According to the World Bank, the global housing crisis, which is thought to affect 1.6 billion people globally, is being fueled by a lack of affordable housing that can be purchased or rented.
The short-term rental (STR) industry has received a lot of criticism in Asia, where some of the most expensive and rapidly expanding property markets are found. Regulators, particularly the Malaysian government, have taken steps to limit the sector's growth and, in some cases, its very existence. This can be a blind move.
Although the housing crisis should worry regional authorities, STRs are not the main culprit during a worldwide inflationary trend. With the high cost of production and pricey land scarcity, housing developers play a crucial role.
Additionally, because of the mismatch between income and rising living expenses brought on by sticky wages, it is getting more and more difficult for residents to afford to rent or own real estate.
STRs have a substantial positive impact on the tourism industry and can influence the digital economy. The industry's expansion and the numerous advantages it provides the tourism sector can be stifled by imposing severe regulations.
With a projected market volume of US$35.55 billion by 2027, the Asia Pacific region is anticipated to become the STR market that offers the greatest potential. The tourism industry may benefit from the STR market's development, which also opens up a new avenue for tax collection by the government. More than US$7 billion in tourism taxes have been paid by Airbnb to date.
As seen in Malaysia, where Penang hotels first saw occupancy rates close to 100% in December 2022, STRs are also gradually emerging as a viable and affordable option for hotels. Having STRs available during busy times helped to moderate the quantity and cost of lodging.
STRs are taking on a bigger role in the medical tourism industry, which is anticipated to grow to US$575.9 billion in the Asia-Pacific area by 2029. This is because they provide inexpensive, practical, and adaptable lodging alternatives. The medical and hospitality industries can become more competitive while the government can profit from a piece of the rental income by promoting ties with STRs.
The STR market also gives users the chance to contribute to the digital economy by generating new revenue streams on digital platforms. This is especially helpful in nations that are only now starting to open up following months of sluggish development, inflation, and soaring living expenses in the wake of the pandemic.
To guarantee the STR industry's ongoing expansion, flexible laws are necessary. The government should take into consideration future-looking policy framework consistent with international best practices and provide the flexibility required in a constantly evolving industry, as opposed to policies that could limit the number of tourists accommodated, lower tax revenues for state and local governments, and deny STR hosts income from vacant properties.
The digital registration of STRs can empower decision-makers to create tailored, data-driven policies that specifically address regional issues, advancing tourism and housing demand forecasting. To prevent driving the business underground or eliminating it, these procedures must be simple for hosts to implement. Regulators can learn from Portugal's national portal for STR license registration and from online portals for host registration in French cities when implementing these systems.
Regulators should make use of frameworks with a voluntary "Code of Conduct" like the one New South Wales, Australia, established. These could enable STR platforms and hosts to control themselves without the need for costly enforcement and monitoring methods.
Quantitative limitations can address issues like an invasion of privacy and excessive usage of shared resources. Policymakers can nevertheless create commercial opportunities for STR hosts and platforms to sell their services by forbidding government-subsidized residential areas from doing so and giving private lodgings the freedom to do so.
Cities and nations can benefit economically from STRs. They can provide new revenue streams for governments, strengthen the tourism industry, and increase involvement in the digital economy.
Effective and creative measures are required in place of strict STR laws to facilitate the expansion and development of the STR sector since there is no evidence that they can effectively alleviate the severe housing shortage.
To avoid unintentionally dampening the potential of STRs to fuel the growth of the nation's tourism industry and economy as a whole, governments must cooperate closely with the STR business.