that turn out Lasky writes: "We drop the white to be the most important aspects towels of a hotel on the bathroom of the form of consumption, even floor because the housekeeper surprisingly those consumers picks them up, but we fold and who approach this world simply carefully hang the coloured towels attracted from its cheapness. A in our Airbnb homes, thinking change of mentality is necessary of their owners" (Lasky; 2016). to make the use of these platforms a widespread practice, Sharing becomes the key word of but the process is already sociability; it is the medium underway, as it is circular: that allows participation the necessary openness is at the and therefore belonging to a same time favored by their use. community, laying the foundations for openness to the other. The "Being human is a team sport, concrete possibility of sharing evolution is an act of tangible or intangible goods collaboration. Even the trees in is configured as a fundamental the forest [...] are connected instrument of social cohesion. to the vast network of roots Sharing behaviours, through and fungi that allows them to these digital platforms, are communicate with each other and applied offline, in the moments pass nutrients back and forth. of our daily life. Therefore, If human beings are the most these platforms are a new idea evolved species, it is because with an old ethic. Openness, we have the most advanced ways of community, accessibility and collaborating and communicating. collaboration have re-emerged We have a language, we have from distant times through the technology. It's not about digital culture. To accommodate rejecting digital or rejecting these values and these forms of technology. It is about recovering relational consumption, however, the values we risk leaving behind it is necessary to re-orientate and then incorporating them into one's own mentality and habits; the digital infrastructure for this involves an effort, which the future. It's simple: how to is always necessary in every create a social network that act of change. As Bill McKibben instead of teaching us to see

10 people as adversaries, teaches New forms of us to see our adversaries as people. It means creating an economy that does not favor a monopoly of the platform, which wants to extract all the value from people and places, but that What are peculiar differences promotes the circulation of value then with the traditional through a community [...]. It economy? Botsman and Rogers wrote means building platforms that do about the deep division of the not repress our creativity and way market run in the 20th and novelty in the name of prediction, 21st century. They affirm (and but actually promote creativity the same concept is evoked also and novelty, so that we can find in Sundarajan’s one) that while some solutions to get us out of the the 20th century was defined by chaos we are in "(Rushkoff, 2018). an “hyper consumption” the 21st instead from a “collaborative "And this is a huge change in one”. To access the hyper mentality, and once you hear consumption you need credit, it, you want it to happen much while for the new one the most more. [...] After you have had relevant aspect is reputation this experience, you trust each which is given by the community other. These are unexpected (they are the main advertisers) things that you could never instead in the hyper one is the have foreseen. When you connect classical advertise campaign. with people, around a shared Hyper consumption satisfies interest or action, you get the need of ownership while the used to the unpredictable things collaborative consumption is that happen in the future, and I based on the non-ownership in think that's what we're watching favour of the shared-access. This happening. We open ourselves 21st century mechanism implies to these opportunities, we are high ability in trusting strangers the protagonists of technology, and believing in the commons. to resize systems and projects together. The world is hungry to In contrast to the platforms, unite together, as creators of the traditional industries, opportunities "(Anderson, 2014). also defined as pipelines, are organized according to a linear structure of distribution in which value is created and transferred step by step. Sharing-economies, instead, uses the principles of circular economy which differs substantially from the traditional one for the strategy adopted. The 11 Image 2. Infographic of linear /recycling/ circular economy. Source https://www. thetalkingthread.com/a-circular-economy/

traditional one is called linear bulbs and sell it as much as economy and it is based on three possible. Consumers then dispose steps: take-make - dispose. the product when not functioning anymore. The characteristic of In order to explain this this is that the industry is concept, I will use an example, never going to see that bulb the bulb market usually takes again. The circular economy the material at the lowest price instead makes profits selling possible as if it was an endless services rather than products, resource, transform it making the steps on which is focused 12 on are make-use-return. Not to to users on both sides of the be confused with the recycling platform, producers and customers. economy, which reutilizes the same good in a different way One of the first issues this recycling it, but it concludes platform had to solve was that anyway with a material disposal. users will not surf on the platform Initially people thought that the unless it produces values on most significant impact of new the other hand, a platform will digital technologies concerned the be worthless if there is not a spread of disintermediation with copious number of participants. the elimination of intermediaries Unlike companies with a pipeline and the establishment of a structure, platforms fail direct relationship between to directly create value (or producer and consumer. goods), therefore what they are based on is the realization of In reality, the platforms instead infrastructures, allowing the of eliminating it, re-proposed a creation and exchange of value re-intermediation, introducing and dispose of the principles new types of intermediaries: the that govern these interactions. classic brokers have been replaced Therefore, the role of community by some more efficient online, is essential to share purposes, often automated systems, which resources, needs, preferences, offer valuable goods and services risks and other characteristics,

Image 3. How Can Larger Sharing Economy Platforms Re-establish Trust Among Their Users’ Community? (Deemly blog; 2016) 13 through the Internet, which do The driving force behind the not depend strictly on material success of Platform Business is elements. Who is the community the network, which companies, composed by? A community is thanks to the growth of digital formed by core team members, platforms, can develop quickly consumer users, sellers, and at a reduced cost. The network partners and by fans. In other effect is a new economic phenomenon, words, the sharing economy roots brought forward by technological itself on a “platform business”. innovation and the spread of the Internet. (Sundarajan; 2014) The Platform Business is a new business model that uses It is now clear that the main technology to connect people, value of a platform is in the organizations and resources, network effect that it is able to in an ecosystem in which the create. But how can we manage to interactions between the subjects monetize this value? One of the allow to create and exchange (in most common solutions is charging an open and participatory way) a tariff on transitions, which an incredible amount of value. is an effective way to monetize

The rise of the sharing economy %of online users willing to participate in sharing communities

Willing to share their Willing to share from own assets others

78% 81% 70% 73% 68% 71% 68% 66%

52% 54%

43% 44%

Asia Pacific Latin America Middle East/ North America Europe Global Average Africa

Image 4. My own reproduction of Data regarding willingness to share own goods in different countries across the World. (World Bank data; 2017) 14 the value created, without Which sectors are embraced hindering the growth sellers by the sharing economy and buyers have to pay only when there is a transaction and are not discouraged to participate in the platform, unless the cost to be paid is excessive.

This system can have different repercussions which are generally divided into two categories called same-side effect, and What is now called the cross-side effects. The same- “collaborative economy” in the side effects are network effects EU is generally said to include created by the impact that users transport, household services, of one side of the market have on collaborative financial other users on the same side of services, professional services the market (consumers on other and accommodation. There are consumers, or producers on other different platforms that operate manufacturers). On the contrary, across the world, so many that cross-side effects are network will be impossible to name them effects realized by the impact of all since everyday a new one could users on one side of the market emerge. The growth in a sector on users on the other side of the goes at the same speed as the market (consumers on producers, willingness people have to share or producers on consumers). in the given sphere. A Research Both effects can have positive conducted by Havas, Credit Suisse or negative implications which Institute shows the percentage we will see in a few pages. of people willing to share in each field of the collaborative “Proponents of the sharing economy economy (See image 5). argue that it improves economic efficiency by reducing frictions The sectors it embraces can be that cause capacity to go divided into many different underutilized, and the explosive categories: Funding’s, growth of sharing platforms Services, Accommodation. (such as Uber for ride-sharing and Airbnb for home-sharing) The Funding’s platforms such as testifies to the underlying , Kva, Funding Circle, demand for such markets. Critics Angel List are argue, however, that much of the platforms. They provide a way for growth in the sharing economy has people to fund a wide variety of come from skirting regulations”. projects (be it a new technological (Barron; Kung; Proserpio; 2017) idea, new movie, new ergonomic

15 object design, new app). Why would Spanish knowledge in exchange somebody sponsor it? The answer of Biology lessons. Others (for unexpectedly is not for money example TaskRabbit) it is just a but for the “pure joy of seeing platform where people are asking a cool idea receive the funding for services such as grocery, it needs to get off the ground or walking the dog, designing a to have an early access to cool logo, writing the price that they new things” (Sundarajan;2017) are willing to pay and people In fact, there is no ownership who has the skills required to stake involved in this process. accomplish the job and found reasonable the price suggested, The service platforms such accept to be in charged. as Trade School, Times Free, TaskRabbit, focuses purely “ Short-term accommodation on services, sharing participants platforms are among the most spare times according to a set of highly-profile and high- skills and knowledges. On some use peer to peer platforms, of them, there are no monetary transforming how people travel transactions involved for example both domestically and abroad” one user could share his/her (Sundarajan,2017). Among the most

MOST SHARED GOODS GLOBALLY

Image 5. Most shared good globally. (Havas, Credit Swiss Institute; 2016) 16 internationally renowned there with the hotel industry rather are Couchsurfing, Airbnb and than Airbnb and definitely not OneFiveStay. While the first one Couchsurfing, they provide 24/7 is the only one without economic services, cleaning and so on. rewards, the others operates under a revenue system. The At the European level in terms criteria on which Couchsurfing of housing share, the most used is based on is the fact that it are Airbnb, Homeaway (which provides an opportunity to stay have been bought by Expedia for free at somebody’s house, as to compete against Airbnb), if you are calling up a friend from Germany (which was that lives in another city when created by two brothers who copy you need a place to stay if you emergent platforms, develop them are travelling to that location. in Asia and then sell them back Jennifer Billock, Couchsurfing to the founders of the original CEO, does not define the platform version, Windu was created to be as an “accommodation” one. On the sold to Airbnb’s creators who contrary she believes the most refused so the German website relevant aspect is the social still exists and operates) and one, people host for the joy to Schibsted a French version of know new people (I am not so sure short term rental. Probably it about what drives guests to select is already clear that Airbnb is CS instead than other websites). the largest one among them who belongs to the sharing economy. “In contrast with the social motivations of a Couchsurfing hosts, Airbnb hosts typically join the platform because they have space that they are hoping to rent out for a profit. Guests, Three positive claims likewise, are often on the platform because they are looking for accommodation that are larger, better located, less synthetic, or more affordable than hotels” (Sundarajan,2017). By that, I am If there are distinctions, why many not denying that there is not services figure like belonging to social interaction on Airbnb, sharing economy? Platforms want to still there is a certain level be under the big tent of “sharing of intimacy involved (compared Economy” for the positive symbolic to traditional hospitality value of sharing. The positive sector). OneFivestay is a effects we are talking about can luxury accommodation platform be grouped in three main themes: which is mainly competing

17 -social: it increases social Controversial aspects mixes, it has high effectiveness and has a positive impact on the networking. Increasing those “weak ties” people create more opportunities around themselves, opening their minds toward what’s new and foreigner for them. According to sociologic studies, it increases people inclination toward generosity and trust of The idea of empowering people stranger. The sense of fear of by creating an economy can be the unknown is replaced by the considered efficient and eco- curiosity of the unknown yet. friendly. One way of making money is to rent things that you are -economic: it is generally more not using. If it sounds like the affordable, and people can depend sharing economy is a win-win for less on ownership. It can become everyone is not that simple! In a second source of revenue for fact, the sharing economy has families, low income classes a major impact on traditional bettering quality of life and business (hotels/taxi). Some may releasing the economic pressure. argue that those have to catch Therefore, it has economic up with the time, but for better benefits for both the provider or worse those are regulated! of the service or shared good and the commuter in need of it. -social: it is not positive for everybody, you might not want to -environmental: in the case of have neighbours changing every transportation it reduces the week via Airbnb for example, or emission of CO2 therefore it not everybody might be able to use is eco-friendlier. This can the services provided (while the be applied for example to some traditional ones may disappear platforms such as Blablacar, due to competition processes) Uber, Bike sharing, Scooter sharing and many others. -economic: instable demand- supply, possibly subjected to monopoly, effects on the workers of industries

-environmental if the use of services increases the CO2 emission may increase too (for example if travelling expenses become less, people tend to travel more).

18 I never thought about the fact to think that through the sharing that someone could be excluded economy we use what we need. In from the sharing economy. It reality we switch the pleasure of never crossed my mind. However, owning things into the pleasure the speech of Steven Miller on a of owning collective goods. Tedtalks brought me to perceive Autonomous vehicle is a good all from a different angle. example, in a decade or two, some He identified four spheres in people will buy one, but majority which regulations are needed in won’t (maybe cannot afford or order not to exclude somebody that there is a feeling of distrust). not many people thought about. So, what will happen then? Many will access autonomous vehicle -community: When we think about through accessing collective community we often think about good via sharing economy! So, family and friends but in the sharing economy become a way to 70es a sociologist named Mark satisfy a desire of ownership Granovetter started thinking rather than applying to the about other types of communities mentality “use what you need”. which he called “weak ties”, those were the people that you barely -reputation: in the sharing know. Jane Jacobs the urbanist economy is everything and nowadays called “hop skip” people, who is built up on rates. But here is are the kind of people that help the interesting thing, taking the building boundaries between us. case of an Uber driver decides to Sharing economy can help making go out and create a start-up about those weak ties in communities. the same thing but at a local While things like Airbnb can have level, can he take the reputation a positive effects on us (for with him? No. This is a problem, example when we are travelling you should be able to own your and want to have an experience reputation not only for creating like the local ones) we also need another online platform but also to address the types of effects it to look for a job outside of it! has on an established community which for example choose to live -equity: A lot has been done in a residential area because to make sure that disables, they know each other, there is minorities have equal access to a feeling of trust and now all public buildings or facilities. of a sudden there are visitors Statics shows that those with every week. We should make African-American names on AirBnB sure to protect them as well. have had a harder time to secure a place for themselves on AirBnB, -ownership: many people like blind people have had difficulties to own things, this is what to be accepted on Uber because capitalism is based on. We like the drivers prefer to avoid

19 having their dogs inside the car. some blogs I saw the answer “what do you want a job for? Jobs are Those points need to be addresses, not a great thing!” or “Having an regulation is needed for the impact economy based on full time jobs is this new economic model is having really inefficient!” or again “It on citizens. In the same speech does not matter, we are going to the speech of Steven Miller on a do it anyway it is inevitable so Tedtalks raises the question “Is adapt or die!” However, citizens the sharing economy undermining should be allowed to think that or supporting democracy?”. Pro- they do have a choice by choosing sharing economies argues that the politicians who are going to regulations are not needed. When promulgate the laws and companies asked about the possible crisis will have to follow those rules of the traditional job system in in a democratic and free society!

20 2.2 What happens when we share homes?

Is it correct to talk about “home” sharing?

If defining “sharing economy” the apartments. As in the article is not an easy task, definition “Platform economies and urban issues comes across also how planning: Airbnb and regulated to grasp the concept of “home- deregulation in London” (M. sharing”. Home sharing was born Ferreri, R. Sanyal; 2018) reports: around the ‘50s, but its true “The growth of the sector has diffusion however dates back been presented as desirable and to the present day: it is in necessary as it fosters the micro- fact thanks to the advent of entrepreneurialism of individuals the internet and the social monetizing underutilized platforms that we have had the assets alongside being ‘a opportunity to arrive at such a major commercial opportunity wide approval on a global level for entrepreneurs, companies, , so as to create sites dedicated industries and/or countries’ exclusively to the partition of “(Martin, 2016: 153). Among

21 the most important and famous, a significant, emotionally based we find for example Homelink, relationship between inhabitants AirBnB and Couchsurfing. The and place of habitation. “Home latter alternative way to share reconfirms itself as an area homes, could be expressed as a of complex meaning, that subgroup of the sharing economy. reason alone is incapable of We could define home-sharing explaining and covering. The as an arrangement by which two meaning deep of home is in that or more unrelated people share process by which we incorporate a dwelling. However, the first the world into the building of doubt I was wondering about is the our identity”. (Marrone;2013) usage of home instead of house. Those platforms born under What is the meaning of “home”? Is the sharing economy I believe it ideology correct to use the should be more careful in naming term “home-sharing”? While in the themselves “home” sharing for Italian dictionary it does not the intrinsic value people give exist a difference in the meaning to this word. Although in some between house and home. (“Casa” cases home-owners are really is “casa). In English instead, letting unrelated people live there is a difficulty in grasping their intimate spaces, full of a univocal meaning of the term emotional connections, with or “casa”, due to its polysemic without their presence in the richness and highlighting the accommodation, it is also true conceptual separation between that often the “home-shared” home and house(Marrone;2013). is actually rather a property Home is the term that refers to rented in a more sterile way, the psychological and cultural where even the furniture are meanings while talking about chosen with the criteria to be the physical structure we appreciated by as many renters refer to it as “dwelling”. The as possible, carefully choosing structural physical dimension to not personalize the space and of the dwelling is related to even “sharing” a place where the the symbolic affective dimension landlord has never slept even a and this allows us to capture night in his life. The coexistence living as a total social fact. of those typologies of properties under the same technological According to Marrone platforms blurs the line between (sociologist), the home is an dwelling and home concept. It is “ideological” construct created interesting to underline the fact by emotional experiences in the that between these ambiguities place where people live, while the term selected is “home” and for Karjalainen dwelling is a not “dwelling”. Sharing a house material object, but the home is does not have a direct implication

22 sharing a home. However, people obvious to simple observation. like to be told, that they would This is the case, for example, not access simply the physical with the consumption of meals. A space, but they will experience time when the assigned seats, the also an emotional one. The reason rituality of the distribution of that stand behind this is that food, almost contemporarily with the sharing economy is answering which the cutlery is held, become to the desire of community and regulatory relations social” belonging, which increased (Marrone,2013). The moment in due to the “individualistic which we decide to share our and depersonalized social homes with strangers, determine context” in which we live. the possibility that we might not keep the same habits, simply According to Mary Douglas, a because we came back home and find space, to be home, must be that our favourite cup has been “under control” (Douglas; 1991). used and not washed or the new Features such as fixity and size housemate is using our seat. In of space, or materials used for other words, inviting unrelated the construction or the happiness people to live (even if for a short that can be expressed in it are period of time) in our intimate not relevant features. Also, a space might once again blur the caravan, a boat or a tent - says lines between home and houses, the anthropologist - can be a between familiar and unfamiliar. home. What makes a place a house is something that has a regulatory Taking again the kitchen examples, value of space over time. It is “Probably is not a case if in institutionalized memory, that many recent cohousing projects is, codified in space, which there is a strong emphasis on defines the predictability of the ability of the kitchen - events. A classic example is the which is often the shared space supplies and stocks in shelves - to be a determining place and beliefs. The operation by for the socialization between which we store food or products cohouser. Socialization - we involves the ability to plan, add - whose outcome is not in place, establish time variables no foreseeable or programmable (deadlines) in operation of those way” (Marrone;2013). This raises of space (forward / backward, above another question, if sharing our / below). For these needs, space personal space has an impact on comes differentiated, parcelised, the social behaviour, can the finalized. The dwelling is the home-sharing be simply called place of the space temporal co-housing? However, co-housing organization by antonomasia. suggests that share of the same “In everyday life it comes in level of entitlement of the countless ways, often not much house. If the owner occupies the

23 listing, this should not be the be more suitable for those case. Still, since there is a platforms’ typologies, I suggest monetary transaction, “hosting a they should be called “dwell- guest for money” can be seen as sharing” instead than “Home- a business therefore the owner sharing”. The reason behind this, might change the behaviour in is that since is certain that favour of pleasing the guest the good shared is “the space of in order to get a better review the physical structure” while it that encourage others to book cannot be guaranteed the sharing his extra space and make more of the “ideological” construct profits. After those assumptions, created by emotional experiences going back to what term should in the place where people live.

24 3. The case of Airbnb 3.1 The bizarre way the idea started and has been accepted by users and investors

The attempt of this chapter is to where it managed to escalate, give an overview of Airbnb, the what is the mission and the platform I am analysing, going type of values both positive and through how the idea was born, how negatives that brings with its it developed, what reasons stand diffusion and how it is related behind its success worldwide, with housing affordability.

