For as much success as Airbnb has had, the home sharing startup has also faced its fair share of obstacles. And those obstacles are not going away anytime soon.
Now, city officials in Paris are blaming the company for declining populations in some of the city’s neighborhoods. One official even called it “a catastrophe.”
And they might have a point. Since Paris is one of the top destinations for Airbnb, many residents have taken to renting out their homes or apartments for most of the year and then purchasing other residences elsewhere.
Airbnb likely isn’t the only factor responsible for the drop in population. But even the perception could lead to more regulations for the company and its users. For example, the city could increase taxes on second homes in the city, which would make it more costly for people who want to rent those spaces using Airbnb or a similar service.
Be Ready for The Side Effects of Business Disruption
Obstacles like this are likely to be fairly common for disruptive startups like Airbnb. Since it’s completely changing how some people live and work, it can have some ancillary effects that weren’t exactly expected. But it’s important that that any disruptive business, large or small, be able to navigate the side effects of business disruption and come up with solutions as the need arises.
Paris Photo via Shutterstock
This trend occurs because people learn how much their home is worth as a rental property. If their homes are worth enough as a rental to enable them to purchase a home elsewhere to live in (which is what I understand the complaint here is) then why not? They still pay taxes on the property and most likely the rental tenants spend more in the city than the resident would, thus injecting money into the local economy.
Vijay D
Sorry, but your response misses out on several key distinctions between rental (commercial) and homes. For example: try getting a loan (assuming you get one) to buy a rental property and compare it to the interest rate you likely will obtain for your primary home. Secondly, in virtually every jurisdiction the taxes you pay on commercial real estate are several multiples of that paid on homes. Thirdly, building codes, particularly in big cities, are far more stringent for commercial as opposed to residential homes (fire sprinklers being an obvious one). Fourthly, you get an income tax write down on interest payments on primary homes. Fifthly, transfer taxes are higher for commercial as compared to residential…. the list goes on but a primary distinction you miss is what Paris is finding out: it is fast becoming like Las Vegas where people visit but don’t really stay particularly in the central strip. The rue du rivoli and opera area are fast becoming like the strip. The very reason people go to Paris will soon vanish.