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. Sharing economy 2.1 Introduction to the sharing economy 2.2 What happens when we share homes? 3. The case of Airbnb 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 business 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 businesses 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.