NATHAN BLECHARCZYK

JOE GEBBIA BRIAN CHESKY

Image 6. The inventors. Source Google.com. 26 The fairy tale

Airbnb is an online marketplace accommodation they hoped to take which connects people who the advantages of the lack in are willing to rent out their the hotel market in San Francisco properties with people in need of during the local industrial accommodation. The idea of Airbnb Design conference. Finally the was born in an apartment in San two friends opened a website and Francisco where two unemployed posted their announcement on it. roommates, Brian Chesky and Joe Gebbia, recently moved in from The price they valued their New York, had to overcome their beds was 80$ per guests per financial difficulties. Both Joe night, which compared with hotel and Brian were recently graduated industry prices during the event designers from the RIDS Academy it can be considered economically (Rhode Island School of Design) convenient. The most surprising looking for deeper meaning of aspect is not that the idea in their professional careers. In itself worked but that their the meanwhile, before to find customers were three professional “the brilliant idea”, flat rent designers, not related to still needed to be paid therefore each other, while they were they thought to rent out their expecting to target “some hippy living room in 2007. However, travellers”. Coming into their they did not have extra beds, home was Kat a designer as a solution they decided to in her thirties, Micheal a father inflate their camping air beds of five and Amol and Indian man on the floor, even if unusual as who just concluded a master’s in

27 industrial design in the Arizona other platform is. Its definition State University (See image n 7). is an “online service of free Since the experience was hospitality managed through a successful the reasonings about website, thanks to which you can what could they do to improve ask or offer others a room or the the service became a direct sofa of your home for a shorter consequence. Joe and Brian were or shorter stay” (Airbnb.com). very careful to the details from the beginning, the pioneer guests Although it is true that they both found on their AirBnB the plan of deal with hospitality in house of the city of San Francisco, some common people and they are both transportation tickets and some focused on the trust concept and coins to give to homeless people. open-minded view and importance of the experience behind the Unique coincidence is that pure accommodation, there are Airbnb idea was born in in the differences at their core. First same neighbourhood (Soma) in of all, we can differentiate the San Francisco were Couchsurfing target. Even tough initially was born and they have been Gebbia and Chesky were addressing often associated to each other the website to the same category for their similar concept of of users as the founders of hospitality which differs from Couchsurfing did (which is the the traditional one. I will open backpackers, students, relatively a brief parenthesis on what the cheap category), after the first

Image 7. First Airbedandbreakfast guests. Source: Ted Talk “How airbnb designs for trust” Joe Gebbia 28 experiment the Airbnb inventors to rent the entire apartment realized that their platform while he was not there, but could mostly refer to guests again receiving a denial from who usually make reservation in the founders who refused because small hotels and Bed Breakfasts. providing breakfast for guests Therefore, they tend to do not needed to be mandatory according consider Couchsurfing as a direct to their original concept. competitor of their business. I was surprised to discover (being Regarding the website growth, a billion-dollar company now) while they were achieving some that they misunderstood the full bookings in the high peak periods potential of what they already such as conferences, congress, created and were still convinced public events it was hard to that Airbedandbreakfast was a stabilize the users flow. The temporary business before “the technique Chesky adopted as he smart idea” would manifest. affirms during a Tedtalks is “If However, the feeling of you launch and no one notice it, bashfulness for not having an just launch it again” said Brian answer when family and friends Chesky so this is what they were asking on which project they did. Among many attempts they were working on, they started made to reach and consequently to talk about this uncommon convince investors to promote airbed website and eventually their project, they rarely they began to believe in it received an answer, nowadays themselves. Soon after, Harvard many investors have publicly graduate and technical architect admitted regretting not having Nathan Blecharczyk joined the understood the magnitude of the team as the third cofounder. In project. However, “one of the main the first couple of years they reasons investors were skeptical could not separate from the about them was that they did not narrow vision of their original have a technical DNA” (Gallagher idea, the website in fact was 2017) which was considered called “Airbed and Breakfast”. necessary to be revolutionary. The entire concept was rotating It does not appear unreasonable, around offering visitors a place considering that majority of to sleep (strictly) on an airbed innovation that made an impact on the floor and breakfast in on the technological field the morning. When a host called were coming from PhD Stanford asking if renting a spare bed student. Another reason was could be an option, Joe denied, also the inability to present suggesting buying an airbed to the project in a sustainable inflate upon the underutilized manner. During a Ted Talk Joe mattress. Another host raised Gebbia revealed that their first the issue of the possibility strategy to sell the product was

29 to inefficient, his own words were Finally, they realized a huge “We wanna build a website where gap in the system: first of all, people publicly post pictures of hosts were unable to value their their most intimate spaces, the properties in economic terms and bedrooms, the bathrooms, the kind second, their photographical of rooms you usually keep close skills were not encouraging, when people come over! And then, damaging the platform’ image of over the internet, they are going the hospitality, consequently to invite complete strangers impacting the guests desire of to sleep in their homes! It’s booking the listings therefore going to be huge!” (Joe Gebbia, impeding the website to grow. They Design for trust Tedtalks). went to each and every apartment listed in NYC and took photos I sincerely admire their obstinacy of host’s houses. After visiting to keep their project alive. In their users in New York, the order to find a solution for company finally gets some traction. expanding their project they designed cereal packages during In order to widen the businesses the election, representing comics possibilities, they changed of Obama and Mc Cain, meant to sell focus, allowing all types of them online as a limited edition, accommodations such as entire filling the boxes with 1$ cereals apartments as single rooms and and selling them for 40$, through not forcing to include breakfast this mechanism they collected a in the package. After this total of 30 000$ in 2008. What enlargement of views in just a was supposed to be a stratagem week they doubled the revenues. to solve a temporary situation, What is relevant to underline became their good luck charm. is that their idea worked not Investors started to believe in for its uniqueness, quoting their stubbornness and to trust Arun Sundararajan “one of the their potential and commitment. basic characteristics of the In 2009 they received the first sharing economy is that no idea founding of 20 000$ from Paul is new” (Sundarajan; 2017). Graham’s Y Combinator’s Company. What they should be more appreciated about is their Mostly their users where located ability to take an idea existing in New York which made them in the market and make it better travel often back and forward to for their users. Although there analyse what could be improved. is something new about them: Mostly their users where located in New York which made them 1_ the absolute novelty introduced travel often back and forward to by Airbnb, the founder says, is in analyse what could be improved. having eliminated the barriers and

30 creating a platform that everyone and precarious citizens. Those can use. Unlike other sites they aspects will be discussed give relevance to the personality further in this chapter. of the hosts, by introducing a descriptive part where hosts can 3_ It has revolutionized the way explain why they decided to join management was thought, they the platform, their lifestyle were ordinary friends who had and professions. (However, I to learn to program, to become would like to highlight that leaders and entrepreneurs and also Couchsurfing also give this the fact that they remained possibility to its hosts and it was solid is more shocking than many already existing on the market). other aspects in my opinion. In March 2009 Airbnb counted 2_ It operates in an urban 2500 listings and close to context. Contrary to what many 10,000 registered users. bed breakfasts did, it was Learning how their story started not necessarily focused on helped me comprehending what holiday homes, but on duplex, the trio stood for which is apartments, studio flats which summarising into two points: were fundamental pieces of the urban texture. As the journalist 1_ to use the “extra space Gallagher underlined in her book somebody doesn’t need” “Airbnb: how three ordinary guys to make “few extra box” disrupted an industry, made billions and created plenty of 2_ the real experience “as a controversy” this aspect made local” provided by the hosts. the start-up attractive for many users and threatening for the hospitality sector (Gallagher; However, many researchers are 2017). I would add actually doubting that the platform mission also threatening for neighbours remained pure and unvaried during themselves, real estate agents this decade (see the next chapter).

31 The reasons that stand behind the success

Three aspects need to be considered they will improve the service as main reasons that led this from the inner core, since it platform to become so renowned. has a direct impact on the “book ability” of their listings. If - The capacity to provide a they own a boat, they will offer heterogeneous offer, by having an extraordinary staying in the as listing a huge variety of middle of city’s canal and so on. accommodations (from rooms The fact that the hosts are driven till house trees and castes) by the innovation factor and which consequently was able to creativity themselves, allowed correspond the demand. While the platforms to grow so rapidly. developing the platform, the founders learnt an important While in 2007 they were afraid to lesson, they understood that lose their uniqueness of offering people are creative, having a airbed accommodation with copious number of users would breakfast included, by enlarging lead to a multitude of option the criteria they managed to be that just the three of them the one and only offering this could never predict. Instead of service, taking a huge distance limiting the possibilities by from their competitors in a giving strict criteria, as they way that allow them to almost did instead at the beginning, hold a monopoly in this field. they realized that if they let Positive feedback between buyers people be free in hosting any and sellers in addition to the type of room, the uniqueness of initial free competition between the Airbnb would consist into marketplaces tends towards “one” giving a variety of options dominant marketplace. Therefore, that never have been possible it can lead to monopoly if that to choose under the same website one marketplace is exclusively or system. Assuming that people owned and controlled. (See are smart and operate in favour chapter 3.3 controversies and of their financial situation, chapter 3.2 filter listings) 32 - The economic convenience for both homeowners and guests. Airbnb Those key points were somehow became appealing for its users constrained by issues that needed because relatively cheaper than to be addressed and that have been the traditional hotel proposal, targeted in the following years: meanwhile it became convenient for hosts because it was (and in 1_ Technical problems, booking many places still is) free from a listing was technically taxation, since the government arduous, there were too many does not have control of data steps before succeeding in from the company neither of making a reservation. Since the information from citizens who get website not highly intuitive, revenues from this activity. Even it was discouraging users to if there are of course commission choose this platform compared costs from both side (guests and to others. The solution was to hosts) from which Airbnb get apply the “3 click rule”, which revenues, they are remarkably simplified the booking process. low compared to commission This system consists in being fees of Real Estate agencies. able to go from the searching of a place till the booking in only 3 clicks. The founders followed - The innovative element is that the example of the Master of hosting a stranger in a private technology, this strategy is accommodation became a business called the “Steve Jobs rule” revenue. The positive side of which was introduced by apple this innovation is the intrinsic to simplify the listening of social aspect, hosting unknown songs in iPod. (Gallagher;2017) people, sharing the space and in As many apps proves, in the some cases time with them, can sharing economy simplicity is develop the weak ties discussed always a winning strategy. in chapter 2. It can increase networking, social skills, sense 3. They needed to be reachable of belonging anywhere in the 24/7 in case of emergency, this world, reduce race biases and service is now called “Customer give travellers the feeling of Experience”. As we can see really getting to know a culture even calling the Customer care starting from a domestic space, appeared described as a mystic neighbourhood familiarity even moment of sharing information experiencing peripherical areas with a stranger. The reason which often are cut out the tourist they had to provide this service bubble. It can, yes, not often is because many episodes where is the case and rarely it brings safety and security became at positive effects to all the groups risks where happening across the of people overwhelmed by it. globe. Those “experiences” later

33 Image 9. “Airbnb Style”. Source: Il mondo piatto dell’estetica Airbnb, Davide Coppo, 2016.

led them to include an insurance of the listings. Therefore, the that covered the housing damages founders then decided to include that guests could make inside professional photographers in the the properties otherwise given Airbnb package. The result paid the negative advertising that off, houses with high quality reports, and newspapers were of pictures were booked three making about vandalistic acts times than the others. It was a that happened in many cases, little, but necessary investment they were risking otherwise to to make their business take off. lose hosts on their platform. Nowadays there are articles As we can see even calling the about the fact that this aspect Customer care appeared described led to create an “Airbnb style”, as a mystic moment of sharing hosts with less bookings copy information with a stranger. the house furnishing style of the most booked ones in order to make more profits, making 3_ Pictures were not representing the apartment suitable to as the apartments at their best many people as possible. In since hosts were not professional other words, this aspect creates photographers, with limited the inverse leanings of what technical resources and low described as “The capacity to skills in lightening and all provide a heterogeneous offer”. those characteristics that The style issue will be better could improve the likability explained in the controversies. 34 Image 10. “Similarity vs reputation”. Source: TedTalk “Design for Trust” Joe Gebbia, 2016.

4_ Trust was definitely one start to believe in the project, of the hardest challenges they becoming less sceptical about faced. Not only was difficult in its success therefore increasing terms of making investors trust the probability of willingness them but also, and especially, in sponsoring the platform. building up reciprocal trust between hosts and guests. The First of all, they made the solution they believed in was “a guests have detailed profile with well-designed reputation system” pictures and descriptions this as key for building trust (Joe mechanism was meant to substitute Gebbia speaking in Tedtalks the classic “shake of hands” and “Designed for trust”). As we know gives the feeling of “getting the trust is such a key prerequisite personality” of this stranger for the success of peer-to- and his/her behaviour inside the peer transactions. In order to property. However, people with overcome this crucial issue, a solid career like doctors, they realized they had first of lawyers, designers, tend to be all to solve the trust problem more trusted than unemployed between users of the platform. ones or students. Therefore, Once a community was built, they based the credibility of investors would consequently a person on the review system.

35 What fascinated me from Joe Jebbia to him/her for jobs, colour, speech is how he presents this age, hobbies. However, when a concept as never existed before. person has built up an online However other platforms already reputation via review system that such as Couchsurfing (and many presents him/her in a positive others) were having the same light, the biases fall apart, and identical approach. Perhaps the the reputation become the most absence of monetary transaction relevant criteria on which to made less adventurous people base the choice to host or not to. doubting about the reasoning behind “hosting a stranger for Another topic needed to be taken free” yet not receiving money into account here is that part of led to a “non-investment” the success is undoubtedly due like to say “I host you for to the dissatisfaction created free, wherever I have space”. by the mass commodification of large hotel chains (Gallagher Even though in Airbnb platform 2017). Arne Sorensonson, CEO of there is an economical transaction, Marriott International, gave an one of the issues they had to interview during the American overcome was the danger issue, Magazine Media Conference in 2016 many people were cautious in stating that “Twenty years ago, hosting stranger because afraid those who travelled wanted only a of possible property damages! clean room, which did not reserve surprises. On these expectations During the speech Joe Gebbia we have created our strategy, talks about how the review system making sure that there were no give the possibility to go behind differences. But today if I wake biases of race, religion, sexual up at the Cairo, I want to feel in orientation, gap age. Researchers Cairo. I do not want to wake up in have discovered that while people a room similar to the one I sleep with less than four reviews are in Cleveland”. The possibility selected only by others on the Airbnb gave to its users is to criteria of similarity, once sleep in neighbourhoods outside passed the third one, reputation of the touristic tour, giving the becomes more relevant than possibility to explore areas. similarity. It is to say that when a host have to choose between two potential guests under same “...and I always believed, conditions, he/she tend to turning fear into fun, is the choose a person who is similar gift of creativity” Joe Gebbia.

36 What is Airbnb today

Airbnb is a community-based online platform for listing and renting local homes. It connects hosts and travellers and facilitates the process of renting without owning any rooms itself.

Moreover, it classifies itself “Airbnb is made up of an amazing under the sharing-economy worldwide community of hosts and by allowing property owners travellers. It’s not just about a to rent out private flats. place to stay, but also about the The way the founders present unique experiences our members Airbnb is like a “mission”. have. We are here to show you On its YouTube channel the the people, the spaces, and the introductory description is: faces that make up the community”.

Image 11. Schematization of Aribnb’s concept. Source Google.com.

37 Image 12. Airbnb logo construction. Source Airbnb.com

The team started to analyse what that is forfilling the dream of message would give a more positive “loving” each other from any impact, and they decided to make kind of place in the world pushed “the sense of belonging” their by the curiosity to get to know motto. Of course, logo urged a different people. I am referring change and Bèlo was born. Bèlo to “meeting new people” in two is a symbol that reunites four ways, both directly in person different cores of their business. or indirectly through lodging People, places, love and the in their private spaces. Since letter “A” which is the initial of “belonging” could not be satisfied Airbnb (Gallagher, 2017). Their if users feel discriminated aim is via Airbnb “to satisfy the within the community, Airbnb universal desire of belonging” launched a campaign “We stated Chesky. Massimo Bricocoli accept” in order to promote the and Ota de Leornardis in their abolishment of mental barrier essay wrote “The territory seems based on biases and to give them to be the referent - explicit contribute over the prejudices or implicit - to designate what on racism (See image below). constitutes belonging, what you share. "Our" territory is a very common expression in any form of local activation of citizens” (Bricocoli; 2014). The “fairy tale” certainly attracts some people to host or attracts some travellers to take in consideration this service which seems to be shared by a community Image 13. We accept campaign.Source Airbnb.com 38 The offer

Image 14. What Airbnb can offer. Source Airbnb.com

In order to satisfy needs of The first aim will be largely its customers, Airbnb does not discussed in the next chapter, only offer accommodations, but the third one I consider it to it amplifies the possibilities be very simple and intuitive one more time. Nonetheless while I am going to spend some opening their website Airbnb. more words on the experiences. com the user can now choose if to use the platform to find a The second point is one more time perfect matching location, or to underline the persistence of the join true local experiences made “experience” in these platforms. up for tourist at an expensive Users can organize themselves and price or choosing a restaurant suggest activities around the from their selection. It now cities where they live, offering offers three possibilities: a unique “sharing moment” for the travellers. Instead than visiting 1_ Selecting an the city just from the classical accommodation where to stay touristic perspective, Airbnb 2_ Selecting an is able to provide alternative experience with a local touristic tours, wine tasting, 3_ Selecting a cooking lesson, language exchange, recommended restaurant gardening classes with enriches

39 the variety of activities users city in Kimono and providing can experience within a city. kimonos for tourists, or to find Vising the website and looking experiences of cooking lesson of for those experiences, what typical polenta in Palermo while emerges is that once again the this culinary tradition certainly platform is using a successful does not belong to the place. What strategy to achieve the goals can be showed here is that through which consist in nurturing itself the platform the offer follows by the creativity of the users the demand in such a rapid and rather than imposing strict dynamic way that would have been parameters. However, while from impossible even to think before the accommodation side, Airbnb the sharing economy appeared. offers a competitive option, from this side instead prices The third option regards are definitely much higher than restaurants. Selecting this usual. Taking one-hour coffee possibility, users have access to with a London citizen costs £30, a list of recommended restaurants while cooking at home typical by both hosts and guests within Milanese risotto costs 70 euros. they can choose where to go Undoubtedly who is willing to avoiding the risk of making a share his/her time and knowledge bad choice. While recommendation with a foreigner is doing it as a might be very useful for tourists, source of revenue, however since the feeling of getting lost in the platform is promoting the the city and discover new places sense of love, people, places and loses its ground here. If local community a different approach restaurants start appearing on could have been expected by the a touristic platform, they will users especially in comparison become more and more booked by not with the raw material. The second residents, definatly compromising aspect I would like to underline the authenticity of a place. If is that the meaning of “locality” Airbnb spreads in a residential is blurred on the platform. It is area, it is reasonable to predict possible to notice how “belonging the risks of gentrification, anywhere” is meant literally. where traditional places leave Giving an example I can say that I the scene in favour of Airbnb was surprised to find an Italian sponsored restaurants. (See Milanese girl giving tour of the gentrification controversies).

40 How does it work and how the platform gets revenues

As said previously, my thesis the process of booking. would be focused on the housing The image below is my own issues generated by Airbnb’s schematization of the impact on the neighbourhoods. booking process in order to Although I think is relevant to understand how intuitive and give a broader picture of the simple strategy is behind. company I will focus from now In yellow line you find the on, only on their accommodation hosts activities, in full offer. The team worked harder colored yellow the guests ones, to simplify as much as possible in dotted line Airbnb role.

4. Booking is 2. Airbnb made through sends a 1. Hosts list 3. Travellers Airbnb where 5. Host professional out their search for traveler pays approves the photographer property a property the amount booking. to the details on in the city mentioned by property Traveler Airbnb along where they host and some location in stays there with other wish to stay additional order to take and finally, factors like and browse money as pricing, high quality available transaction Airbnb pays amenities photographs. options charges. the amount provided, according to to the check-in, their needs. host after check-out deducting etc. their % .

Image 15. Source: My own production based on Airbnb_insight about business model.

