New publication: Tourism in the digital city. The business behind Airbnb.

I’ve contributed to a short text entitled “Tourism in the digital city: The business behind Airbnb”. It is about how Airbnb is increasingly becoming a lucrative investment and a new means for investors to extract profit from tourism. The text was co-authored with Roman Seidl and Leonhard Plank and draws on our recent research on Airbnb activities in Vienna. It appeared in the German journal “Forum Wohnen und Stadtentwicklung”, published by the Bundesverband für Wohnen und Stadtentwicklung, in an issue on “Tourism and urban development”. Our text can be downloaded here (in German):

https://www.vhw.de/fileadmin/user_upload/08_publikationen/verbandszeitschrift/FWS/2018/2_2018/FWS_2_18_Seidl_Kadi_Plank.pdf

The whole issue is available here:

https://www.vhw.de/publikationen/forum-wohnen-und-stadtentwicklung/aktuelle-ausgabe/

Reflections on tourism & gentrification.

I had the pleasure to contribute to an inspiring book discussion on tourism & gentrification organized by Yuri Kazepov, Yvonne Franz and Roberta Cucca at the University of Vienna yesterday. The book we discussed, together with the editors Maria Gravari-Barbas and Sandra Guinand, was “Tourism and Gentrification in Contemporary Metropolises“. After an introduction of the book by the editors, Bas van Heur from the Vrije Universiteit Brussel, shared his very stimulating remarks, opening up a number of conceptual, methodological and political questions for the analysis of the tourism/gentrification nexus. I used my reflections to argue that there is a need to consider the importance of the real estate industry in driving current tourism gentrification. I’m sharing my quick notes below.

Reflections on “Tourism and Gentrification in Contemporary Metropolises”

I would like to start by congratulating the editors and authors on this remarkable book. And I would like to thank the organizers of this event for inviting me. I was asked to reflect on the relevance of the main arguments of the book for the Vienna case, and introduce the city into the debate. Before I do that allow me two general remarks about the book.

There were two things that I found particularly remarkable. The first relates to the general topic. Tourism clearly is a key process of urban development and transformation today. In Vienna, for example, we had 6.6. million tourists last year alone. This equals an increase of about 400% over the last 30 years. Despite this huge, and growing, importance of urban tourism, I feel that lots of academic debates around urban tourism tend to discuss it as an entirely benevolent process – as something desirable cities and urban governments should strive for. Like any development process, however, urban tourism also systematically produces winners and losers. Gentrification has long been a framework in urban studies to highlight just this: that urban transformation and change is inevitably bound up with the production of winners and losers. The idea of the book to think urban tourism through the lens of gentrification, I would argue, is therefore vital, in order to contribute to a more nuanced and wider understanding of the relationship between tourism and contemporary urban change and to open up a more critical perspective on urban tourism than we currently have.
A second point that I found remarkable about the book is its geographic coverage. If I counted correctly, it includes 12 case studies from different places, including cities from three continents. Now, the post-colonial critique of Westernized urban studies has been around for quite some time, as have been calls for a ‚worlding‘ of the discipline. People like Jennifer Robinson or Ananya Roy have argued that we need less research on the usual suspect cases like New York, London, Amsterdam, or Berlin, and more work on cities that have not yet been discussed sufficiently in international urban studies, particularly in the Global South. In doing so we can open up the terrain of urban theory to a much wider range of cases and experiences and incorporate a greater number of cases for building more global urban theories. Interestingly, I had the feeling that the book does just that. Open up the analytical apparatus to a wider set of cases and cut across analytical boundaries between the Global North and the Global South. Although this anchoring in the post-colonial critique of urban studies is not explicitly acknowledged in the introduction, and there is also no reference to this literature, I think this is a remarkable feature of the book.
I want to frame my reflections on Vienna with a brief remark on the methodological approach of the book – as an example of comparative urban research. There are many ways to compare cities and I want to briefly distinguish two of them. One you might call the deductive approach. It is done by setting up a framework with different dimensions prior to an empirical analysis, through which then to systematically look at different cases. Ultimately, the same lens is used to study different cities. This will lead to results such as that you can say, in case 1 we see the presence of dimension A and B, in case 2, we see the presence of dimension A, but not B.

