by Hayden Voon, Managing Director of White Forest Suites, 25/10/2020, adopted from Hayden Voon's research project- "WEIGHING THE BENEFITS AND DRAWBACKS OF HOME-SHARING REGULATIONS IN MALAYSIA: A COMPARATIVE APPROACH" -University Malaya.
Photo adopted from https://www.latimes.com/local/lanow/la-me-ln-santa-monica-airbnb-conviction-20160713-snap-story.html
Currently, there are discussions with the law-makers whether to adopt the Europe approach where short-term rentals are only allowed for a MAXIMUM of 180 days per year in Malaysia. If this is implemented, it will have grave disadvantages towards the Malaysia economy.
First, by restricting the number of days for short-term rentals operator to operate the units, the home-sharing industry will not survive. Most of the commercial Airbnb operators obtain rights to the units by way of tenancy agreements or profit sharing. And by way of tenancy agreements, the operators being the tenants would have to pay constant monthly rent to the landlords. If short-term rentals are only allowed for a maximum of 180 days in a year, operators being the tenants will not be able to furnish rents beyond the limit of 180 days. In profit sharing wise, landlords proceeds will be halved as the units can only be rented up to a maximum of 180 days. Making it impossible for the home-sharing industry to survive.
This butterfly effect will then disrupt the housing markets. The rationale behind this argument is that by limiting the maximum number of days short-term rentals can be operated, the demand for the houses in tourism spots to be converted into short-term rentals properties will fall. Thus, causing the investment values of the houses to fall as well.
The uniqueness of Airbnb lies within its local experience enhanced to the travelers as staying in Airbnb travelers have more options to choose from in terms of the locations and a proximity to the nearby attractions. With this said, travelers have limited options to choose their accommodations as they are only limited to budget hotels with low quality stays or luxury business hotels in strategic locations with high prices. This will jeopardize our local tourism sector as Airbnb serves as a local attractions stimulator. For example, Airbnb and short-term rentals are under high development in I-City where it helps to boost the number of travelers to the attraction and providing high-quality accommodations with relatively reasonable prices as compared with hotels nearby. Besides, Airbnb is often the first choice of families as apartments have more amenities as compared with hotels. High quality Airbnbs are usually furnished with fully equipped kitchens, larger bedrooms with more bedding options and living room for family gatherings.
By limiting maximum number of days short-term rentals can be operated, the potential competition that the home-sharing industry have towards the traditional hotel industry may decrease. Whether the growth of Airbnb in a local market would affect the hotel industry lies within a few factors. In the researches done, Airbnb only has direct competition towards the budget hotels as luxury business hotels are of different nature as suggested by the researchers. Thus, budget hotels may be benefited from the implementation of restricting the number of days short-term rentals can be operated. However, it is indisputable that Airbnb has in fact elevated the tourism sector in various ways.
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