41 On the other hand, obviously, real threat also for OTAs (Online their aim was to make easier Travel Agency). The business also to register properties model adopted by Airbnb has a lot for renting them out on the in common with the e-Bay’s one. platform. The process is a simple It connects sellers and buyers questionnaire, it was so smooth simply retaining a commission that without realizing I almost from the transaction. Being part registered my owner’s apartment. of the sharing economy dynamic, It is relevant to underline its business model has a lot in how the data of Airbnb growth common with what described in might not be accurate since some the previous chapter. However, listings might appear on the “critical commentators have website and consequentially on argued that it is not part of the the data without being active on ‘pure’ sharing economy as much as the platform. Airbnb is part of the corporate-driven process that the broader phenomenon of sharing involve increased utilization economy, it has revolutioned the of durable assets” (Finck and classic model, and is becoming a Ranchordas, 2016; Schor, 2014).

Image 16. Scheme of Airbnb business model. Source https://bmtoolbox.net/stories/ airbnb/ 42 The scheme above summarizes the Second of all, after all these concept, visitors access the expenditures, both creators and platform to make a request of investors are aiming their own staying in an accommodation. revenues of course. What is Hosts access the platform, interesting to notice is the once created their profile and strategy behind the percentage provided the information of the retained from sellers and buyers. properties with the intention to One of the difficulties Brian rent it out for a certain period Chesky, Joe Gebbia and Nathan of time. Since hosts need the Blecharczyk had to overcome was website to be connected with the asymmetry between the numbers the potential guests, they also of hosts and guests. It is not pay a service fee. The exchange hard to believe that the amount is therefore of accommodation of people willing to “put their and guests via a platform that house online” risking to have help matching offer and demand. their own property damaged by a The service costs are necessary stranger is incredibly lower than for maintaining the business someone who is sleeping over for a successful. First of all, couple of nights even if “risking Airbnb is a company with 3100 encountering a not friendly or employers (lawyers, technicians) trustable host”. For this reason, according to Wikipedia and its they decided to apply the same costumer care is open 24/7. asymmetry to the taxation, asking

Image 17. Business Model Canvas, Source https://www.innovationtactics.com/business- model-canvas-airbnb/ 43 to add the 12 per cent of the the business model canvas total cost of the property rented used by Airbnb, which clarify and detracting only a 3 per cent actors and processes involved. from the price of the listing. It is to say that if for example Many critiques argue that one a listing costs 100 dollars of the reasons that lead this per night, the guest will pay business model to success is that 100$+12%=112$ (of which 12$ goes it is unencumbered by certain to the platform) while the host responsibilities that the instead of earning 100$, earns traditional market has. For the 100$-3%=97$ (of which 3$ goes to simple fact that “it belongs under the platform), the total earned the sharing economy umbrella” and by Airbnb from this transaction that is structured as the peer- is 12$+3$=15$. Considering the to-peer platform their users amount of people booking per are not seen as customers and night on Airbnb it makes sense how the host figures are not seen they became a 2,6billion dollar as employees but just a simple company (Wikipedia 2017). The connection between citizens who disproportion in percentage is “help each other”. This led to one of the strategies they adopt resentment from other economic to encourage more people to list fraction who are strictly their properties on the platform. regulated by local policies through taxation and fines. (See The scheme above represents rules eviction controversies).

44 The worldwide exponential growth

North Korea Syria Iran Sudan

Airbnb’s presence

Airbnb is not active

Image 18. World map of Airbnb spread around the world. Source Hugo thesis “Sharing under the threat”.

Founded on 1 August 2008 by Million listings, the company Nathan Blecharczyk, Joe Gebbia has served over 35 Million guests and Brian Chesky, Airbnb grew with 140,000+ people staying at as a technology masterpiece in an Airbnb listed place every day. a short span of time. Having received a massive funding of The company had an exponential $4.4B (Till December 2017), it growth between 2011 and 2017 of is a part of the Billion-dollar 100x growth. How is it possible club. The company, headquartered to grow so rapidly? Technically at San Francisco, California, this is called “network effect” USA, is valued at $31 Billion which is based on the fact that today with a presence in 34,000+ when more people post announcement cities across 190+ countries. on the platform, as a direct Out of the list are North Korea, consequence, the platform itself Syria, Crimea, Iran and Sudan for becomes more appealing for its political reasons. Having 1.2 users thanks to the enlargement 45 Image 19. Graphic of Airbnb growth. Source Airbnb.com of the variety of offers existing every new market, implying on the market. This implies to huge investment of capital, create a better match between employers and other resources! guests and hosts. Consequently, What investors appreciate more more people are inclining to use of Airbnb is the efficiency Airbnb for their staying and and the level of growth. bilaterally more people wants to put their announcements on the It is relevant to underline the website since they see a real fact that the usage of Airbnb investment opportunity. Once is different from countries to explained the network effect, countries and also from villages it relevant to underline the and city within the same borders. “global network effect”, this is Definatly Airbnb is more popular to say that since guests have in countries where population is high probability to be from technologically savvy, in other another country or at least from word where people feel more another city, they advertise by comfortable in using technology themselves their experiences to (and trust it). Second, in order friends or they simply normalize to explain the spread of the the possibility to host a stranger platform in different capitals, in their homes. Moreover, the there are other factors that need global expansion becomes fast, to be considered. Those are, the easy and without additional costs technological development (as for the company. This aspect is just said), the economic size, often underlined when compared the relative size of the tourism to the difficulties Uber has and travel industries, the when it wants to expand elsewhere nominal exchange rate (that gives since it has to physically launch a measure of the competitiveness 46 Image 20 Top 5 countries in which Airbnb is more active. Source: www.statista.com of countries at international based on significant variables. level), the level of economic The research conducted by Heo and development (or wellbeing) and Blengini, professors at Ecole the country productivity level. hotelièr de Lausanne, HES-SO/ When talking about the level University of Applied Sciences of competitiveness the report Western Switzerland, proves “Macroeconomic perspective on empirically that a country that is Airbnb’s global presence” (Heo; highly oriented towards tourism Blengini June 2018) highlights will be more familiar with this that variables included under type of platform but that at the this definition are institutions, same time the most important infrastructure, education, health factor affecting the number of and macroeconomic environment. Airbnb listing is the level of technology in a given country. Not many analyses on those The graphic below shows the top macroeconomic factors have been five countries that registered conducted, it would have been the higher Airbnb listing (data interesting to quantify the impact from August 2017). As you can of them on the Airbnb’s diffusion. see, Italy is one of them, However, the relative size of the precisely on the third place in tourism and trade industries are the world among 192 countries. 47 The target the company is focusing on

When talking about target often 1990s to early 2000s as ending the first thought goes to guests, birth years. Millennials are as we are used to think for the sometimes referred to as “echo traditional forms of business, boomers” due to a major surge however as previously said this in birth rates in the 1980s and platform works and grow in such 1990s, and because millennials a prosperous manner because it are often the children of the has a double target made by hosts baby boomers. Although millennial and guests. Some bibliographies characteristics vary by region, include in the target also the depending on social and economic photographers, since they are conditions, the generation has the ones making the difference in been generally marked by an terms of the impact, they offer increased use and familiarity their service and knowledge to with communications, media, Airbnb however since they draw and digital technologies”. money unrelated to if the house (https://en.wikipedia.org/wiki/ is booked or not, I would rather Millennials). exclude them from the target category than include them. One more time this was partially true, the huge variety of options The initial thought of the founder where to sleep, and consequently was to attract “Hippies” who were prices attracted a multi-class travelling and had probably low target of guests, including “the budget conditions. However, since famous ones”. The demographic the first experience in their category amplified, and the San Francisco’s apartment, the medium age of guests is thirty- customers showing up at the doors five years old, having a third of were the so called “Millennials”. travellers from their fourthies “Millennials, also known as to go up. The hosts category Generation Y or Gen Y, are the instead is a bit older, in media generational demographic cohort they are 43 years old (data of following Generation X and 2017) paraphs is due to the fact preceding Generation Z. There that the age range of who owns are no precise dates for when a property is higher than who this cohort starts or ends; travels. In fact, it is the over demographers and researchers sixty target the range who is more typically use the early 1980s as rapidly increasing between people starting birth years and the mid- who are available to rent out. 48 3.2 Typologies of spaces rented via Airbnb

The intent of this paragraph is make many choices related to what to give a broader picture of we find on the internet. Filter the possibilities of booking selections might seem just a tool via Airbnb that never before that we have to achieve what we a traveller had opportunity of want, however they penalize the discovering. The urban issue here choices we make because instead is that having a temporary user of being “personal” they are access neighbourhood, properties introduced by a system which that he/she was never allowed often is world-wide and in order to, can have repercussion on to “belong to anybody” does the neighbourhood stability. not represent the way we would Externalities will be mentioned arrive to a conclusion, our in the next chapter; however, I style, our list of priorities. felt the urgency to remark the It narrows our views forcing us reasons that made me analyse to see through a window that the following issues (type we even did not want to open. of accommodations/ type of hosts/criteria of booking). Moreover, it has externalities We live in a technological era, we on what it precludes to be seen. 49 Typologies of properties

The properties are listed according camper, campsite, castle, cave, to different filters. One of dammuso, earth house, heritage the aspects that made Airbnb so hotel, hut, island, minsu, successful is (as said in chapter pension, dome house, farm stay, 3.1) the huge variety of option igloo, island, light house, boat, that it offers to its users. The nature lodge, plane, pousanda, most relevant classification ryokan, tent, tiny house, tipi, for this thesis is the division trai, treehouse, trullo and yurt. between entire property, private room and shared-room. Apart from The concept of sharing “extra this division based on privacy, space that you don’t need” to there is another one made on give people “sense of belonging” typology. This separate the most went a bit out of control but it traditional ones from the most is my personal point of view, unique ones. It is considered to maybe conditioned by the fact be traditional: house, bed and that people who have a spare hotel breakfast, bungalow, chalet, are not easy to meet. Although guest suite, hostel, loft, I certainly see the fascinating townhouse, cabin, apartment, side of this incredible variety boutique hotel, cottage, guest of selection, analysing the house, hotel, resort, villa. trends of what is more required it is easy to be tempted by Unconventional places where to investing in what tourist lodge are classified into barn, want, and likely is not igloo. 50 Typologies of hosts

The top three reason to push a host people would not use the website. be called as such are expressed This is how it became important in the paper Millennio Urbano for Airbnb to give guidelines written by Michela Barzi (2016): to hosts. Guidelines turned into seminars, community hosts 1.Children leave the house groups, private lesson from the and suddenly there is a most experienced. This pyramidal possible rentable extra space structure makes the experience 2.House inherited and not so personal. What seems evident sure if to rent it or sell it is that, despite the positive 3.Business on renting short term, message of uniqueness they want speculating on the sharing economy people to perceive from their company, they are telling people If the division seemed only what they want to hear. Money between guests and hosts, it makers are told how exponentially is actually more complex than grow their profits with it, to the that. As Gallagher underlines, “hippies” they are proposing the the platforms sell the concept positive message of sharing, to of lodging in other people’s Millennial “to belong anywhere” home but if they would provide and in the meanwhile they are the possibility of renting their expanding the revenues so much properties the company would that allows them to launch an not exist. Consequently, if the airline company. The attempt here owners, willing to accept guests is not criticize their smartness in their private spaces, would not in anyhow, but how the concept of provide a positive experiences sharing economy is able to spread 51 a positive layer on the cover hospitality business become a lot of substances who might be toxic more intrusive in the “sharing for our society. Especially from system” which is based on sharing my generation, the Millennials, extra space, extra time. The I have not heard anybody who is competition between business not enthusiastic about the rise oriented is unfair. Becoming a of this “innovative economic super-host puts you on the first system”. What differentiate a host pages of the researches, more from a super-host is explained in flow of user exists in a city Airbnb website: “Super-hosts are and more those first pages of experienced hosts who provide a super-hosts are long, decreasing shining example for other hosts, enormously the chances by the and extraordinary experiences for traditional hosts to be seen. their guests. Once a host reaches Eventually more booking leads Super-host status, a badge will to more profits and more profits automatically appear on their leads to more investments. This listing and profile to help you is an interpretation of how is identify them” Airbnb help Centre. possible that the 20 per cent of the hosts gets the 80 per cent However, to tick the boxes and of the revenues on Airbnb (Data become a super-host is not as taken from TV program Report). easy or meritocratic as it seems. Different criteria have Nonetheless Airbnb reserves the to be met, a host to become right to keep an announcement a super-host only need to: with low rates at the last pages or even disactivate the 1. reply to potential account. I supposed this right guests within 24 hours has an influence on data such 2. keep the guests constantly as percentage of appreciation updated and doublecheck of its users (who apparently 3. be clear and provide all sets of are enthusiastic of the service rules of the house (If you are an provided by the platform). easy-going person start not being) Talking about hosts I would 4. provide sheets that like to take few examples, Pol smells as just coming out McCann, a Sidney super-host, from the washing machines following the advices of Airbnb, 5. Available to pick up at the became able in only sixth month airport (if you have a day job to accumulate enough money to maybe consider quitting it) be able to pay the deposit of 6. Give a “personal touch” putting another property in front of his fresh flowers (if hate no worries, house (to rent again on Airbnb), give your very personal touch) with two properties he earns 100000 dollars a year and he What are excellent advices in a bought a third apartment to rent.

52 Other filters options

Other filters available on the 7.3 accessibility (for example platform are: only step free or with shower- chair) 1. Dates (I tried to select 3 7.4 amenities (such as iron/ months and I had no problem even crib/doorman/ Carbon monoxide staying for long term, overall detector) the length of short-term rental 7.5 Facilities (gym/ pool/ hot is debatable) tube) 2. Guests summing adults, children 7.6 Host Language between 2-12 and infants under 2 7.7 Neighbourhoods years old 7.8 House rules (suitable for 3.Home type as discussed before events/smoking allows/pet it regards the possibility to friendly) rent entire place, private room 7.9 Property types (traditional or shared room ones) 4.Price range from cheap to opulent 7.10 Unique homes 5. Instant Booking which give users to select Listings that can be booked without waiting Although I will not go in detail for host approval for each of the filters I felt 6.Trip type which is divided into unfair not to mention all and For families which recommends I would like to highlight some exploring entire homes with of them. For example it is 5-star reviews from families and interesting to me the 7.2, Brian essentials like a kitchen and Chesky’s statement “We can no TV or For work which suggests longer distinguish ourselves if to explore top-rated homes with the lodgings are offered by a essentials like a workspace, professional. It is equivalent Wi-Fi, and self-check-in to staying in the hotel. The 7.More filters sense of belonging is a bit lacking” however the presence However, is in the more filter of the filter “select only section where things get super-hosts” is controversial. complicated: 7.1 number of beds/ bedroom/ Majority of super-hosts bathroom are professionals and by 7.2 possibility to select only giving this option means super hosts encouraging this activity. 53 3.3 Controversies

MONOPOLY AND SHARING PLATFORMS system (of course possibly “Marketplaces are where buyers having a “sufficient rate”). and sellers come together to Therefore, one a platform is exchange. On Uber this is riders renowned between communities is and drivers. On AirBnB owners and very hard to manage to compete renters etc. Marketplaces have against those marketplace and existed for thousands of years, transit users from one company to practically since civilization another. Having a certain number first began”. (International of users guarantees liquidity: Journal, Rubin Pollock, 2018) you will be able to trade e.g. Marketplaces, once reached a book a taxi, rent an apartment certain size, have the potential etc and diversity: they have to grow rapidly and exponentially. the product you want e.g. this Positive feedback become a particular fish is available, measure for trust between buyers that stock has a market maker, and sellers, attracting spirally there is a taxi in your area other buyers and sellers. When (not just central London) downloading an application, Furthermore, buyers and sellers consumers tend to download the usually are not willing to one with most users because the participate in lots of different amount of people themselves marketplaces, since comparing are a sign that the platforms opportunities requires energy works properly and people are investments which once again satisfied, despite the review tend to make the monopoly grow.

54 AIRSPACE, THE FLAT AESTHETIC the same’?” he asks. “What if OF AIRBNB this seemingly accidental—and “It has been defined as “AirSpace”. usually regretted—homogenization It is not just about bars and was an intentional process, a restaurants: it is the style that conscious movement away from is reshaping the houses we live difference toward similarity?” in. And it molds the philosophy according to which, wherever The ideal Airbnb is becoming we go, we must feel at home. A both unfamiliar and recognizable strategy to omologate spaces”. and the impact that is having is (Il mondo piatto dell’estetica that “aesthetic homogeneity is a Airbnb, Davide Coppo, 2016). product that users are coming to demand, and tech investors are The newspaper “The verge”, catching on it” (Kyla Chayka;2016). published in 2016 an article written by Kyla Chayka in which they call “Airspace” the new interior design style that is spreading across houses on the Airbnb platform all over the world. Opening the website, inserting as location “Everywhere” a multitude of houses that give the same feeling will appear. This feeling is called Hygge, which is described by Davide Coppo as “Hygge (...) has a relationship with the small luxuries that enrich life, with time the happy happy that happen to us. So, furniture, furniture, chocolate, fireplace, cushions. The mental images related to the style are purely crepuscular, Nordic, winter”.

