The rapid and uneven expansion of short-term accommodation rentals (STARs), facilitated by online platforms, has transformed housing in urban as well as rural areas, and tourism dynamics across the European Union. During 2023, guests spent 719 million nights in short-term rental accommodation in the EU booked via Airbnb, Booking, Expedia Group or TripAdvisor. This corresponds to a 20.5% increase compared with 2022 (596.5 million) . The data received from the platforms for Q3 2024, which is the most important quarter for tourism in the EU, shows continuing high growth rates for the number of nights spent in accommodation booked via online platforms.
While STARs bring flexibility, entrepreneurship opportunities, and tourism-related income to local communities, they also present considerable challenges to housing affordability, neighbourhood cohesion, and local governance. These include exacerbating the housing affordability crisis, disrupting local communities, and undermining traditional hospitality industries. Therefore, regulating STARs is not about stifling innovation but about ensuring a balanced approach that safeguards both economic interests and community well-being.
One of the primary concerns associated with STARs is their impact on long-term housing availability and affordability. The so-called ‘Airbnb effect’ has been linked to rising rental costs and the removal of housing stock from the traditional long-term rental market.
Evidence from European cities highlights this issue. For example, in Florence, research indicates that one in five apartments in the historic centre is listed on Airbnb; all these apartments then disappear from the regular long-term market. In Madrid, the city centre has lost a staggering 15,000 residents since 2005, and the influx of tourists into famous neighbourhoods such as Lavapiés is transforming them. Lavapiés is a part of Madrid with a mix of cultures and ethnicities, poor and sometimes tough, but a place where residents created their own environment .
Studies from multiple countries reinforce the connection between the growth of STARs and rising rental prices. Research in the US, Berlin, Sydney and Canada, all points to a significant reduction in housing stock for long-term residents due to STAR proliferation.
A positive correlation was found between the rise in Airbnb density and the increase in average rental prices per bedroom in a neighbourhood, indicating that an increase in Airbnb supply is associated with higher rental prices. This correlation remains even after controlling for unchanging neighbourhood characteristics, number of bedrooms, and type of rental property, as well as economic factors in the neighbourhood. However, no significant correlation was found between Airbnb density and house sale prices.
During the COVID-19 pandemic, despite a decrease in Airbnb offerings and average rental prices, there was no significant correlation between these declines. The results indicate that while Airbnb’s presence correlates with increased rental prices, the reduction in Airbnb listings during the pandemic did not have a significant lowering effect on rental prices. This lack of correlation could be due to a delay in the market’s response or Airbnb hosts’ expectations regarding the pandemic’s duration.
Beyond housing availability and affordability, unregulated STARs alter the traditional character of cities and neighbourhoods. The expansion of STARs has contributed to the displacement of local residents, particularly in high-demand urban centres. In cities already struggling with overtourism, such as Venice and Barcelona, the surge in STARs has exacerbated housing shortages, driving out local populations in favour of transient visitors. As property owners convert long-term rentals into more profitable short-term stays, low-income renters are increasingly forced out of central areas, leading to the erosion of historic and culturally rich neighbourhoods.
The influx of short-term guests often leads to:
- Loss of social cohesion and displacement of local residents — sometimes termed ‘Gentrification 2.0’ — and the conversion of neighbourhoods into transient tourist zones that replace long-term community members.
- Increased noise levels and disturbances.
- Reduction in local services catering to permanent residents, as businesses shift focus to the tourism sector.
- Conversion of historic districts into ‘tourist zones,‘ stripping them of their authenticity and local charm.
Without effective regulation, cities risk losing their cultural identity, as local populations dwindle and once-thriving neighbourhoods become mere backdrops for tourism.
