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Shared economy impacts housing offer

Certain regulation is necessary, but there is still discussion on how to do so.

Bratislava(Source: SME)

The capital of the Czech Republic has recently announced plans to deal with people who offer accommodation via the AirBnb platform as it loses tens of millions of Czech crowns on fees paid by tourists and other visitors. The city has also created a working group and is discussing what can be done in this field, said Eva Nováková from the Prague municipal authority, as quoted by the Hospodárske Noviny daily.

Bratislava, too, is dealing with AirBnb headquarters, asking it for cooperation when collecting the tax for accommodation.

“The city needs the contacts for accommodation providers (who at the same time are taxpayers) who offer the rental mostly under nicknames,” Marek Papajčík from the press department of the Bratislava municipal authority told The Slovak Spectator.

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The regulation of shared economy services is also being discussed by the European Commission, which is currently seeking ways of how to approach them and their regulation.

Sharing accommodation with other persons, however, is nothing new. Also in the past the information offices had certain lists of people renting their own flats or houses, said Vladimír Baláž, prognosticator of the Slovak Academy of Sciences.

“The only novelty is the internet platform,” he told The Slovak Spectator.

Benefits, but also risks

Currently, there are some 2,000 accommodation offers published via the AirBnb platform, with the majority of them situated in Žilina Region, according to Róbert Chovanculiak, analyst with the economic think tank INESS.

The service brings several benefits to the owners of flats and houses, including the possibility for them to share it for a short period of time.

Moreover, it connects people with empty rooms with strangers who arrive to the town and seek accommodation.

“Thanks to the shared economy platforms they learn about each other, agree on the price and conditions in a few clicks, while the platform will check whether they both observe the agreed conditions,” Chovanculiak told The Slovak Spectator.

Using shared economy services also enables the owners of flats to address more potential clients, for example, from abroad, said Maroš Ovčarik from the Financnykompas.sk website.

There are, however, certain risks since the shared economy platforms do not have to observe the same rules as ordinary entrepreneurs. This may includes details like insurance, Baláž warned.

Tourism without a greater impact

Slovakia witnessed a record number of tourists last year, with the number of holidaymakers exceeding 5 million, and it is expected that another record will be broken during this year’s season. This may have a certain impact on the use of AirBnb services in Slovakia, though it will not be significant, observers admit.

“In case of the further increase in demand for accommodation services there is no reason not to expect that the accommodation sector within the shared economy will rise,” Chovanculiak said.

Baláž says that using shared economy services in fact broadens the offer.

“Everything that helps expand the market and improve the quality of the supply is good,” he added. “More people come and spend money here, while the state can collect more taxes, if it applies certain rules.”

At the same time, it is necessary to realise that shared economy services work especially in metropolitan regions. In the case of Slovakia, there is some potential for the service to grow in Bratislava and possibly also Košice, Baláž said.

More possibilities available

AirBnb is not the only service to share accommodation Slovaks can use. Czech startup Flatio launched its services in the local market in the beginning of 2017, offering rental housing for one-six months, the Hospodárske Noviny daily reported.

When offering their services, the company focuses mostly on foreigners coming to Slovakia for a couple of months, including managers, students and so-called digital nomads, said Radim Rezek, founder and CEO of Flatio.

Yet the company does not want to compete with providers of short-term accommodation, for example, for tourists.

“If we will expand our offer, we will focus rather on long-term rentals and how to apply the technologies we use in the real estate market,” Rezek told The Slovak Spectator.

Regulate or not?

One of the most discussed topics in connection with shared economy services is their regulation. The EC issued a directive last year, setting some basic principles which member states should follow when dealing with the legislation in this field.

“The changes to the system should be in compliance with both the national and European legislation, but first of all they should be beneficial for people,” the Transport Ministry’s press department told The Slovak Spectator, adding that currently they only discuss how to approach the matter.

The Economy Ministry also organised an inter-department discussion at which it presented a proposal to create certain rules for the shared economy platform and the providers of these services. Next steps will depend on the decision of the European Court of Justice about the status of the shared economy platforms and the EC’s recommendations, said the ministry’s spokesperson Maroš Stano.

Chovanculiak does not support extensive regulation of the shared economy, though he admits there should be some simple rules like requiring contracts and responsibility for caused damages. In his opinion, the shared economy comes with its own mechanisms to secure quality and safe services, which is the reason why it is growing and attracting an increasing number of customers and providers.

“The shared economy does not need more than the simplification of the regulation and the implementation of its business model into laws,” Chovanculiak said.

Baláž says the shared economy should be regulated to a certain extent in order to secure fair competition in the market. Though the shared economy platforms claim they only offer the space to people either offering or seeking for a certain services, but do not do any business, the fact is there are certain laws stipulating what it means to run a business.

“The state should define at least minimum standards that would be fair for all subjects in the market,” Baláž added.

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