Kyla Chayka affirms that the platform is producing and harmonization of taste which recalls what the architect Rem Koolhaas noticed in his prophetic essay “The Generic City,” from the 1995 book S, M,L,XL: “Is the contemporary city like the contemporary airport—‘all Image 21. Example of Hygge style. Source: http://www.id-tips.com/tag/zona-notte/ 55 INADEQUACY OF INSURANCE POLICY protecting consumers around However the insurance does not issues of safety, security and cover the personal damage but discrimination” (Edelman and only the economic one, this is Luca, 2014). Many episodes of to say that if objects, furniture violence, vandalism and even elements, floors are broken or few cases of death happened in ruined by guests, Airbnb will Airbnb’s apartments. Certainly, refund the host or the equivalent accidents can be caused by a amount of money of the damaged multitude of factors, not always value. If act of vandalism is is possible to identify precisely behaved on marriage photos, the the culprit either the victims. first presents of your kid and However, some cases could have any type of element which has an been avoided if the properties intrinsic emotional value for the listed on the platforms where host beside the economic one, is following the same set of not covered. Coming back to the rules and norms that other word that we most see in Airbnb, activities on the hospitality the founders have a predilection sector are forced to obey to. for the word “experience”, they Just mentioning a case to give want people to buy the message an example (Gallagher; 2017), a that Airbnb is an experience you host decided to tie a swing on live that nowhere else you could. a tree arm to post pictures and make the house more appealing. VOCABULARY DEPRIVATION Unfortunately, the tree was dead We see often in the sharing for many years, when a man in his economy, the usage of emphatical 50es, sat on it the tree uprooted words to be more socially accepted causing the man’s death. It was by users and to differentiate one an accident, but since no control business from others, covering are made on safety part of the up with an ideal of helping each blame goes to this “deregulation other in a generous human way. attitude” and since it is not Apparently, it is a marketing illegal to tie a swing on an arm strategy that is working really tree, neither hosts are expected well, changing the mindset of to have engineering knowledges. people towards spending money for a product or service. In Episodes of security and safety my opinion this attitude can risks are not only to be risk depriving this word from considered on physical level. its full, meaningful meaning. In Florida a couple founded a hidden camera (in the bedroom SAFETY AND SECURITY smoke detector) in an Airbnb’s “Concern around running house they were staying in. They ‘illegal hotels’ that were being secretly recorded in circumvent rules and regulations the Airbnb’s rental, the camera

56 was able to also record their or a conniving scam artist.” voices, they were able to realize (Is Airbnb safe? We analyzed it since the husband works in IT 1021 horror stories, https:// and was more suspicious. As he www.asherfergusson.com/airbnb/ reported then to ABS news “My ;2017). In the same article the wife and I are distressed by the stories are dived into categories, situation. I hope more victims readers can select to be informed will come forward.” The host, on one of those as the screenshot Wayne Natt, hosted for two years of the article shows below. already before the couple’s rental and had already forty DISCRIMINATION reviews. Although Airbnb’s policy However often the online world requires users to disclose any is a mirror of society and even cameras and prohibits cameras in if believing in the idea of a the private areas. The company better world can be a relief, after this event, stated “We episodes of racism happened here are outraged at reports of what as well, blowing up the bubble happened; as soon as we were made of a peaceful world. Studies on aware, we permanently banned the topic from Harvard university this individual… we take privacy validate the suspects showing issue extremely seriously”. how this advertised positive community is full of biases The issue here is to understand just as the outside world. if it is enough to have policies that are basically guidelines. “In An analysis made by Michael the US and other major countries, Luca and Benjamin Edelman in Airbnb does not require any ID “Digital discrimination: the other than an email address and case of Airbnb.com” written in phone number, therefore, anyone 2014 highlights how personal could be your hosts. They do not profile pictures and personal even require real names. This info introduced to generate a means you could end up staying sense of trust are on one hand with a convicted felon, a working while on the other this registered sex offender, a thief trusts is based on the concept of 57 Image 22. Anti-discrimination campaign made from the Black community in the USA. https:// byrslf.co/hi-i-is-a-good-black-man-my-airbnb-story-6fe0a87eddd0 similarity and not as Joe Gebbia colour of skin, ethnicity and state on his Ted talk “Design so on, the issue not only becomes for Trusts” on reviews. We care viral but can heavily offend the about who made the reviews and discriminated part involved. we rarely if we have prejudices on someone, we put them on the Benjamin and Michael demonstrate side because he/she got more than that under same conditions in three positive reviews. However, terms of location, housing, not always the biases are based on period of the year, white hosts racism, this caution might also are able to rent their listings simply be regarding hosting a for a price 12 per cent higher family with kids because children than the coloured ones. To this could break valuable objects accusation Airbnb replied that or to a group of friends who they took into account only 35000 could party hard in our property cities so their conclusions where rented out but when it comes in not objective. Further studies terms of assumption based on this time on twenty profile of 58 which ten of black people and rights, emergency exits and so ten of white ones having all same on which the “traditional market information, they sent requests has to fulfil”. Certainly, is not to 64000 hosts in five different a fair competition. While they cities in their world and the operate under the collaborative rate of acceptance proved one economy name, they are becoming more time that statistically money-making machines. The colour people’s requests had much European Union as a strategy higher probability to be denied! to promote innovation and job Many hashtags #AirbnbwhileBlack creation in a sustainable way have been shared between the is supporting companies who are most empathic users, while labelling themselves as part separate platforms like Noirbnb of the collaborative economy and Innclusive were created. business model. As one of the commentators of the Financial Reading those problematic Times stated “Airbnb hosts are aspects, the question I am trying not collaborating with their to answer is what type of impact guests any more than Marriott can it have to neighbourhoods? International is collaborating If the central neighbourhoods with its customers”. are increasing the number of properties on short term rentals, As Kenneth Haar (a Danish they are not only pushing citizens researcher who collaborates with in the periphery, but they are also the Corporate Europe observatory) mostly attracting a specific kind declare in his “Unfairbnb, how of tourists in terms of ethnicity rental platforms use the EU that could potentially generate to defeat cities’ affordable a phenomenon of gentrification housing measures” 2018 article inside the gentrification. “So while you can certainly find examples of AirBnB hosts This leads to the skepticism on and guests who match the ideal which percentage of users are on citizen-to-citizen exchange, the the platform for this frustration company has long since become of otherwise not feeling to belong a big commercial company, and anywhere in the world or who is hosts who make a lot of money there for revenues and saving from commercial letting abound. money is not clear. However, And when AirBnB comes under fire the website works, is booming for the problems its success and seems nothing can stop it. has caused across the globe, in particular the effect on locals’ RULES EVICTION impaired access to affordable This business model can easily housing, it fights back like evict to perform safety any other commercial colossus”. regulations, taxes, employees’

59 PRIVATIZATION OF THE PUBLIC SPACES Entire neighbourhoods might be The attempt of this thesis is rented, and I seem to be too dealing with the issue of how the harsh on this topic, I would like sharing economy and specifically to keep in mind that in Japan Airbnb among the home-sharing is possible to rent an entire platforms is having an impact island “A host in Nagasaki, on the housing affordability. Japan, is eager to share his Critics argue that “platforms like private slice of paradise with Airbnb raise the cost of living the world, meaning you can rent for local renters, while mainly Tajima Island for just over benefitting local landlords £3,000 per night” (The Sun,2019). and non-residents tourists” In Italy the first super-host is (Barron; Kung; Proserpio; 2017). Guido, who owns 1095 properties in Italy. Guido was contacted by The assumption I am basing my Airbnb because his company rented research on is that through the apartments and his criteria were help of home-sharing platforms, on the same page of Airbnb. What which facilitate the networking criteria? To share his time between landlords and tenants with with guests? Or to make guests almost 0 cost and avoids taxation experience a local experience? because belonging to the sharing Once accepted, Guido’s profile economy umbrella, there will is like that of a simple host, happen a switch of home-owners who who divides his apartments, but will choose to make their houses there is a company behind which available on short-term rentals does not appear. It seems that rather than long-term because Airbnb hides information that of higher revenues opportunity. can lead people not to believe This phenomenon will diminish in the mission they advocate. the number of listing rentable Therefore, when Elisa Schreiber, on long-term, the economical one of the investors of Airbnb says perspective follows the reasoning “Uber means transactions. Airbnb that by decreasing the offer but humanity.” I feel it hard to buy. steadying the demand the price of good (housing in this case will GENTRIFICATION increase). The scenario would It will be described in chapter 4. worsen if also the demand would be increasing, since the gap HOUSING AFFORDABILITY CRISES between demand and supply will be On this controversy specifically higher (see graphic n....). The I am structuring my thesis. It will demand could increase from both be discussed in the next paragraph. side tourists and non-tourist.

60 CLAIMS LIMITS

To give the guests the Neighbourhoods change under possibility to live “a local the spread of Airbnb, turning experience” by accessing into touristical areas, areas of the city that were compromising the meaning of never thought to be for “local experiences” tourists

Meant to be occasional High % of people who rent for activity more than half year

Based on sharing hosts’ Majory of hosts do not personal space, since rent their primary home, renting out an extra space consequently their space is inside their apartments not shared and in some cases not personal.

Based on the concept of non Investors are buying space to wasting the space rent it out on Airbnb

Thought as an integration of 80% of the total revenues goes income for people in need to only 20% of hosts

To be hosted in an unique An homogalization of the taste house “ If you wake in across the globe which takes Cairo,you want to feel like the name of Airspace is making in Cairo” “everybody feel they are waking up in an Airbnb”

61 3.4 What links Airbnb and housing affordability?

The attempt of this thesis is the number of listing rentable dealing with the issue of how the on long-term, the economical sharing economy and specifically perspective follows the reasoning Airbnb among the home-sharing that by decreasing the offer but platforms is having an impact steadying the demand the price of on the housing affordability. good (housing in this case will Critics argue that “platforms like increase). The scenario would Airbnb raise the cost of living worsen if also the demand would for local renters, while mainly be increasing, since the gap benefitting local landlords between demand and supply will and non-residents tourists” be higher (see graphic n22). The (Barron; Kung; Proserpio; 2017). demand could increase from both side tourists and non-tourist. The assumption I am basing my research on is that through the help of home-sharing platforms, which facilitate the networking between landlords and tenants with almost 0 cost and avoids taxation because belonging to the sharing economy umbrella, there will happen a switch of home-owners who will choose to make their houses available on short-term rentals rather than long-term because of higher revenues opportunity. Image 23. Graphic Deman-supply. Source This phenomenon will diminish “Public Economic” Myles;1995. 62 The factors that could drive fact that the sharing economy this rise of people in need of started with the idea of sharing accommodation (generally speaking underutilized goods, in the home both in short and long terms sharing cases, we are talking visions) can be exogenous and about spare rooms, or entire endogenous, such as investments houses when tenants are away. in the city, cheaper flights, the opening of a new road that I see the point of those creates new connections, the arguments; however, I believe it natality rate, the increase of depends on the diffusion of home- job opportunities and the type sharing platforms in a given city of jobs, the mega events hosting and more precisely in a given and so on. Whatever is the reason neighbourhood. As we will see in if the demand increase while chapter 3 when talking about the the housing stock remain steady exponential growth in the world, of course price will increase. there are many factors that Therefore, the housing price will determines the success of this increase consequently will also business in different places. the rental price. Nevertheless, The aim of this thesis is to see not all workers can afford to pay if Milan is one of those. From an a higher rent and since housing economically perspective I start has an incredible significance with the assumption that if a on a budget, some residents condition is more economically might be silently forced to move profitable, users will switch elsewhere, adding pressure to from one activity to another in the surrounding neighbourhoods favour of their best interests. and becoming from gentrified Regarding the second point, I to gentrifiers themselves. will demonstrate how majority of hosts that rent via home- This vision is not universally sharing platforms are actually shared, critics argues that: non-renting their primarily locations, but on the contrary - first of all, short-term rentals they are investing in it, taking might be very small compared off the market many long-term with long term ones especially rental accommodations influencing because majority of landlords consequently the housing still prefer to keep a more stable affordability in a given city. income rather than a possible higher but unpredictable one. I am going to use as a reference the paper “Sharing economy and housing -second of all, housing units affordability: Evidence from that are rented on the short run, Airbnb” written by Kyle Barron, would remain vacant otherwise. Edward Kung and Davide Proserpio This assumption is made on the in 2017, which constitutes one

63 of the three academic papers that Therefore, increasing the number I found that directly study the of short-term housing would effect of home-sharing on housing mean diminishing inevitably the costs. The other two articles are ammount of long-term ones, having conducted by Lee (2016)who based a fixed housing stock H. his studies on Los Angeles and Horna and Merantea (2017) focused Considering: instead on the Boston area. The Q= rental rate of short-term reason that made me opt for this housing research is that they include the R= rental rate of long-term role of the owner-occupancy rate housing in the housing price changes. As c= being a common component the authors wrote “Our paper looks e= being an idiosyncratic at a somewhat unique context in component across landlords this literature, because we focus where c+e = additional cost of on the effect of the sharing renting on a short-term marker. economy on the reallocation of goods from one purpose to It comes naturally that a another, which may cause local landlord would rent on a short- externalities”. What I found term market if, and only if, particularly revealing, opening a set of reasoning that I did not thought about at the beginning is Q-c-e > R when they underline that local externalities are present here in other words, if the revenues because the suppliers are local, Q of a short term are higher and the demanders are non-local! than the revenues of a long- Transactions made in the home- term market once detracted the sharing platforms reallocate additional costs! resources (such as apartments) from local to non-locals therefore Here the sharing economy comes not anymore to residents. in the picture, since home- sharing platforms reduce costs I will simplify what their for landlords to advertise on empirical studies revealed the short-term market, therefore in some basic mathematics implying a decline in c.(The equations. If we consider: following reasonings are my own thoughts) Not only they are cost H= as a fixed housing stock less, but they save time (which in S= short-term housing economic terms can be reasonably L= long-term housing considered as saving money) and the sophisticated system of filters, trust, reviews also S + L = H reduce the risks of not finding

64 a suitable match. Diminishing (2015). In the graphic n this the probability of having issues condition would correspond to with tenants also is conceptually the point of intersection between similar to money saving (if we the demand slope and the supply are talking about the risks that one. Reading those assumptions, tenants might ruin furniture we could think that the sharing and create in anyhow property economy has created positive damages). externalities by eliminating such costs, creating new In economics, one of the basic revenues opportunities. However, assumptions is that a subject it depends from the point of in front of two possibilities view we are looking at. It is not will choose the “best one” in a win-win situation, it is not economic terms, consequently, a Pareto efficiency situation will opt for the short-term where “A Pareto improvement is market, diminishing the amount any change to the economy which of long-term once. However, in leaves everyone at least as well reality there are phenomenas off, and at least someone strictly to take into account, such as better off” Stiglitz J.E. & procrastination, or accepting all Rosengard J.K. (2015). The first the new innovations in technology Fundamental Theorem of welfare with a lot of scepticism. economics (sometimes called the (Baddeley;2017). In fact, if the ‘Invisible Hand’ theorem) states assumption was correct, would that, under certain assumptions, be nobody left on the long-term competitive markets will lead to market, increasing the offer of the a Pareto efficient allocation. short-term rental, consequently On the contrary, while it is a once the offer is higher than new opportunity for landlords the demand the revenues Q would and travellers, it is not so then become lower than R (even convenient for the hospitality having the additional costs c+e sector either for the residents near to zero thanks to the home- who see an impact on the housing sharing platforms. The question affordability. I raise here is that probably this would at a certain point Until now I have just discussed create an equilibrium in terms about what would be more convenient of landlords willing to rent on for a landlord’s perspective, the short or long term. “At the still not had brought evidences market equilibrium, where supply to the fact that it will equals demand, the marginal increase the price of housing benefit (to consumers) is equal and the prices of long rentals. to the marginal cost (to firms)— This would happen because home- and each equals the price” sharing platforms increases the Stiglitz J.E. & Rosengard J.K. value of home ownership. First

65 of all, this is due to the fact to rent it out on the short-term that they increase the rental market. They cannot rent excess rate which is then capitalized capacity on the long-term market, into housing price. Second, the due to the nature of leases and simple possibility that home renter protections. The benefit can become a revenues source to renting excess capacity on by becoming a business on the the short-term market is Q−c−, short-term rental, increases the where c and are again the cost price of listings. Consulting and the idiosyncratic preference again Barron, Kung and Proserpio for listing on the short-term (2017), as previously mentioned, market, respectively. If excess they calculated the relevance capacity remains unused, the that being owner-occupier or owner neither pays a cost nor absentee landlord has on the derives any benefit from the housing affordability market. excess capacity. Owner-occupiers will rent on the short-term market Consider, if Q−c− > 0, and thus f(Q−c) is the share of owner-occupiers Ha = number of housing units who rent their excess capacity owned by absentee landlords, on the short-term market. Note Ho = number of housing units that the choice of the owner- owned by owners-occupied occupier is to either rent on L = is still the number of the short-term market, or to hold housing units allocated to long- excess capacity vacant. Thus, term residents (including owner- participation in the short-term occupiers) market by owner-occupiers does not change the overall supply of Therefore, the number of renters housing allocated to the long- is: L-Ho term market, L. It also does not change S, which is by definition We assume that Ha is fixed and equal to H − L (we think of S that Ho will be determined by as the number of units that are equilibrium house price and rental permanently allocated towards rates. We allow owner-occupiers short-term housing, as determined to interact with the short-term by absentee landlords.) The housing market by assuming that equilibrium supply of short and a fraction of their housing unit long-term housing is therefore: is excess capacity. This excess capacity can be thought of as the unit’s spare rooms or the time S = f (Q − R − c)Ha that the owner spends away from L = H − f (Q − R − c)Ha his or her home. Owner-occupiers have the choice to either hold Rental rates in the long-term their excess capacity vacant, or market continue to be determined

66 by the inverse demand curve of In other words, home-sharing can residents, r(L). The equilibrium lead landlords to switch from response of rental rates to a renting on long-term market to the change in c becomes: short one. This condition would create a n increase in rental The latter equation therefore rates. The existence of home- makes clear that it is the absentee sharing platforms incentive the landlords who affect the rental ability to utilize home fully, rate response to Airbnb, because therefore also constitutes an it is, they who are on the margin increase of property values, both between substituting their units in terms of renting or selling. between the short and long-term Finally, the increase of renting markets. When the share of owner- price would be restrained if occupiers is high, the rental landlords are owner-occupiers, rate response to Airbnb will this is because they are not be low. In fact, the response substituting the long-term to a of rental rates to Airbnb could short-term, but rather renting be zero if all landlords are on a short-term an otherwise owner-occupiers”. (Barron, Kung, underutilized good for a limited Proserpio 2017). period of time.

67 Rent gap and gentrification

“Localized disinvestment presents an opportunity for reinvestment capital not because of the neighborhood’s changing the relationship with metropolitan growth dynamics, but because of the neighborhoods’ changing relationship with a transnational middle class, for whom globalization has rendered a physically distant local increasingly accessible both logistically and imaginatively as a lifestyle destination” (Sigler and Wachsmuth 2016).

According to Neil Smith who more affluent newcomers. first proposed in 1979 the “rent Smith’s belief is that this gap model”, rent gap constitutes situation will displace existing a structural explanation for poorer resident, burdening on gentrification in the inner gentrification phenomenon. cities. Rent gap is a situation that arise when the actual The fact that Airbnb generates economic returns to properties new potential revenues in the tend to decline or stagnate housing markets, suggests the meanwhile potential economic possibility that is creating returns tend to increase. As a rent gaps around the world. This result, the Real Estate capital is happening because Airbnb is will invest in the new trends “shifting the high and best use rather than the traditional ones. of residential housing in the Those investments would increase neighborhoods with sufficient housing prices, attracting extra-local tourist interests”

68 (Wachsmuth and Weisler 2018). product for a sale price that leaves a satisfactory return to Therefore, housing affordability the developer”. What emerges crisis and gentrification from his own words is that Smith phenomenon are strictly mainly discusses the case where interconnected. However, there the diverge between actual rent are some innovative elements which and potential rent occurs because needs to be taken into account, of devaluation and neighborhood this type of gentrification decline. Hackworth and Hammel is not be confused with the instead (respectively 2002 traditional one “scalable at and 1999) argued that nowadays a metropolitan level”, here we the rent gaps are increasingly are talking about transnational likely to form through rising gentrification which is instead potential ground rent rather than “globally scalable”. The latter decreasing in actual ground rent. one can create significant crisis for local residents who The transnational gentrification are forced to pay housing prices is happening in a way that local being set by global rather than residents who live in rented local demand. In other words, the apartment are substituted by service is taking the advantages tourists coming from all over of gleaning extra-local demand. the place. The steps that are considered to be necessary in It is essential to underline that Smith’s theory to generate Smith wrote his theory in 1979, gentrification processes does not in the middle of the oil crisis apply in the Airbnb case, although after economic boom, therefore the rent gap is still essential historically was a different for gentrification phenomenon period according to influence of but only in the opposite way technology, flow of people around where actually housing prices the globe, mean of transportations increase. Therefore, the only and profitability of businesses. necessary step to initiate this process is converting a long-term According to him, the rent gap rental to a short-term rental was creating gentrification by removing existing tenants. (referring of course to (Wachsmuth and Weisler 2018). the traditional metropolitan scalable form) when “the gap is The following image represents wide enough that developers can the variation through the years purchase shells cheaply, can pay of Smith’s rent gap theory which the builders’ costs and profit for is taken from the essay “Airbnb rehabilitation, can pay interest and the rent gap: Gentrification mortgage and construction loans, through the sharing economy” (D. and can then sell the end Wachsmuth and A. Weisler; 2018).

69 Image 24. Variation of rent gap theory (Wachsmuth and Weisler 2018)

The first figure represents the potential income to rise sharply, original Smith’s analysis where, creating a rent gap in a moment as we can see, a gap can open when it is not possible to yet between gradually declining any declining property income. actual ground rent and the As previously mentioned, this new potential ground rent were the type of gentrification happens property to be redeveloped or when long-term tenants are put to the highest and best use. evicted from properties to give Once this rent gap is big enough, space to short-term tourists. The the phases of gentrification result will be the displacement and redevelopment may follow. of people who generally belong to the poorer category of the The figure B shows the minimal society, in favor of higher- capital needed to take advantage income newcomers. The “innovative of an Airbnb rent gap means that element here” is that the the gap can become large enough “replacers” here are not going to to motivate landowner action become stable residents but are much sooner than before. While temporary visitors. When talking in the first case, investors were about redevelopment in the first waiting for having the maximum figure and construction costs, disinvestment, to buy properties in the Airbnb phenomenon instead at the cheapest prices possible, dwelling are not shut down to make now they anticipate this action, the land available for building predicting the consequences of hotels. They stay “as they are” the phenomenon, causing the rent on the outside, while they are gap to be effective much sooner. likely to be changed on the inside.

