Short term rentals serve government, not just people

Lo Ming Hin: Short term rental good!
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Lo Ming Hin is Secretary of The Sharing Economy Alliance. Here, he makes the case for how AirBnB style short term rentals serve government objectives.

Lo Ming Hin: Short term rental good!
Lo Ming Hin explains why the government finds its ends served by short-term home rental platforms.

When it comes to the discussion on whether or not house-lodging platforms should be legalized in Hong Kong, there is often a misconception that the benefits brought by allowing such short-term rentals (e.b, cheaper accommodations, a more authentic tourism experience) are, by and large, only applicable and relevant to consumers. In actual fact, the government’s incentive to legalize short-term homestay is as big as consumers’ interest, especially in the Hong Kong context. Three government objectives are served, making ample justification for the government to support these innovative platforms.

Objective 1 — Injecting flexibility into the rigid town planning system

It is a known fact that land is one of the most scarce resources in Hong Kong. In order to alter existing non-commercial land into commercial land, it requires a significant amount of both time and resources. As a result of the cumbersome administration required for this change, developers are limited by the lack of flexibility and may not be able to react quickly or sufficiently to market changes. The cyclical nature of tourism has made it harder and harder for the government to do a proper urban planning with the existing regulatory regime.

According to the figures from the Land Department and the Town Planning Board, from the year of 2011 to 2016, 27 former industrial buildings had been successfully approved for a change in land use, and forecasts have shown that this should provide 7,360 new hotel rooms once the construction is completed. However, completion of these projects have been a slow and arduous journey; over 60% of the room show no clear signs of being under construction or completion. Out of the 27 approved, 5 of these projects have also been re-designed into shopping malls, leaving behind a significant gap in the supply of hotel rooms.

Short-term homestay platform such as Airbnb and Homeaway, however, offers a high degree of flexibility for units to be used as normal accommodations as well as house-lodging for some days of the year. This flexibility will be the key to increase the efficacy of Hong Kong’s rigid town planning system.

Objective 2 — Economic diversity through in-depth tourism

The Smart City initiatives, led by The Office of the Government Chief Information Officer, is an initiative to embrace innovation and technology to build a strong economy. It is an undeniable truth that house-lodging activities enabled by sharing economy platforms have already become an inseparable part of the smart city experience for tourists all around the world. Why should it not play an equally important role in The Smart City Initiatives in Hong Kong?

According to Insidebnb, short-term rental listings are mostly outside the traditional hotel districts, enabling tourists to have a deeper and more authentic experience in Hong Kong. Some short-term platforms also offer a variety of local activities for tourists to search for their unique travel experiences such as biking in the less travelled parts of the city, attending local cooking classes and more. The growth and rise of these tourism options and offerings can only increase Hong Kong’s attractiveness as a tourist destination and support tourism growth. This will only be further strengthened through the legitimization of short-term homestay platforms.

Objective 3 — A sensible and efficient regulatory regime

The existence of short-term homestay platforms such as Airbnb and HomeAway had indeed created problems for the administration but it also creates a window of opportunity for an effective regulatory regime for house lodging activities.

To begin with, house-lodging or homestay has always been a part of the Hong Kong Tourism experience. According to the figures provided by The Tourism Board, a rough estimation of 10% of overnight visitors per day have been engaging in the house-lodging or homestay experience regardless.

The establishment of house-lodging platforms created a single window for the administration to oversee the house-lodging market systematically and the expansion of sharing economy platforms such as Airbnb and Uber had proven that customers are generally satisfied by the service provided via self-regulating platforms.

Data collected through sharing economy platforms would also enable the government to understand the benefits and provide a well-researched case to quantify the value created.

It could be argued that if citizens’ benefits were the only consideration, then the government should allow people to offer their homes for short term homestay. However, if the government is considered as a manager with its own objectives, three important objectives it aims for are served by this new economy model. 

That’s two reasons more than it needs to allow this new sector to thrive.

The author, Lo  Hing Min is the Secretary of The Sharing Economy Alliance. The SEA will be publishing a policy white paper on managing short-term homestay activities in Hong Kong in the near future.

Lo Ming Hin is Secretary of The Sharing Economy Alliance, a columnist and graduate of Shue Yan University. He is a former prize winning student intern, earning a scholarship from The Lion Rock Institute to study at The Acton Institute (Michigan, USA). He is a founder of the Liberty Forum in Hong Kong.

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