A second approach might be called the inductive approach. In this case, you start out with a number of themes and issues, and use different case studies to illustrate the complexity and variety of how they play out in different cases in different ways. The idea is much more that different cases will herald additional, new insights and thus contribute to a more complete understanding of a topic. You might end up with results that show that case 1 is an example of phenomenon A, case 2 is an example of phenomenon B, while case 3 is an example of phenomenon C. The book, in my reading, is more an example of the second than of the first. I say this because I think it opens up room for me to contribute my reflections about Vienna, and in doing so perhaps add another layer to our evolving understanding of the relationship between tourism and gentrification.
Turning to Vienna, I want to make one key argument. The Vienna case shows, I would argue, that tourism gentrification is not only driven by a transnational tourist class, or by local policies to harness tourism for redevelopment, as is very convincingly shown in the book, but is also powerfully driven by interests of real estate developers and real estate capital. Urban tourism is increasingly becoming a new strategy for real estate investors to maximize profit, and to establish a new investment model in the current post-crisis period. I want to briefly elaborate on this point by offering some reflections on a recent study of Airbnb in Vienna that we did at the TU Wien.

Like in many other cities, the Airbnb listings have exploded in Vienna recently. Over the last years they have grown by a factor of 6. From some 1.300 in 2014 to more than 8.000 this year. Airbnb is by now a significant player in the urban tourist industry, accounting for some 10% of all revenues from overnight stays in the city. Conventionally, Airbnb is thought of as a platform where people occasionally share their home. There is some money exchange involved, but it is ultimately about households that earn a little extra income through renting out an extra bed, or a spare room in their home. What we found in Vienna is that this is far from the whole truth. And there is significant real estate business happening on Airbnb.

A first indicator is the type of accomodation that is offered on Airbnb. We found that entire apartments, for exclusive use by tourists, make up more than two-thirds of all listings. Only some thirty percent are rooms, where the host is also at home during the tourist stay (what you would conventionally understand as “homesharing”, probably).

A second indicator is how long apartments are rented out on Airbnb. We found that of all apartments offered, 4 out of 10 are permanent tourist apartments. They are rented out to tourists all year long, and there is actually no regular tenant in the apartment at any time.

If we now look at the size of the hosts in terms of how many listings they have, we see that 60% of all listings are from people with just one listing. 40%, are, however, from hosts with more than one apartment. The biggest host in Vienna has 43 listings and earns more than €60.000 per month!

What this suggests ist that Airbnb in Vienna is to a significant degree commercialized and, besides people that share their home, has become a  key mechanism for the real estate industry to extract extra profit from the city. This can be put in numbers. Today, you can earn significantly more with Airbnb rentals than with regular rentals in Vienna. Depending on where you invest, this Airbnb rent gap is between 35 and 70%.

There are by now specialized agencies that support investors and owners to use their real estate as permanent Airbnb home. Some provide merely facility service. Others also adminster the bookings and welcome guests. Again others even calculate how much you can earn with your apartment on Airbnb, provide info on taxes and legal issues and even provide a proposal for the furniture of your unit. On the website of one of the agencies it tells you what this is all about: maximizing profit: “We turn your apartment into an attractive address for tourists and business guests. That is how you can significantly increase profit with your real estate.”

If you go to the internet and look up real estate ads in Vienna today, you will quickly find ads offering you units for permanent Airbnb use. I quote: „Go and pack your bags. Also for investors for immediate renting on Airbnb“, it says there. Some units are also offered with tailored furniture – and I quote: „This unit is perfect for immediate Airbnb renting, equipped with new kitchen and furniture.“

Once turned into permanent Airbnb apartments, the units are no longer available for regular rental. This drives gentrification and displacement, particularly in the attractive inner cities. The overall number compared to the housing stock is limited and accounts for some 2,000 units city-wide. The accomodations are highly concentrated in a few inner city neighborhoods, however. In some of the very affected areas, you find up to 100 permanent Airbnb apartments within 500m.
Now, the real estate industry has of course been intrinsically bound up with the tourism industry, long before Airbnb even existed. I would argue, however, that in the current post-crisis context, tourism, and Airbnb in particular, is becoming a new temporary, or permanent, spatial fix for global and local capital looking for profitable investment opportunities. This is facilitated of course by the growing tourism streams and the favourable regulatory context that allows investors to easily use housing units as permanent holiday homes. And this brings me back to the relevance of rising tourism streams and local governments as key anchor points for understanding the tourism/gentrification nexus that is discussed in the book. Certainly, the challenge is to construct an analytical apparatus that considers these factors, demand side, production side and state actors, in their interrelation with each other. In this short comment, I wanted to point to the importance of the production-side, capital flows, circulations and the real estate industry for understanding tourism gentrification processes in the current context.