The last image’s purpose is Therefore, while producing rent to show how Airbnb can cause gap we could expect as history 70 proved that steps of demolishment Sheppard and Udell (2018) try to and redevelopment would answer to the following question follow, Airbnb provides a new “in a highly constrained and opportunity, directly dependent regulated housing market, where on the flow of tourists coming residential homes are both into the area. This is why if in high demand and located in looking at this phenomenon on a dense neighborhoods, what is city level scale we might not the impact of being able to find the results expected but if transform residential properties looking closer at some specific into revenue streams and partly neighborhoods we can notice that commercial residences?”. The view there is fire to go with this points about this issue appear smoke. Where those externalities to be often divergent, on one are expected to found can be hand there are policy makers who grouped into two categories: tend to believe that the presence of Airbnb decreases houses value 1- Areas surrounding the on the other hand opponent argue business district, where we can that it leads to rise prices up. already find a relevant presence of the hospitality sector The ground on which the first (hotels, hostels, B&Bs) where assumption roots is that since the tourist demand is strong. Airbnb are considered by many as “unsafe hotels”, upset quiet 2- Areas which are considered residential neighborhoods due to to be residential, but which increase of flow of people which are renowned for some reasons are considered to be “strangers” for example night life, leisure by local communities and therefore amenities, public transit, careless about the area they are artistic vibes and which temporary living in they may have not historically hosted generate a local concentration of a large number of tourists. externalities which are expected to depress the dwelling values. Nonetheless, those processes can Opponent argue that even if manifest where gentrification those conditions are true, they is already happening for all a will still have a huge impact different set of factors creating in the growth of renting and the “super-gentrification selling properties’ prices since effect” (Lees 2003) where the demand of units increases tourists are the gentrifying the due to the fact that more people gentrifyers of a neighborhood. are in need of square-meters.

71 Image 25. Transmission mechanism for Impact of Airbnb Activity on Housing Prices. Source Sheppard & Udell 2017.

The scheme above is a re- becomes unattractive for organization of what expressed citizens, who decide to live previously in terms of Airbnb’s the area (not only for too much impact on property values. noise as described above) but However, many other externalities also because not finding good might come as consequences of and convenient services that Airbnb’s presence, for example necessary for every-day life, the increased local tourism might therefore, since the neighborhood initiate a renovation in terms of became more expensive they opt services and shops that are needed for moving to other parts of the by travelers, this can imply that city even though the area might not all the properties taken off be prettier now than before. the residential market will be re- utilized for housing scopes, for Eventually this last reflection instance they could be used for might lead to excessive “fakeness” commercial purposes increasing of the neighborhood which could property value in an indirect way. make travelers feeling they are not discovering a local Another possibility is that the environment, increasing the sense now overpopulated neighborhood of segregation and motivating

72 them to also choose other areas While the three main topics that of the city (paraphs also on generate concerns are: Airbnb’s platform) this would - Impact on decreasing lead once again to devaluation of affordability; the neighborhood because rejected - Negative externalities by both tourists and residents. caused by Airbnb guests within quiet residential neighborhoods; This is not to say that tourism - The shadow hotel industry is is “bad” for city, but the facing due to commercial operators excessive turistification of who use Airbnb in order to evade the city has effects that most important regulations and taxes. often are appreciated by few and overwhelms the rest of the Even though controversies upon citizens (and tourist sometimes). Airbnb presence in the cities Reporting Klapan & Nadler have been discussed in this arguments (2015) the division paper, this thesis seek not to between should we embrace or make a judgment whether Airbnb is fear Airbnb’s presence in cities overall good or bad for cities or is around the following points, citizens but only whether it does the positive sides are that compromise housing affordability - Create new income streams (underlined negative externality for residents; above) which might have as a - It encourages tourism; direct or indirect consequence - It is associated with the eviction of the most fragile economic benefits for a city. section of Milanese population.

73 4. How airbnb is impacting housing affordability in Milan? 4.1 Data issues: privacy or convenience?

The importance of data

Without Data is impossible to Policy Director in Europe, conduct accurate researches. Patrick Robinson. According to Without accurate researches him, AirBnB may hand over the data assumptions remain just if the company sees an interest: assumptions and confuting “Where we see the right kinds allegations becomes effortless of processes, the right steps for the accused part. Studies are being taken by cities, by police often hampered as local authorities forces, tax agencies, that data and researchers complain that the is available to people” Robinson online platforms are reluctant to told the Washington Post. deliver the necessary data. And Many issues are pointed out in the European Union, rules have as direct consequences of the been constructed to allow AirBnB Airbnb platform. However, it to refuse access to data. This is hard to demonstrate if the was recently confirmed by the company does not release its Administrative Court of Berlin,16 data or if it does only in case a decision hailed by Airbnb’s it is more convenient for them. 75 Why the “sharing “platform that “data are not accurate”. does not share its data Their fear once dates are released is that city government might formulate restrictions in terms of expansions (for example using the zoning tool and banning certain areas from hosting guests or limiting the amount of nights booked) or simply becoming aware “Patrick Robinson of AirBnB has had of the magnitude of the market plenty of motives to deny access and adopt taxation system to get to data to public authorities, profit from it. What is outrageous and he and his company have is that Airbnb pays the same fought several of them in court. taxes as a body shop mechanic For AirBnB, the data is not just in Italy (Report AAA Affittasi about concealing the full picture Italia) even though Italy is of the impact the company has on the third biggest market in the access to affordable housing, it world where the company operates! is about avoiding the impact of I would like to underline that regulation”. (Unfairbnb,2018). we are talking about a billion Many cities are setting up rules company which is launching an to limit the expansion or Airbnb airline’s one! In my opinion in order to protect the housing there is a high chance that the affordability. Of course, Airbnb reasons that stand behind these is not the only cause, but still new investments is the fact that is one of them. Its impact they are based on tourism which is varies from city to city, but partially increasing due to the what is becoming clearer is that low price of flights (of course touristic destination are the still people travel also by car, most vulnerable ones when it in train and many other ways). comes to talk about short-term If governments put pressure on rentals. In chapter 5 I will talk airline companies to rise price about how municipalities across up of certain destination in the world are responding to order to limit the impact on issues with different proposals cities, this will have a direct and how it seems that users are effect on the Airbnb usage on that able to find ploys to surround the specific place, then of course obstacle and continue to operate on the company’s revenues. How in their own terms, regardless convenient will be for Airbnb of municipality rules. Airbnb to have an independent airline constantly fights back policies that fix prices according to the restrictions and the first tool flow of people in cities where they have in their hands to they operate? But of course, confute municipalities rules is this is only my reasoning.

76 Alternative data platforms

There is evidence that many an attempt to uncover the true politicians, researchers, urban nature of the company’s letting, planner are in need of Airbnb’s with a focus on the incidence of data. When there is an increasing the commercial actors and their demand, soon it comes an offer. potential impact on the stock In order to understand the impact of apartments for rent”. One of rental platforms on cities of the first question it poses across the world, some groups is “How is Airbnb really used have developed methods to produce and what are the consequences comprehensive statistics. To in your neighbourhood? ”and it my knowledge there are three follows “Depending on the type platforms on the internet of accommodation offered and the that provides these services activity rate, an Airbnb ad might and they are InsideAirbnb, work more like an unregulated Tomslee’s data, Airdna.com. hotel, be a nuisance to the neighbourhood, subtract the availability of housing in the InsideAirbnb has been created by residential sector and be illegal.” Murrey Cox from New York. His platform shared information about Airbnb’s offer around the world, Tomslee.net provides detailed including European cities and of information on Airbnb listings course Milan. As it is written of the cities where it is more on the article Unfairbnb “by used around the world. Among scraping the data from Airbnb’s these cities there is also Milan. own listings, InsideAirbnb is The system that he created is

77 an algorithm that update the analytics and reports are based information taking them directly on Airbnb data gathered from from the website! In other words, information publicly available it is the same process one could on the Airbnb website. Their manually do, just updating them database currently tracks the in real time. The data that he performance of 4,000,000 Airbnb provides is the picture that is listings around the globe each happening in a given moment. For day, generating their custom instance, the result of today raw data reports, and updating is already obsolete tomorrow. their interactive market The correctness level is intelligence tool Market Minder. pretty high (within the 10%).

The type of information Airdna analyses the competition’s they all provide are: occupancy rates, revenue and listing types(Entire homes, pricing. It is a paid tool that Private rooms, Shared rooms) allows investors to narrow down host statistics (number to a profitable location by zip of listings per hosts) codes. It has the most robust intensity booking usage in analytics and features. Airdna different period of the year.

78 4.2 Airbnb presence in Italy

The historical background, twenty Italian regions where we renaissance architecture, can see more traffic is Puglia artistical attractions and (particularly located in Salento heterogeneous landscapes area), Tuscany (with a specific made Italy one of the top focus on Costa degli Etruschi), destinations in the recent years. Liguria and Trentino Alto Adige, Obviously, this tendency creates if we take into consideration parallelisms also in the flow the top three cities in Italy of people that, while visiting the most targeted is Rome, Italy or simply looking for an followed by Milan and Florence. accommodation short-term decides to use Airbnb website. In fact, Just during summer 2016, 2.4 according to data from 2016 million tourists choose Airbnb in (“Così la rivoluzione Airbnb ha Italy which is approximately the cambiato il modo di far turismo”, 58% more of the previous year. La stampa; 2016), Italy is the What is relevant to underline third largest market after States is that eight people out of and France. Although among the ten where foreigners, numbers

79 TOP TWO CITIES FOR AIRBNB TOP FOUR REGIONS FOR DESTINATION IN iTALY AIRBNB DESTINATION IN 1.Rome iTALY 4.Trentino Alto Adige 2.Milan 3.Liguria

2.Toscana TOP THREE COUNTRIES FOR AIRBNB DESTINATION IN THE WORLD 1.Puglia 1.USA

2. France

3. Italy

Image 26. My own schematization of the most “profitable” Airbnb destination. Source La stampa;2016.

that infuriates hotel owners, different from the expected especially of one-two stars Millennials) while thirty-four the which were the most competitive average of who hosts via Airbnb. offer that the Italian market was offering until the spread The paper “L’airificazione delle of Airbnb. The risk in fact città. Airbnb e la produzione di is that this category will ineguaglianza” produced by LATEST slowly disappear is real if the which stands for Laboratory of percentage of travellers staying economic, historic and territorial in bed&breakfasts continues to data of Siena University has grow at this speed. Also, from studied the penetration of Airbnb the newspaper “La stampa” appears in thirteen Italian cities and data which are hard to find even has demonstrated how revenue on the alternative data platforms distribution is highly uneven. discussed in the previous paragraph, I am talking about They believe that the usage of the average of guests and hosts, this platform is transforming the according to them, is forty- urban tissue and the redistribution two the age of guests (slightly of richness. Although short- 80 Image 27. Chart representing percentage of entire dwelling rented on Airbnb in the historic centre. Source Swissbank.com

term rents have always existed, to every corner of the road to the electronic acceleration is tourists with easy tastes. The intensifying the disruptive literature on these topics is effects around the world, which vast, recently the sociologist according to them, in Italy can Giovanni Semi has documented be described as “Disneyfication”: as the historic centers of “A phenomenon in reality Italian cities, not only those anything but new for the cities “of art”, are increasingly of art of our country: populated places used for nightlife historical centers more and more and tourism and less and less from a colorful and transient places of permanent residence.” population, and less and less from stable residents; activity trade Obviously, this is not to say that are increasingly turning to that Airbnb is the cause, the this population at the expense excessive tourism in Italy started of that resident; ridiculous earlier, followed by many waves of caricatures of “typicality” and building speculations. However, “tradition” never existed peddled the intense densification of

81 process of aerification. An exponential growth has been observed outside the historical walls as in Milan as in the other city taken into account by the article from LATEST, in fact other functions that attract the short- term demand are universities (for example students that book an Airbnb while looking for long- term accommodation, or relatives that come for graduation day and so on) or hospitals (both for people who need some specific Image 28. Municipio 1 of the city of Milan. retreatments that cannot get in Source https://it.wikipedia.org/wiki/ their hometown, or relatives and Municipio_1_di_Milano friends who are taking care of a person in need who is hospitalized).

The last example is one of the Airbnb dwelling in the same area major driven of the Bologna case of the city is proven to have the as Istituto Catteneo proves in effect of discouraging citizens the article “L’impatto di Airbnb from living there. As we can see a Bologna nell’indagine sul from the chart below, the density mercato delle locazioni”(2018). of Airbnb within the “historical Therefore, the phenomenon of walls” of the city is rising up. short-term renting starts from the center and widens towards Although the percentage does not more peripheral areas of cities. seem to be high in Milan, what Quoting from LADEST “This can got my attention mostly is the be the sign of a lightening of fact that doubled between 2015 the pressure on the historical and 2016. According to Airdna. centers, or simply the sign of com data in 2018 half of the their saturation”. Observing the offer on Airbnb is located in distribution of supply and demand Municipio 1, which corresponds to from the spatial point of view, the central part of the city as it is possible identify a series it is shown in the image above. of recurring configurations.

Even though the centre is the most The top three Italian cities of targeted part of the city, however Airbnb spread represent, each it does not have to drive to the of them, a different typology conclusion that the peripherical of spatial distribution. While areas are not involved in the in the case of Florence the

82 Image 29. Airbnbscapes of the top three cities in Italy for Airbnb diffusion. Source Map made by Antonello Romano and Stefano Picascia. www.ladest.com.

distribution of supply and demand found a way to classify this follow the simple logic according phenomenon, labelling Florence to which travelers prefer to stay as example of centralized in the city center, therefore effect, Milan as multipolar the demand is higher in that and Rome as hierarchical. specific part of the city, where also there is higher density As the researchers proved, of offers, consequently the two forms of inequalities prices are lower in the external need to be considered: neighborhoods. Regarding Rome and Milan, this condition is not always the case. The image below Interpersonal inequality The show the Airbnbscapes in those interpersonal is about the three cities according to density division of income between hosts, of listing per census track. The the 80% of revenues in Italy is paper “Airification of cities earned by the 20% of hosts. This and production of inequalities” is because the top hosts in the 83 Image 30. Airbnbscapes of the top three cities in Italy for Airbnb diffusion. Source Map made by Antonello Romano and Stefano Picascia. www.ladest.com.

cities taken as examples are economic agents of a certain often professionals belonging importance” (LADEST; 2016). to the real estate sector. “This is evidently agencies, including Spatial inequality The income international ones, that serve generated from hosting on the dozens of owners. The existence platform is very different of these subjects proves, if according to areas of the city it were still needed, that the as the image n shows. As we can platform is now light years away see, most of the revenues are from the myth of foundation of located in the richest parts of the two boys with the inflatable the municipalities, not really mattress in the room, and that confirming the aim that the the market is desirable for founder had initially (See chap 3).

84 4.3 Why Milan became a good marketplace for Airbnb’s business

Before going deeper with Airbnb’s trend which is leading to a data about listings in Milan, demographic decrease in the since we have seen that is the peninsula, Milanese situation second biggest marketplace in appear to be different. This Italy for the platform, I would might be caused by the fact that like to make some hypothesis Milan has an attractive economic regarding the reasons that situation for many migrants who made it become so important. I come from countries where the identified several possibilities, number of children per woman starting my reasoning from the is superior than 2.1 (which is flow of people point of view. the rate for stable demographic situation considering the percentage of child mortality).

Population growth The immigration flow refers to both immigrant from foreign country and within the country borders. According to ISTAT data, the First of all, the population percentage of foreigner residents growth is a relevant issue. in the city is 19.2% which On the contrary of the Italian correspond to 262,521 inhabitants in 2018. Unfortunately, those 85 Image 31. Demographic data in Milan from 2001 till 2017. Source Istat data,2017.

Image 32. Immigrant rate in Milan from 2002 till 2017. Source ISTAT Data,2017 86 Italian population in Milan Foreigner population in Milan

Image 32. My own schematization of data. Source Istat data,2017.

data might not be precise though, many returns to their since it does not take into towns of origins or many others account illegal immigration. move elsewhere, there is still a consistent rate of students who The northern part of the search and find job opportunities peninsula has always had better here. The population growth is chances of job opportunities in relevant to understand how the many different sectors therefore need of affordable housing is Milan has been one of the most increasing each year meanwhile the targeted places for families need of short-term accommodation coming from the South, initially is also facing the same trend. for its industrial tradition, Airbnb can be considered as an nowadays for its tertiary sector. option by the “wealthy” rate of In other cases, students move people in the initial staying to the city to achieve a higher in Milan while looking for level of education and, even something more long-lasting. 87 Transportation

Second of all, Milan is well (Malpensa, Orio al Serio, Linate). connected with other cities. The meaning of transportations has Relevant to mention that in been intensified over the last 2013 the project “Malpensa 2000” decade in terms of efficiency, , which included the opening of increased time-schedule, fasten Terminal 1, has been completed in transports, cheaper tickets. By occasion of the Mega-Event “Expo meaning of transportation I am 2015”, which added 41 new gates referring to flights, trains and increasing a lot the possibilities buses. Low cost airline companies to reach the city, while have enlarged to possibility to Terminal 2 is used exclusively travel to low income classes by all flights of the low- too, therefore the flow of cost airline easyJet, of which people passing by has increased Malpensa is the largest base consistently. There are three in Italy and the second most airports around Milan’s territory important in Europe with 58

88 destinations served per day. are predicting to have in Milan. Linate airport is the only one facing a decrease of -0.5% of “Low cost airlines in Europe people flow in 2018. However, favored the development of tourism the airport will be closed for destinations that otherwise three months during 2019 for would not have been accessible re-styling (MilanoToday;2019). and, by encouraging short-term If for a moment it could lead “short-breaks”, have reduced to the thought that somehow the seasonality of tourism” tourism is decreasing, the (C.Benevolo e M. Crasso; 2017). renovation is an index of the Regarding train companies, potential that business makers instead, while national train’s

Image 33. The chart shows the evolution of the number of passengers since the year 2000 in millions. Source Asseareoporti. 89 Image 34. Orio al serio flow of people from 2006 till 2018. Source Wikipedia.

company “Trenitalia” has always on the train ticket have been had the monopoly of the sector, reported since. A classic way since 2012 a new competitor to reach a city is by bus. came into the picture, known as “There is not only the green “Italo” which intensified the fluorescent wave of FlixBus’ connection on the west coast touring to move the European world between Turin-Milan-Florence- of medium-distance road links. Rome-Naples-Salerno, and becoming The German startup, founded in an alternative mean of transport 2013 in Germany in the wake of for Italians and tourists, the fall of the railways monopoly linking (as a coincidence) the on motorway connections, has top three cities where Airbnb’s become the European leader in business is more active. the sector. But the competitors are not lacking, to the delight Competition as we know, effects of the passengers, ready to tick prices, therefore an increasing rates always very convenient” number of “special prices” (www.touringclub.it; 2016). 90 Tourism

Finally, the tourism growth is the media have helped the city to last reason of Airbnb’s success. grow in the touristic direction, “In 2018 tourism in Milan grew especially thanks to events like by 10%. They are mostly single Milan Fashion Week held each and between 31 and 45 years old. September and February and Salone And this year we aim to grow del Mobile held in April. As a again thanks to the celebrations matter of fact, those periods of Leonardo” (Repubblica; 2018) coincide with the moment of the “There is a hot new destination— year in which Airbnb’s listings a cultural, culinary and style have a higher price as we will centre—trending in northern later discuss. Obviously, it is Italy. It’s called Milan and it’s not that the previous image of been hiding in plain sight for the Milan as gritty and grey was decades beneath its reputation totally unrooted, however urban as “Italy’s industrial capital” planners and architect together with countless references to its with policymakers have “given factories belching grey smoke another chance to the city”, over grey buildings in grey building as Bosco Verticale weather” writes Andrew Ferren on and Gae Aulenti square became the Wall Street Journal in 2018, internationally renowned, old where he advocates that social factories have been converted 91 into museum and cultural centre, an example of that are Fondazione - the growth of North Prada designed by Rem Koolhaas and American tourism (also thanks his firm OMA, and Mudec (Museum of to the strengthening of the Culture), by David Chipperfield dollar, starting from mid-2014); or again Armani Silos with its rational interior design. If - and the increase in long- before Milan was considered to distance travellers (from China and be “one night stop” as Ferren India, in particular, also thanks says, nowadays people tourists to the sharp decline in the price are staying for two or three of oil and costs for air travel). night at least and according to Andrea Grisdale, CEO of bespoke Thesis which is confirmed by the travel specialists IC Bellagio, fact that “Italy in the period bookings for Milan are up 30% over saw a sharp increase in French, the last five years. Mentioning German and British tourists, those “new attraction” is not to while there was a collapse of say that “traditional sites” are presences from Russia (due to not appealing anymore, of course sanctions and the ruble crisis) Duomo cathedral, the shopping and Brazil, which entered a severe street via Montenapoleone, economic crisis” (Sole24ore; Castello Sforzesco, Pinacoteca 2015). However, data regarding the di Brera and many other sites wave of tourism in Milan thanks never stopped fascinating both to EXPO 2015 are interpreted in local and travellers. However, controversial ways, having on it was with the mega-event one hand who believes that the Expo 2015 “Feeding the planet, amount of people who came into Energy for Life” that all the the city for expo were not as spotlights were focusing on satisfactory as the predictions Milan which in just six months were, while others argues that attracted 21million people. it has to be taken into account also the “after Expo effect”, According to the newspaper “il according to them the raise of sole 24 ore” tourism in Milan tourism manifest even after the has been incremented especially mega-event has already happened from foreigner countries. In because it changes the city- the paper “L’anno straordinario image, becoming a more appealing del turismo grazie ad EXPO? destination for travellers. Parliamone con i numeri” of the 29th of December 2015 are: Müller (2015) defined the Mega- event as “ambulatory occasions - an increase in tourism of a fixed duration that attract flows within Europe, many a large number of visitors, towards seaside resorts; have large mediated reach,

92 INTERESTS GROWTH IN “MILAN”

Image 35. “Milano” google trend from 2004 till the 11th March 2019. Source https:// trends.google.it/trends/explore?date=today%205y&geo=IT&q=milano.

come with large costs and have event in that season of the year. large impacts on the built environment and the population”. “It is interesting to understand Using google trend as a way which accommodation facilities to numerically describe the benefited from this surge of interest in Milan as a city to tourists in the city. As we look visit, I found out that the word at tourist stays over the same “Milano” in the travel field has year, we can note that the total been googled exponentially in amount increased by 61%. Yet, the last fifteen years, having hotels seem to have benefited an evident drop in the summer less from the increasing period for obvious reasons such arrivals since hotel stays as the weather extremely hot, increased by 47% whereas stays the long distance from sea-side in non-hotel accommodations was and the consequent absence of multiplied by five” (Hugo; 2016).

93 4.4 Analysis of Airbnb data in Milan

As mentioned in the previous information I will not consider paragraph the interest for Milan Tom Slee’s data since those are as a city to visit has raised in updated only every two years, the last decade. In the image below while instead I found high the graph shows the interested level of precision in Airdna and manifested in the combination InsideAirbnb websites. However, of words “Milano+Airbnb” as we they do not exactly match. can there is a drastic high peak This is because they take into around Expo 2015 event and an consideration sliglthy different overall consistent growth. The portions of the city however the attempt of this paragraph is to proportion do match in each single go deeper inside the data about field taken into examination. Airbnb’s scenario in Milan. As already discussed, Airbnb does I divided the information provided not provide information about into four different sections: amount of listings, multi-hosts - Growth or revenues. Therefore, private - Revenues companies made a business out of - Book-ability selling such typology of data. - Typology of listings In order to have the most recent - Spread

INTERESTS GROWTH IN “AIRBNB MILAN”

Image 36. “Milano+Airbnb” google trend from 2004 till the 11th March 2019. Source https://trends.google.it/trends/explore?date=today%205y&geo=IT&q=milano 94 GROWTH cleaning fees for all booked days and it is updated each month. As we can see from the image above, RENTAL GROWTH 35% Annual growth prices changes according to the IN MILAN period of the year. The highest 40 K peak is during April, where on 30 K avarage the price reaches 121 euro 20 K per night, which is definitely 10 K not cheap considering that all

0 different dwellings from any part 2010 2011 2012 2013 2014 2015 2016 2017 2018 of the city of Milan (it does not matter if in the central distric or the extreme peripheries) are Image 37. Rental growth of Airbnb from part of the math. On the same 2010 till 2018. Source Airdna.com line of the preamble before, it is during summer that Milan becomes a “ghost city” therefore In order to avoid any confusion, it does surprise if prices are while the previous graph was more competitive during August related with the google trend were the medium price per night of the combination of the words is 73 euros, making the avarage “Milano+Airbnb”, regardless if a of the entire year 87 euros. It booking as been made or not on is relevant to underline that the website, this data provides when talking about “average” is instead the actual rental not the maximum price + minimun growth which is extimated 35% price divided by two (121euro + per year with an evident shove 76euro) / 2 = 98.5 ! The way it is between 2014 and 2015, probably calculated instead is the total connected with Expo event. of each single daily average divided by the number of days in REVENUES a year period.

ADR (Average Daily Rate) is the The Occupancy Rate shows the average booked night rate + number of booked days divided by

Image 38. Avarage Daily Rate/Occupancy Rate/Revenue. Source Airdna.com Updated 12/03/2019 95 the total number of days which The last graph takes into were available for rent in the account the revenues generated last month. Properties with by Airbnb’s business in Milan. no reservation are excluded. The revenues are considered Through the website Airdna. as the total nightly rates + com we are able to put on the cleaning fees earned. However, table the fact that more that it does exclude takes, service listings are booked for 70% of fees or additional guests fees. the time of their availability One more time, April is the most on the platform. In other words, profitable month of the year to if a host would like to make rent on Airbnb in Milan, this available his/her dwelling for result was predictable since the 100 days, the average situation average daily rate consistently in Milan is that it will get higher in that specific period, booked for 70 nights out of 100, when it reaches in fact 1,551 which in my opinion it makes euros per month, while the lowest Airbnb in Milan a successful moment is January with only 1,019 business. Nonetheless, there are euros which make the average of differences regarding different the entire year of 1,254 euros. seasons of the year. Apparently, Here again I would like to remark December is the month in which that this calculation is based is harder to get properties upon any type of reservation, booked, while September has which could be entire apartment, the highest occupancy rate. We single room, shared room, in any could have expected April to neighbourhood of the city. reach the highest peak one more time because of the Salone del BOOK-ABILITY Mobile event. However, it is relevant to say that even though Since revenues and occupancy in that week there is a strong rate varies meaningfully during competition to book a place where the year, I find essential to to stay, therefore the high mention the comparison between demand increases the prices, availability on the website and in terms of nights booked that the book-ability. single week does not compensate for the entire month situation. Regarding the availability, In fact, it is in September Airdna.com provides the following that students move to Milan and information: are often in need of temporary location while looking for a more 45% of properties are available stable situation, this condition for a period of time between is often the case of workers on 30 to 90 days per year, which call, interns and so on. corresponds to 8,178 listings. 22% of properties are available

96 for a period of time between between 120 and 180 days, which 120 to 180 days per year, which makes a total of 3,672 properties. correspond to 4,021 listings. 12% of listings are booked for a 16% of properties are available number of nights that is included for a period of time between between 210 and 270 days, which 210 to 270 days per year, which makes a total of 2,171 properties. correspond to 2,879 listings. 5% of listings are booked for a 18% of properties are available number of nights that is included for a period of time between between 300 and 365 days, which 300 to 365 days per year, which makes a total of 829 properties. correspond to 3,287 listings. TYPOLOGY OF LISTINGS Regardless the possibility of making reservations, the actual There has been a significant bookings, as it is possible to growth in terms of active rents predict, do not correspond with during these last two months, the availability. passing from 12,134 active listings to 13,334, increasing of In fact, as the numbers shows, 1,100 dwellings. This result is 64% of listings are booked for linkable with the rental growth a number of nights that is discussed before, however, I will included between 30 and 90 days, focus on the image on the right which makes a total of 11,693 since it is the most recent one. properties. This data does not only reveal the 20% of listings are booked for a number of listing but moreover, number of nights that is included it classifies them according to 97 RENTAL TYPE SCHEME February IN MILAN March 2019 2019 75% 72%

ENTIRE HOME

27,8% 24,8%

PRIVATE ROOM

0,2% 0,2%

SHARED ROOM

Image 40. My own schematization of rental typology of listing on Airbnb platform, comparison between February 2019 and March 2019. Source Airdna.com.

entire home/ private room/ shared implementation of entire homes. room cathegory. To be exact, 18 shared rooms and 196 private room have been removed Entire home: represents the 75% this last month, meaning that the of listings, corresponding to total increase of entire homes 10,042 units. is of more than 1,000 dwelling. Private room: represents the 23% of listings, corresponding to 3,030 units. Shared room: represents only the 2% of listings, corresponding to RENTAL SIZE 1,2 Bedrooms/3,5 Guests IN MILAN on average 262 units. 5 K 4 K Compared with the previous data 3 K I registered in January, I can 2 K say that the increased number of 1 K listing did not happened in each 0 studio 1 2 3 4 5+ cathegory, on the contrary, some rooms private rooms and shared rooms have been eliminated from the Image 41. My own schematization of the Rental size according number of bedrooms market, while there has been an per listings. Source Airdna.com. 98 LISTING AMENITIES PROFESSIONAL IN MILAN HOSTS IN MILAN

Air conditioning Heating Washer Drier Kitchen Parking 58% 42% Internet Cable TV Pool SINGLE HOST MULTI HOST Hot Tub

0% 20% 40% 60% 80% 100%

Image 42. My own schematization of listing Image 43. Professional hosts in Milan amenities in Milan. Source Airdna.com. Source Airdna.com.

The image 41 considers the number dwellings. of rooms that each listings is Three bedrooms: only the 4%, bookable for, obviously this data therefore 404 apartments. does not say how many beds can Four bedrooms: only 1 % of units be fit in one room (for instance belong to this category, 107 a room could host ten people dwellings. while another just one person). More than five bedrooms: is a On average listings have 1.2 very rare situation, in fact 0.3% bedrooms which are capable of rentals have this condition, 30 hosting 3.6 guests. apartments. Studio: 968 studio flats are The most common situation is to available on Airbnb, which is have just one bedroom apartment the 10% of listings. on Airbnb in Milan, in fact One bedroom: is the case of 64% Although it does not exist at the of units, which correspond to moment an accurate way to know the 6,404 dwellings. dwelling size, it is reasonable Two bedrooms: 21% of units belong to suppose that majority of them to this category, which is 2,129 have a relatively small size 99 NOME DELL’HOST ANNUNCI

Bettina 237 The Best Rent 77 Hintown 75 Arianna&Chiara 68 Filiberto 58 Welcome to Milano 56 Hemeres 54 Simone 40 Stefania 40 Alessia’s Flat 38

Image 44. Top 10 hosts in Milan. Source Airdna.com.

which since half of the listing in Milan, among which the name is located in the centre of Milan of Bettina covers the highest where there is high density of position with 237 listings in inhabitants. this city and many others in other touristical places.

In chapter 3, in the dedicated paragraph, the hosts system has “It is likely that hosts with been largely described. In fact, multiple announcements are if the total ammount of listing handled like a real company and is 13,334, the number of hosts that hosts do not live on the is very different from that. In property itself, thus violating Milan almoast the 50% of hosts the terms of short-term rental have more than one listing rented policies designed to protect on the platform. In the table accessibility to the residential below there are the top 11 hosts market” (InsideAirbnb.com). 100 SPREAD

entire homes

Image 45. Map representing entire homes listing on Airbnb’s listings in Milan. Source Airdna.com 101 entire rooms

Image 46. Map representing private rooms listing on Airbnb’s listings in Milan. Source Airdna.com 102 shared rooms

Image 47. Map representing shared room listing on Airbnb’s listings in Milan. Source Airdna.com 103 SPREAD

entire homes entire rooms

shared rooms

Image 48. General overview of Airbnb’s listings in Milan. Source Airdna.com Source Airdna.com. 104 4.5 The convenience or renting on Airbnb rather than on the traditional market in Milan

The attempt of this paragraph is However, evidence demonstrate to confront the rental offers of that even if summing them up, both the Real Estate market and pretending they are all different of Airbnb’s platform in order to properties and that no owner understand the profitability and published his/her announcement the risks of the two options for on more than one platform, the home-owners. In the first part number of listings on the long- I will explain the information term traditional market is found regarding the traditional inferior than the number on the rental options, however since not short-term Airbnb’s platform. all the listings are united under the same website and often the During an interview with Tommaso same announcement is published on Romagnoli, stakeholder of Real more than one window display, it Estate market, he gave me a would be inaccurate to add up the clue that probably I would not number of listings from different have guessed alone, when the websites. The inaccuracy of demand of Airbnb’s apartment information regarding the ammount increases, it increases also of listing available in the the offer because the market city of Milan made impossible becomes more profitable, while, to have a direct correlation if the demand increases in the between the number of listing Real Estate market, the offer available on Airbnb in Milan and decreases because dwellings the long-term rental listing. are already occupied long-term. 105 Rental prices in Milan

The rental demand although does not adapt well to today's it increased in the last year times, as well as constituting of the 3%, does not determine some fiscal problems” (2018). an improvement in the offer increase, in fact according This raises another issue to the website WIKICASA “this which is connected to rental is due to a phenomenon that contracts. Obviously deciding to is increasingly expanding make a dwelling available on the recently, namely the market long term rental market implies for temporary rentals dedicated obligations, in fact the owner to tourism, which negatively cannot claim the listing until affects the availability of the contracts end unless with a apartments for residential use. notice of many months in advances In addition to this, the rents and for specific reasons, or formulas are for the most part 4 + cannot change the rental price 4, as established in 1998, which after the contract has been signed.

106 Image 49. Avarage rental price per square metre from February 2017 to February 2019 in Milan. Source Immobiliare.it

Therefore, the owner even if the during the same day, the previous market price is raising up, cannot information are last updated to make the most of the profitablity the day of the 13th March 2019. of the listing, while on Airbnb he or she does the price per “The following graph shows, where night can change (and often it available, the trend over time does according to the period of of the request prices of houses, the year, events, flow of people) apartments and in general of and if for any reason he or residential properties within she is not willing anymore to the territory of the municipality rent can cancel reservations. of Milan, both for sale and for rent. Request prices are the Although there is not certainty average prices of properties of being booked most of the located in the municipality of time, not having strong restains Milan published on Immobiliare. can be a positive aspect that it during the reference encourages home owners to opt for month”.(Immobiliare.it) Airbnb platform in Milan rather than traditional market. The During the month of February 2019 most common websites to look for for residential properties for a dwelling to rent in Milan are rent, an average of euro 17.50 - Immobiliare.it with 5,250 per month per square meter was listings requested, with an increase of - Idealista with 4,466 listings 6.59% compared to February 2018 - Subito.it with 1,448 listings (16.42 euro monthly per square - Bakeka.it with 3,220 listings meter). In the last 2 years, the - Tecnocasa with 179 listings highest value of the requested Be aware that number of listings price within the municipality may change day by day or even of Milan was 17.50 euro monthly 107 per square meter, recorded in sole 24 ore” journalists in 2018 February 2019. The month in which Milan is the most expensive city the minimum price was requested in Italy, having the average of is March 2017: an average of 17.5 euros per square meter the euro 16.00 per month per square price per month of two bedrooms meter was requested for a rental apartment of 50-55 square meters property. Unfortunately, it is is between 850 and 900 euros. not comparable with the price The most affordable prices are of Airbnb’s listings since in Baggio (12.4 euros per square there are not data per square meter), Lorenteggio-Bande Nere metre. However, it is evident (13.6 euros per square meter) that there is a general rise of and Corvetto (13.5 euros per rental prices in Milan, which is square meter) while, the top still a relevant consideration. areas are Navigli-Bocconi (18.4 euros / sqm) and the center I sincerly doubt the outcomes of (23 euros per square meter). those websites, meaning that I hoped to find official and accurate “One of the reasons of this boom data from the municipality. in requests is to be found in the Looking at all the announcements consequences of the crisis and , it is possible to realize that the precariousness of the labor the “maximum rental prices” market - according to idealista are excessively high, which of - which in recent years has made course in case of mistakes modify it almost impossible to buy a significantly the average rental home for some sections of the price per month, raising it up. population. At the same time, In particular I am refering to two the propensity to mobility of flats in Milan on Immobiliare.it individuals (for work, study, that are registered as costing family, tourism) has increased respectively 50,000 euros and and so has also changed the 139,000 euros per month which seem financial education of many young more realistic to be the selling people, pushed to stall before prices due to the square metre and buying a house” (Sole24ore;2018) aesthetic conditions. This can convince tenants that are paying a Regarding prices according rent per month below the “average to location, the data of price” that they found a cheap Immobiliare.it shows how there accommodation while the data are is a straightforward connection not accurate. This is why it is between central areas and essential to have official data expensiveness, it is important coming from the Municipality. to underline that those costs are considered for selling According to expert of the Real transaction rather than rental Estate market interviewed by “il purposes however, there is a

108 min 2,400euro 3,400 euro 4,400 euro 5,400 euro 5,900euro 6,400euro max

Image 50. Map rapresenting properties’s selling price data per square metre according to different areas of the city. Source Immobiliare.it

strict link between rental and emerges from an analysis of the selling costs of dwellings. idealistic real estate portal. The result is the rents that are still The newspaper “Il sole 24 ore” rising: + 3.9% in the last year. published an article the 14th of The requests of the owners are June 2018 on which they stated increasing in all neighborhoods, that “The demand for rent in Milan except for some peripheral has increased by over 84% in one areas, while they run downtown year, with requests more than (+ 9.4%), Forlanini (+ 6.2%) doubled in the historic center, and Famagosta-Barona (+ 5.6%)”. in the Navigli, Bocconi and Porta Vittoria areas. The offer, on Even though the article was the other hand, contracted with written almost one year ago, leased buildings, which rose the level of expensiveness from 10,637 to 9,704 in the last identified in the different areas 12 months (-9.6%). The picture of the city still correspond.

109 5. Airbnb and urban policies 5.1 The urge of regulation

“The contemporary policy However, certain businesses more debates surrounding Airbnb can than other have managed to avoid be summarized by the following the spotlight more than others. question: Should Airbnb be The rumours of externalities regulated and, if so, what is catched the attentions of media the appropriate type and level of for example much more (and regulation?” (Sheppard and Udell worldwide) than Airbnb. Why? 2018). Airbnb has recently been facing policies issues that before First of all, Uber’s competitors its appearing on the sharing are strong, organized, often economy umbrella have been barely centralized and have the discussed. Discussions about possibility to strike. Airbnb’s the need of regulating sharing ones instead are hotels, economy’s activities have been Bed&Breakfasts, Youth hostels at the centre of many political which are not grouped under debates, Tedtalks and so on. the same category, not in touch 111 and most of all are competitors must be updated to the presence between themselves. Nevertheless, of the sharing economy, opponents the travel agency companies who argue that Airbnb’s aim is to just survived the introduction of avoid regulation and taxation trivago, booking, Skyscanner and (which are instead imposed on so on, kept as costumers the most traditional businesses). This traditional ones, who anyway divisions of views goes to the will be less incline to book as detriment of housing affordability accommodation an Airbnb solution! in cities. Arun Sundarajan argues In other words, the travel agencies that new regulations need to be companies have not had such a developed primarily to protect huge impact on their businesses individuals, both consumers and as for hotels and rental housing. workers, “As the scale of peer- to-peer expands, society needs Second, the style in communication new ways of keeping consumers between the two companies is very safe and of protecting workers different. On one hand we have as it prepares for an era of Uber which has been synthetic population-scale peer-to-peer and direct in the communication, exchange” (Sundarajan; 2014) I would say efficient but assailable (vulnerable to attack) “Cities are struggling to address because it was easier to predict urgent shortages of affordable its externalities. On the other housing and there is evidence that hand, Airbnb adopt a different commercial interests in the short- strategy (maybe learning from term rental industry are removing Uber experience) and adopt the residential units from housing storytelling images and making the markets and thereby contributing users feeling part of innovation. to even higher rents” the quote here is a passage of a letter to Finally, hiding data from the US Federal Trade Commission government under the name of signed by lawmakers from across privacy protection has influenced the United States (Partnership in post phoning the awareness for Working Families 2016). of the externalities magnitude. “Nonetheless, Airbnb’s impact Many protests are taking place on cities and housing markets in cities around the word, by is not well understood, since many factions and the urge of the company takes great pains policy maker action plan is a to cloud its operations from real need for many of us. Hotel scrutiny” (Wachsmuth and Weisler associations complain that short- 2018). This impedes or partially term rentals effectively are limits lawmakers in agreeing substituting their businesses upon amendments. While Airbnb but moreover they are doing so advocates that these regulations in an unfair competition where

112 activist of the sharing economy affordability by diminishing the are avoiding taxes and not efficiency with which an owner can complying with safety and zoning make use of his or her property regulations (Zervas et al.2016). may fail to be welfare-improving, However, as Sheppard and Udell in the same way as a city that 2018 wrote in their conclusion of creates “affordable” housing by “Do Airbnb properties affect house encouraging more crime hardly price?” “Despite the speculative seems desirable. Evaluating the assessment of utility impacts, welfare consequences of Airbnb, and the clear evidence for and hence the appropriateness impact on house prices, we advise of any regulatory action to caution in crafting policies limit use of Airbnb services, that ban Airbnb or similar short- requires deeper analysis than term private rentals altogether. we have provided here and much Public policies that reduce house deeper analysis than appears to prices in pursuit of housing have been undertaken to date”.

113 5.2 When Airbnb overtakes a city: The case of New York

The assumptions made for the Researchers from the Urban Planner Milanese case, are based on previous school, McGill University, from experiences which happened in Economic department of the William other cities. Being an American College and Harvard Law school, platform who began to perform in investigated the phenomenon. the USA, it is not surprising Reading essays from remarkable that the biggest impacts, whether universities was essential to they are positive or negative, give structure to my suspects verified within the same border. about the Milanese externalities. The most rooted literature Therefore, in this paragraph, I I was able to find regards in will discuss about the situation fact the cases of San Francisco, in New York city in order to Los Angeles and New York. give support to my thesis.

114 Airbnb’s presence in New York City

New York city has been the was already active to consider first place where Airbnb took as illegal renting properties in off and during the years of buildings composed by more than its development it remained one three housing units for a period of the principal markets where less than thirty days. The reason the platform operates, having that stand behind this is that records of 450 billion revenues the government, (particularly each year. (Gallagher; 2017) the democratic Liz Krueger was During the second half of 2016, one of the manifesto-face of this the governor Andrew Cuomo signed amendment) wanted to limit the a law that prohibits advertising phenomenon of illegal hotels that the rent of apartments for less were taking advantages of the than thirty days if the owner copious flow of people that the is not present, or a large city was facing. In 2010 no many part of the New York business. politicians knew about Airbnb This law was not the first attempt platform, but they were already to limit short-term rental in N.Y. aware of the business possibilities In fact, in 2010 the amendment based on the exploitation known as “Multiple Dwelling Law” of the built environment.

115 There are specific conditions are active is the fact that according to Gallagher proliferation of housing units that made N.Y. one of the used exclusively for renting platform’s biggest market: out on Airbnb subtracts houses from the market, already facing 1- Recession, crisis, increasing the prices. 2- High prices of hotels, Data shows that if the nighty-four 3- High prices of housing rents, per cent of hosts active on the 4- High number of people renting, platform has one or two listings 5- High flow of Millennials. on the website, the last six per cent is formed by “commercial Belinda Jonson, chief of legal hosts” who make a third of the department of Airbnb affirms that total reservations, representing from 2012 “began to run rumors the thirty per cent of the of a tightening of controls on business revenue in New York. our hosts”. The first case that Looking at the first hundred of confirmed those rumors is the most active hosts we can see that when Nigel Warren, a designer they have between nine listing who decided to rent on the and two hundred and seventy-two, platform his room in the East the first one gets an income of Village charging 100$ per night. almost seven million dollars. Unfortunately for him, the Office of Special Enforcement gave him The final result is that the three fines of 40 000 dollars, platforms reduces the housing later diminished since he rented offer of a ten per cent. However, only the room and not the entire Airbnb lobbyists replies that apartment with the help of Airbnb’s the data are inaccurate since lawyers. However, more than fifty the municipality does not have per cent of listings in New York the official ones because Airbnb regards entire properties. This does not deliver them for the episode is considered to be the protection of their users. In turning point of relationship a world where technology is between municipality and obtaining more and more power, founders. The anti-Airbnb the first instrument that could be “alliance” is composed by: turned against a sharing economy platform business is sharing its 1- Citizen’s rappresentative own data. It is a double edges 2- Activists of “housing rights” sward that is too risky to land in 3- Representatives of the hands of policy-makers. After hospitality labor units battles between Airbnb lawyers 4- Some politicians and Municipality of N.Y., at the end of 2015, Airbnb undertook a data transparency exercise, The first reason politicians sharing one-day snapshot of data

116 Image 51. Percentage of multi-listings in New York. Source Municipality of New York 2018.

from New York City with lawmakers. squeezed in two-rooms apartment However, independent analysts twenty-two matrasses to rent demonstrated that the company had out on Airbnb. Surely it does carried out an unprecedented purge not come as a surprise if the of listing just days beforehand, hospitality sector, who receives raising persuasive doubts about controls of safety and security the data’s representativeness and get fines if certain standards and accuracy (Cox and Slee 2016). are not satisfied, decides to create active groups against The message that founders want this business. Another case, is to promote is that their platform the of a couple who evicted the helps the New Yorker middle housemates living in the property class, however many examples of they were renting in a long term “mis-usage” can be found in the and built plasterboards to divide news. One of them that catched each room in three micro-rooms, my attention is Murray Hill, who going much below the minimum 117 standard of square meter per that their business was helping bedroom, of course the issues of families in need to save for ventilation and lightening were college, the category which was not even considered. The urban benefiting more according to them standards so much advocated in was the Africa-American middle the past, especially from the 19th class. In support of their belief century in those cases disappear they provided information that in favor of a new phenomenon the usage of their platform had called sharing economy which, risen more than 50% faster in Black since it is based on community neighborhoods than in the city as who self-regulate themselves, whole. “Critics of the company is justified from guaranteeing were quick to point out that the human living conditions. most obvious interpretation of this fact is that Airbnb is helping The answer Airbnb gives to those to gentrify these neighborhoods attacks is that they are helping by taking affordable long-term the middle-class increasing rental units off the market” income to be able to pay rents. (Wachsmuth and Weisler 2018). They spread this message through the spot “Meet Carol” who represent an Afro-American widow Anti-Airbnb movements started with children who lives in Lower to spread messages like “I Manhattan and uses Airbnb to feed don’t want Al-Qaeda in my her kids after having lost her job. condominium therefore I don’t Certainly, it conquered the heart want Airbnb in my neighborhood” of many New Yorkers, especially (Gallagher; 2017). In my opinion those who did not have to deal neither of those represent what with the controversies. In April the real situation was, in 2016, Airbnb released a report other words they represented “Airbnb and Economic Opportunity the extreme possibilities in New York City’s Predominantly of a phenomenon rather that Black Neighborhoods”, claiming the most usual situations.

118 Emerging issues

The debate as we could see does In New York residents live in not rotate around one and only limited spaces, one above the concept, but there are many other, sharing walls, ceilings, issues razed here that of course floors and common areas. Not of impacts not on each group having a restriction on the of people in all the cases: number of people per square meters, or when there are, are SAFETY difficult to control, allows Handing over the keys of the tourists to invite more and more condominium to people passing people to share the place they through means allowing access rented. Therefore, the situation to common areas to complete risks exacerbating the conflicts strangers, who could for example between tourists and residents. forget to close the doors well or make a copy of the keys to be used QUALITY OF LIFE later for a multitude of reasons. Quality of life is also a concern for residents who have seen their DWELLING DENSITY neighborhoods transformed into

119 de facto hotel district (Còcola rent out on Airbnb in New York Gant 2016). Icing on the cake rather than renting on long- for residents is when there is term market. This rent gap can a constant presence of tourists be very intuitive, as it emerges who knock the door to enter, from the image below and it can throw rubbish in wrong bin or be exploited by a different the cigarette butts on other’s range of housing actors, from balconies. This is to say that developers to landlords, tenants people who do not live there and homeowners, requiring just a permanently and do not have to minimal new capital to be invested. deal with the consequences of a mis-behavior are more tempted A research by “New York Community to care less about condominium for Change and Real Affordability rules generating an effect for All” discovered that Airbnb in which instead of adapting took approximately 20 % of units to the neighborhood are the off the market in Manhattan neighbors who suffer the new and Brooklyn area, while the situation without hope. As the percentage can reach the 28% in David Wachsmuth and Alexander the East Village neighborhood. Weisler write in their essay, it The shocking news is that those is necessary to understand are proportion are estimated after short-term rentals transforming it became technically illegal to the fabric of everyday life rent an entire unit for less than in the neighborhoods in which thirty days. Moreover, making a they are proliferating, and media between the results that at other spatial scales? The came out from the twenty most sharing economy is not just a popular neighborhood in New new economic opportunity for its York, they could affirm that users, but also a new and perhaps between all those areas the loss unprecedented commodification of amount is of the ten per cent. everyday life; it is “extending a harsh and deregulated free As the image below shows “While market into previously protected the Lower East Side remains a areas of our lives” (Slee;2016). hotspot on this map, with average fulltime Airbnb revenues in the RENT PRICES range of 200-300% of median rents, Over the years, the opponents have the other major areas of Airbnb highlighted the issue of rents: activity—Williamsburg and Midtown Airbnb subtracts homes from the Manhattan—have significantly free markets, and this raises receded in importance. The rental prices. More detailed two previously second-tier information will be provided in neighbourhoods of Harlem in North the next sub-title. The image Manhattan and Bedford-Stuyvesant below shows how profitable is to in Brooklyn have advanced in

120 Image 52. The rent gap which is still open, shown by the profitability of an average frequently rented entire-home Airbnb listing compared to the median 12-month rent in the neighborhood. Source D. Wachsmuth and A. Weisler 2018. importance. These are areas where in order to create this switch, there is not yet a lot of Airbnb landlords need to remove tenants activity in absolute terms, but from their properties and be where the landlords who are willing to make extra efforts using Airbnb are making a lot such as renovate furniture, take more money than they would have care of the management of Airbnb in the long-term rental market” profile, key delivery, cleaning (Wachsmuth and Weisler 2018). and so on. Reasonably, those are extra activities that landlords As mentioned previously the can consider the larger diverge inflection point comes when between these two income sources short-term rents exceed long- is, or in technical words the term ones. However, there are larger is the diverge between other factors that need to be the actual ground rent and the taken into account, for example potential one. We can suppose

121 Image 53. Airbnb listing over the time in New York. Source Sheppard and Udell 2018.

that rent prices increase leads to a 0.42% increase in basically for two main reasons: rents and a 0.76% increase in the house price in the USA. 1- When long-term rentals are converted into short-term rentals “Nationwide, they estimate that the number of housing stock on Airbnb is responsible for a 1% market reduces. Reducing the offer of increase in residential rents and increasing or stabilizing and a 2% increase in housing the demand the prices will rise. prices from 2012 to 2016, with the effects concentrated in 2- By increasing the economic cities such as New York where potential of some residential Airbnb activity is highest” properties, Airbnb could (Wachsmuth and Weisler 2018). cause the growth in selling Wachsmuth et al. applied the and renting prices also. model of Barron to New York and found out that between 2014 and Barron et al. (2018) conducted 2017 Airbnb activity led to an a study where demonstrated that increase of rental prices of $380 10% increase in exogenously- per year, reaching much higher determined Airbnb listing peaks in neighborhoods where 122 Image54. Estimated effect of different treatment levels. Source Sheppard and Udell 2018.

Airbnb presence is very dominant. number of individuals who could be observed). The researchers Stephen Shepperd and Andrew Udell from the What the results of the hedonic Williams College department of model shows is that a doubling economics wrote a paper titled (which correspond to 100% “Do Airbnb properties affect increase) in the number of house price?” which is a first Total Airbnb accommodation is attempt to measure this effect associated with a percentage in New York City. They used two of increase in property value different approaches to do so: between 6 and 11 per cent. According to Sheppard and Udell 1-Hedonic approach: those numbers are encouraging this is a relative traditional since are “almost identical to way as explained in Rosen (1974), those obtained by Barron et al. widely used to measure the factors (2017), who find associative that are affecting property values. impacts of between 3% and 35% on the house price indices with 7% in 2-Quasi-experimental approach: their most completely specified this strategy is largely used to model” (Shepperd and Udell 2018). estimate the average treatment effect generated by Airbnb The result presented in the through observation of data preceding subsection cannot (Since they had a very large be given a clear causal

123 interpretation. In order to Airbnb properties sell for about properly evaluate the causality 14% more, while those exposed of those effect they would have to 31 or more properties sell chosen two identical properties for a 79% premium. In addition, and analyzed over the time the it is visible that effects tend effect on their prices having to decline if considering more one of them surrounded by than 11.5-kilometer distances. nearby properties and the other Sheppard and Udell also isolated from this phenomenon. provided a three-dimensional However, the impracticality figure that helps to clarify of such approach is obvious. the effect of Airbnb presence Therefore, they decided to use on prices in New York City. a quasi-experimental approach where they took into account The diagram is a figurative the several properties since representation of the table above. the large size and extensive Each color identifies a column of time over which their data distances from the center. The were observed made reasonable red dots are the closest to the the usage of such approach. properties, followed by blue, green and yellow. Intuitively, The image below represents the is visible how “the increase in increase (or eventual decrease) house prices (and presumably the of property value in the moment price of space) is greater at of selling observed through the central locations and diminishes presence of Airbnb properties in to the point of insignificance a certain distance. In the first as we move toward the periphery column are expressed the number of of the city” (Sheppard and Udell; Airbnb listing that surround the 2018). One of the factors that house (1 to 5, 6 to 10, 11 to 15, can possibly be responsible for 16 to 20, 21 to 25, 26 to 30, more the price increase is associated than 31) the other columns give with the decline in equilibrium information about the distances utility levels of residents. within which the listings are “The increase in population, from the properties taken into as desirable as it might be consideration. The values inside for certain individuals and the table are the estimated the temporary occupants of the effect on prices significant at properties, is associated overall 1 per cent (apart from a value with a decline in equilibrium significant at 10 per cent). utility in the urban area. This observation helps to explain the As expected, it is possible to concern of policy makers and the see that distance does effect (occasional) vehemence of local properties value. Properties sold opposition to Airbnb properties” within 7 kilometers of 1 to 5 (Sheppard and Udell; 2018).

124 Image 55. Impact on house price of different treatment levels at various distances in New York. Source Sheppard and Udell 2018.

UNEVEN DEVELOPMENT recognizable cultural cachet. As the examination of New York made Furthermore, the neighborhoods by David Wachsmuth and Alexander with the most Airbnb activity are Weisler demonstrates, short-term not necessarily the ones where rental activity is distributed the impact on existing rental in a highly uneven fashion housing is strongest. across the urban landscape. LABOR In New York the cluster were Despite the label “Sharing most pronounced in the city’s economy”, Airbnb along with Uber traditional tourism area and in does not actually involve sharing several neighborhoods, which in the sense of non-monetary have not historically been major exchange. They have both rolled out tourism draws but at the same a kind of flexibility/precarity time still do have international for their users, operators and

125 Image 56. The percentage of active entire-home listings which are multi-listings Source: Source D. Wachsmuth and A. Weisler 2018.

intermediaries. “Airbnb operators Airbnb has introduced a new flow frequently outsource cleaning of potential revenue into housing and key management labor which is markets which is systematic but generally unionized in the hotel geographically uneven. This sector, simultaneously rendering generate a new form of rent this work more precarious and gap in culturally desirable and less visible to guests, who internationally recognizable area experience short-term rentals of the city. Moreover, since it as peer-to-peer exchange”. (D. is proved that not-white people Wachsmuth, A. Weisler; 2018) have more difficulties in being accepted by hosts, it is essential GENTRIFICATION to underline that we are talking 126 about racialized gentrification dwellings, switching their units and displacement. Understanding from residential to short-term when gentrification processes rentals. do initiate in a territory is theoretically easy to grasp as Looking at data, in 2017 Airbnb a concept. Gentrification tend almost accounted the 2% of all to occur when the potential residential rent payments in ground rent exceeds the actual New York. More dramatically it (or capitalized) ground rent. has been an exponential growth However, according to Wachsmuth between 2015 and 2016 which is and Weisler (2018) only Clark’s of about 20% if considering the paper on Malmo city in Sweden has entire New York City, but it been fully successful in proving reached the 50% only in Manhattan so, this is because the concepts as the image below shows. of “potential ground rent” and “capitalized ground rent” are The new stream of housing has abstract rather than concrete. consistently been more intense Therefore, the analysis made by in Times Square, Lower East Wachsmuth and Weisler is not Side and Williamsburg. In those a direct measure of potential areas Airbnb created a rent gap, or capitalized ground rent, in other words landlords have however, there are “compelling switched from renting on long- theoretical reasons to believe term to short-term. What is they will describe the existence relevant to highlight here, is and relative size of rent gaps”. that those are areas of the city The two major empirical indicators where gentrification had already used to root the research are: taken place, they saw a massive increase of rent and displacements - The proportion of total over the last decades and have residential contract rent been transformed into “wealthy generated from Airbnb neighborhoods”. The fact that - The proportion of Airbnb becomes more popular in the neighbourhood median long-term post-gentrified neighborhoods contract rent earned on average it means that “it intensifies by hosts of frequently rented gentrification and displacements entire-home listing on Airbnb. where those dynamics have already been acute”. It is essential to underline that in the case of Airbnb, when Apart from this category of areas talking about gentrification, we in the city, there is another are not expecting the processes one that could be even more of renovation and gentrification problematic, which generally to happen. Property owners can refers to the peripheral areas simply renovate inside their of the city. Those parts are

127 Image 57. Percentage of residential rent payments which now flow through Airbnb in 2015 and 2017.

residential district, not since the relevant diverge classified as touristic but which between actual ground rent and have been considered trendy and potential one as we have seen in popular, in New York those would the rent prices paragraph. be North Manhattan and Bedford- Stuyvesant in Central Brooklyn. The way the authors decided to These two neighborhoods are at operate in order to understand greater risk for Airbnb-induced where it happened gentrification gentrification in the near future and where is going to happen 128 is by analyzing some factors As mentioned before, Harlem in and interpreting them both Manhattan and Bedford-Stuyvesant individually and together. in Brooklyn fit this profile. The last one shows the intersection 1. Percentage of housing of those two concepts, in purple revenue that now flows through are figured neighborhoods where Airbnb. This first pattern Airbnb had its high impact indicates where Airbnb has opened already, opening and closing rent and closed already a rent gap. gaps but new opportunities for higher revenues are appearing 2. The percentage of the median on the market, therefore there rent on Airbnb, which indicates are high chances that the same where there is still money to be pattern will repeat one more made for landlords by converting time. long-term rental housing into short-term rentals. In technical Researches realized that the words it refers to where Airbnb areas of the city differentiated has opened a rent gap which has by color on the map, are actually not been closed yet. divergent also for color of population inhabiting there. In 3. The intersection of those two fact, Airbnb has had the greatest indicators shows where rent gaps impact in the non-Hispanic white are closing but not yet closed, neighborhoods while the areas at where new Airbnb revenue has risk for future are the Hispanic been considerable, but landlords and African American ones. continue to face incentives to Putting numbers into perspective, introduce new short-term rentals. “households in areas suffering high current impact of Airbnb The image below represents an in New York are only 34% non- attempt of identifying where white, while household in areas those areas are in Ney York city. at risk of future impact are on The first category is highlighted average 71% non-white. Given in blue, where there is a high emerging research demonstrating current impact, neighborhoods the prevalence of racial who belong to this group are discrimination on Airbnb (Cox Midtown Manhattan, Lower 2017; Edelman et al. 2017), the Manhattan and Williamsburg. The pattern identified here implies red color identifies areas which the impending arrival of a new are at risk in the near future intensification of racialized (because of the disproportion gentrification in New York”. of income generated by renting on Airbnb, therefore there is an open rent gap) although are “A challenge for students of not in this situation currently. rent gap theory is to illustrate

129 Image 58. Gentrification in New York city. Source D. Wachsmuth and A. Weisler 2018.

specifically how the opening and available for long-term residents closing of rent gaps leads to 2- Increased rents and housing the agony of people losing their prices. homes” (Slater 2015). In the case of Airbnb and short- Each of them leads to displacement term rentals those consequences in different ways. According are straightforward. We have two to Marcuse (1985) there is a types of results: deep distinction between direct 1- Reduction of housing stocks displacement and exclusionary 130 displacement. The first one in New York a high percentage of the case of Airbnb would happen listing are available on Airbnb if landlords expel residents to for more than a third of the year, switch properties into short-term which make difficult to have a source of revenues, therefore they full-time tenant living there are directly displacing them. and a consisting percentage of While exclusionary displacement listing is possible to book for manifest if (in this case through more than eight months in a year, Airbnb) prices of housing become so it is certainly impossible. prohibitive so that families The positive side of it is that cannot afford anymore to live such forms can be regulated and in the neighborhood and are there is room for improvement. excluded from the market as a Data needed to fully continues in target, therefore we talk about this research are about the number exclusionary displacement. of tenants who were forcibly evicted from their apartments to However, this situation would free up units for Airbnb (direct not occur if the listings on displacement) and number of units the platform would be casually were simply converted into Airbnb available when owners are not in listings after they “naturally” town or it refers to spare rooms became vacant (exclusionary underutilized. Unfortunately, in displacement).

131 Attempt of regulations

REGULATION AND REGULATORY CONFLICT interest to the sharing economy Existing research suggest that a phenomenon, which however is commonality to the business model probably going to be present of firms in the corporate sharing in the business scene still for economy is disruption of existing a while. In the meanwhile, not governance arrangements more having a common view of what is in than existing market structures the best interest for the city, (Geobey 2018). Many attempts have the platforms continue to play been made by politicians around the game with their own rules. the globe to regulate short-term rentals however not many have Since the situation of affordable proven to be effective. Regarding housing is diminishing in New York, the regulation in New York, politicians found an agreement regulators do not always speak and in 2018 have introduced new with one voice or demonstrate short-terms regulations that were

132 going to become mandatory from rent increases identified by NYC the 2nd of February 2019. Taking Comptroller Stringer (2018)”; as reference the paper from UPGO (Urban Politics and Governance While with new regulations effects research group) “The impact of new will be mitigated since the City short-term regulation in New York will target mostly commercial City” written by David Wachsmuth, operators and full-time hosts: Jennifer Combs and Danielle Kerrigan there few things that are relevant to considerate in order 1- Average daily listing to understand which approach is will decline of the 46% so it thought to be most suitable in means from 56,800 to 31,000; certain situation especially from a Municipality which has seen the Airbnb phenomenon growing 2- “8,700 housing units will be exponentially. This overview may back on the market: 8,700 housing help to enlarge the visions and units which had previously been evaluation of how municipality taken off the market by Airbnb of Milan is responding to the would be returned to the market, same issues. According to reducing rents and increasing the researchers, without new vacancy rates”. Rental vacancy regulation over the next year rate will increase again, mostly where Airbnb presence is high, some neighbourhoods in New York city 1- “The number of housing are particularly at risk, having units which would be taken less than 5% vacancy rate. In off the New York long-term particular in the neighbourhoods housing market by Airbnb, and of Williamsburg and Greenpoint thus would become unavailable the expected return for the next for New York residents, would year is approximately of 720 increase by 1,800 to 10,800”; units, while 730 for Chinatown and the Lower East Side, 290 returned in Park Slope and Red Hook, 400 2- Listing revenues that will in Bedford-Stuyvesant and 1160 be earned by illegal reservation in Chelsea, Clinton and Midtown; would increase of 68%;

3- “Airbnb’s growth will lead 3- Illegal revenues will to $8.6 million in rent increases decrease of about 69%. for New Yorkers looking for apartments next year (and $60 million in rent increases over The scheme compares the number three years), in addition to discussed above, before and the $616 million in previous after the new regulation.

133 Image 59. Comparison on New York scenario before and after the new regulation. Source Wachsmuth, Combs and Kerrigan 2019.

This new regulation introduced the total amount of the rent. in August 2018, requires short- term rental booking to share Even though the new regulation their information with the seems not to be drastic on municipality, however it has Airbnb’s activity, as said in been blocked by a judicial chapter four, the most powerful injunction which it means that tool that governments might have at the moment Airbnb’s activity in the sharing economy scenario will further commercialize. The is the data. Only through amendment requires STR booking information they can predict services to share all STR-related future consequences, understand transaction information causes-effect relationships and with the city, including: formulate proper amendments to avoid negative externalities. - The physical address of the STR; Researchers have considered three - The full legal name, hypothetical scenarios, one if physical address, phone number the law does not come into effect and email address of the host; because of the judicial injunction, - The name, number one if there is a moderate law and URL of the listing; enforcement and the last with - Statement as to if the a strong enforcement scenario. transaction was an entire dwelling unit or part of a unit; Baseline scenario is the - The number of days situation in which the law that the unit was rented does not become effective. - The total amount of fees received by such booking service, For the moderate scenario, and, if the booking service they predicted that the major collects rent on behalf of hosts, immediate effect is similar to 134 Image 60. Representation of the three possible scenarios in New York City. Source (Wachsmuth, Combs and Kerrigan 2019)

what happened in San Francisco Kerrigan 2019). In terms of (after new STR regulation) where data, they assume that 73% of it was to remove a large number entire home-listing will be of relatively low-performing removed from the market which listings from the market often correspond to commercial because people where feeling operators which are exactly the uncomfortable to share their own ones municipality is aiming to data with the municipality and eliminate from the competition. afraid of possible repercussions. “We furthermore assume that The strong scenario is similar the City would choose to use to the previous one, just adding the information about host pressure on the hosts who are very activities it will gain under frequently renting entire homes the new regulations to increase listings, meaning by frequently the effectiveness of its current as rented for more than four months enforcement activities, with a per year. “We assume that 25% of particular focus on restricting such listings remain unchanged, hosts to a single entire-home because they are operating in listing” (Wachsmuth, Combs and buildings unregulated by the 135 Image 61. The impact of returning Airbnb units to the market on neighbourhoods vacancies rent. Source Wachsmuth, Combs and Kerrigan 2019.

Multiple Dwelling Law or because case of moderate enforcement they shift their activities to (predicting a decrease of 30-night-or-longer rentals, listing on the platform of which are permitted under the 24.8%), while in case of strong Multiple Dwelling Law, that 25% enforcement is expected that limit their activity to 120 nights 8,700 housing units returns to booked per year, and that 50% the long-term rental market. leave the platform altogether”. The image above shows the cases of In terms of housing affordability baseline model, strong scenario what is expected to came back on enforcement and the actual return the market in terms of listings of listings on the market in case number, is 2,700 dwellings in of strong scenario takes place.

136 5.3 Comparing other policies

In this chapter I would like the platform was encouraging the to bring as an example the relocation of the inhabitants, experiences and the strategies entire buildings became out of adopted by different local the traditional housing market. authorities around the world When the municipality started (especially in Europe). I feel to prove that there was a need it is extremely important to do for regulating this phenomenon so for two reasons, first of all Airbnb opposed forcefully, spent because it remarks the fact that 8 million of dollars, hired if municipalities from different lobbyists and tried to push countries are adopting measures back the rules that at the end to limit the spread of Airbnb had been approved. Today there in their territory it confirms three requirements to be able that there is an emergent issue to put an online announcement: that need to be addressed. -be a resident Second of all, once agreed on -put only one property this assumption the comparison -be approved by Municipal office was enlarge the vision of what has been done already in Milan In case of violation, your permit and what could be improved. will be removed. However, it is not too difficult to predict how Sunny Angulo from the to register fake information. municipality of San Francisco, (information’s taken from the heart of Airbnb, says that “Report AAA Affittasi Italia”) 137 In Italy politicians feel they feeds real estate speculation have less power. The mayor of contributes to the sharp rise Florence founds unacceptable in prices, and generates that he does not have the power strong neighbourhood nuisances” to limit the number of Airbnb Maxime Cochard, an advisor in the city centre. While it is to Ian Brossat, told CEO. possible when we are talking about hotels, it is not legal when we are talking of the usage In 2014 Barcelona’s government of a private property. Is it decided to suspend the permits stripping the city of its local? to use apartments for short-term From the data there are no rental in Ciutat Vella (a group evidence, although the chances of of central neighbourhoods of the tricking the system are numerous, Catalan city. “The following for example being a resident in years would be marked by serious town and hosting via Airbnb. conflict between AirBnB and the Researchers discovered that one municipality, culminating with a out of five flats in the historic fine of 600,000 euros to both centre of the city is listed on AirBnB and HomeAway for breaking Airbnb. (information taken from the rules, and an intensified “Report AAA Affittasi Italia”) hunt on illegal listings that would result in many fines, some In Paris an existing law at a high level.21 In the case was tightened. “The rule of of AirBnB there has even been compensation obliges a person threat of banning the company who takes an apartment off the from operating in the city” rental market to buy a commercial (Unfairbnb, 2018) By April 2018, property and turn it into a Airbnb has still not accepted to residential one”.(Unfairbnb, include in its website a tourist 2018) The relevant fact is that licence registration number that the compensational apartment would help the municipality needs to be bought within the same to fight illegal listings. district, to prevent traders from taking off the housing market Amsterdam’s municipality tried a listing from an appealing a totally different strategy in neighbourhood replacing with 2014. The government set up as another one in a less attractive rule “to not rent an apartment area of the city. However, we on Airbnb for more than two can predict that Airbnb is very months per year”. The agreement steadfast and fought back Paris, was signed by both City council there is not a final agreement and Airbnb, under the conditions yet. “Too many homes are diverted that the municipality would and used as a cash machine facilitate the possibility of year round. This phenomenon renting an apartment while

138 Image 62 . Message of frustration along the streets in Lisbon. Source Unfairbnb,2018.

Airbnb would help to tackle letting apartments and houses illegal businesses. However, in the city in May 2016. in 2016 still three quarters of the listing were breaking the rules and managed to work “On that occasion, on 22 March, illegally despite the twenty-two- majority speaker in the City inspector devoted to the “witches Council of Berlin Iris Spranger hunt” full time! Unsatisfied, (SPD) introduced the bill that politicians put an additional would increase fines for illegal limit in 2018, restricting the listings, but her first remark allowed time of renting from was of a more general nature. two months per year in only one. Referring to recent statistics that showed the rules in force had In Berlin the authorities, in returned a full 8,000 apartments response to the rapid growth to the long-term rental market31 of short-term rentals, put she said, “This shows we got a freeze on new permits for it right!” (Unfairbnb,2018).

139 5.4 How Lombardy regions tries to regulate Airbnb

If it can seem surprising that regarding rental prices, people the title of this paragraph in need of accomodation and is about Lombardy rather than through regulation they achieved Milan, let me start by saying an agreement with Airbnb’s that in Italy tourism competences founders to share information. are regional therefore this Unfornutately the same root has the following laws applies in not been paved in the case of Milan. Milan as in Branzi (town of 800 inhabitants up in the mountains). In 2015 the article “Milan embraces Airbnb & Simplify rules” showed how the city was supporting One of the challenges while Airbnb business. The achievements writing my thesis was to find for hosts in Milan and the data as previously sais, however business in Silicon Valley were: while in the case of New York the -Lombardy residents are municipality provided information free to share their houses 140 -Home sharing is classified in practice those that can be as nonprofessional activity found on Airbnb or other sites. -Hosts will not have to deal Many people in Milan prefer not with complex registration to include their apartments in requirements designed for the long-term rental market, professionals or have to display but rather on Airbnb and similar signals outside their homes online platforms. Furthermore, -Hosts will benefit from new other requirements have been notification requirements introduced by the act of August designed for regular people. 5, 2016 concerning rental housing for a duration not exceeding 30 In 2016 the article “Affitti casa consecutive days. What does it con Airbnb anche occasionalmente? mean? That two different cases Ecco tutti gli obblighi” like: case A, an investor who from the Milano Today page, puts a different tenant inside turned the situation around. the accommodation every 30 days, - Maximum price must be shown or case B an old lady who rent out inside the house in Italian and a spare room fifteen days in a at least other two languages year period to help the nephew are - Need to report guests basically put on the same level. ID to the public security authority (questura di Milano) For the Regione Lombardia the - Obligation to take activity is not to be considered out insurance policy entrepreneurial if the total number Since the new Regional Law on of apartments rented are less tourism n27 / 2015 “Regional than four per person, and if the policies on tourism and activity is occasional. However, attractiveness of the Lombard it has not been precisely defined territory” has come into force, what is occasional and what not, according to article 58 which leaving space for interpretation. regulates the common provisions To show how encouraging this for all hotels and non-hotel list of requirements can be I structures. These laws categorize decided to report it here. the non-accommodation structures into five types and establishes ENVIRONMENT their legal obligation (see table -Compliance with heating n...). Airbnb belongs to the last regulations; category “Case e appartamenti -Compliance with water per vacanze CAV (houses and regulations; apartments for holidays). -Compliance with energy regulations However, the new law provides for restrictive measures also for NUMBER OF BEDS non-occasional holiday homes, -One bed each 8mq if flat measures

141 less than 48mq; safety deposit box are mandatory; -One bed each 12mq if flat -There must be the tourist brochure measures less than 84mq; in Italian and English (the format -One bed each 14mq if flat must necessarily be in paper form); measures more than 84mq -There must be a list of the equipment of the house and BATHROOM the manuals of each existing -It is granted a bidet exemption appliance in Italian and English; but only for technical -It is not mandatory, but it is impossibilities; preferable to have TV at home -The alarm call button is mandatory HOUSING TOOLS -For each guest needs to be BEDROOM included two sets of cutleries, -It is mandatory to have a bed; one soup plate, one plate, one -It is mandatory to have a coffee cup and one tea cup; wardrobe; -Also need to be inside the -It is mandatory to have a bedside house one milk jug, one cheese table with lamp; grater, two dish cloths; -It is necessary to have a basket -The electric plug needs and a mirror inside the room to be close to the mirror.

KITCHEN -There have to be at least two cookers; -The fridge needs to be minimum This “minimal standard” also 130 litres if the number of beds raise the question of the inside the house is less than possibility for the Region or any four, while minimum 200 litres surrogate institution to check if if the number of beds is higher; hosts have applied those rules. -It is mandatory to have the how does rules are going to be sink;there may not be an oven if monitored? Who is in charged to there is a microwave; control? Nobody. There is not a -There need to be extra public body who is in charged chairs for optional guests, to check the listing and you do -It is mandatory to have a kettle; not need a degree to understand -Either in the kitchen or living how to abstain from adopting room, the sofa’s sitting need to those rules. Since certainly accommodate at least 3 people Airbnb does not volunteer in doing so, I would say they are ACCOMMODATION not respected. However, this -The washing machine is not list of requirements I find to optional; be intimidating for someone who -The fire extinguisher and the would like to rent once in a while.

142 Conclusion

“The rise of the sharing economy One platform which paved its phenomenon and its exponential way on those basis is Airbnb, growth is generating a variety of on which my thesis is focused consequences especially in the on. However, going deeper most developed countries” was the evidence shows that the revenues first sentence of my introduction. generated through Airbnb are incredibly high and concentrated What became clearer during the in only 20% of the total amount research phases was that one of hosts (even though has partly of the reasons of the sharing contributed to some families’ economy’s platforms successs is income). In some cases, has been that they spread an advertised even advertising that it helps message of helping middle class women, sponsoring the fact that to raise extra money, giving there is a high concentration the illusion to simply be an female hosts involved in this integration of income. In other market which might be true, words this business model is however, according to newspapers “socially accepted”. Many goods and media black users (in some are shared helped by the platforms cases even homosexual couples as a way to connect to more users, had the same issues) are having generating a sense of online a harder time in being able to community who share the same book an accommodation, feeling values. Among those goods, there discriminated and isolated. are dwelling as well, once again this “service” is called “home- Apart from the ethic point sharing” to underline the positive of view in these regards, what meaning that home rather than bothers me as new urban planner dwelling has in English language. is the risk of racial and social 143 gentrification which might lead services will start to change. to urban segregation of some who The risk that the explosion of share the same characteristics city markets and services for pushing further from the economic tourists increases the price of center of the city. Risk that is living in any given city compared amplified by the rising of rental to “regular shops” creating prices. This raises the question the saturation of commerce. of what is left inside the city Therefore, the entire aim of the center, the answer can be found city changes, passing from being in two main groups, the wealthy for citizens to being for tourist. class resident and the tourists One of the most discussed flow. As a consequence, this leads cities in which this phenomenon to an over-touristification of is manifesting is New York, the city where citizens may have which was pioneer of the the feeling to have lost the Airbnb unregulated business quietness of their neighborhood, (Wachmuth and Weisler;2018). in favor of parties, music and noise or simply the sound of In other cities in Europe, trolley’s wheels because more administration is trying to and more residents are leaving regulate Airbnb’s business by the area not being able to fully limiting the amount of days a trust their surrounding anymore. listing can be “rentable” or This situation surely adds more setting the number of dwelling pressure to the peripheries that a host can place on the and the sense of renovated website in order to prevent the center often does not tell the possibility that more houses are uneasiness that encumber outside taken off from the traditional the city center. The new city rental market. It was interesting users, whom residents left the for me was to understand if the space for, where do pay taxes? In situation in comparable with the the case of Airbnb, they do not situation in New York at any contribute to local fiscal system, scale. From the information I therefore their money are not was able to identify, it seems re-invested in public sector and that Milan is at the beginning citizens do not beneficiary from of the same process of over- the economic “revitalization” touristification, however data tourism is supposed to bring to are not official on both side towns. However, some, the ones (Airbnb and the Municipality) who open businesses tourism- therefore they should be looked related, do have more chances at but not fully precise. Even to increase their revenues. It though consequences are hidden does not have to surprise that or not evident yet, Milan is the if the number of travelers goes second biggest market place in up in a certain area, also the Italy for Airbnb activity and it

144 is significant enough the fact official data, actually raised that its diffusion started only the question of “Does the just around Expo 2015, and Italy municipality have them? How are is the third most profitable they trustable?” As we have seen country among 192 where Airbnb in chapter 4, population growth operates. It would have been in Milan is one of the urgent interesting to be able to topics that needs to be addressed. support theory through practice Comparing with other cities in and experimental approaches. Europe and more specifically the case of New York, apparently As Gianluigi Chiaro and Enrico administrations have (and are Bergami discuss in their not shy to provide) information presentation “Airbnb and the regarding average rental prices, City” when Airbnb compromises the some of them even fixed conditions housing affordability by putting to allow people to have the right at risk students and workers on access to the housing system. call who are in need of rents, increases prices and dislocate The spiral of arguments discussed families generating sublocation above, warns and warms me enough phenomenon, it does bring up the to believe that planners and topic of fiscal eviction where policy makers should respond Online platforms do not pay taxes through regulation now, and not to local municipalities and later in the future, to address professional hosts see in these those topics and first of all markets an opportunity to pay less ensure the functionality and taxes than they would otherwise do the affordability not only of in the traditional market field. housing but of the city itself, for the citizens, workers Facing the reality, since there and students who are looking was no possibility to access for a place to call home

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