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CHAPTER II

SHARING ECONOMY, HOME-SHARING AND THE AIRBNB

A. The Dynamics of the Sharing Economy

To date, there is still no consensus on the definition of the “sharing economy” and what

activities comprise it.1 Sharing economy is also interchangeably used with terms “‘collaborative

consumption,” “access-based consumption.”2 But essentially, sharing economy is characterized

by the phenomenon where consumers or firms grant each other temporary access to their under-

utilized physical assets for money.”3 It is an economy based on access instead of ownership.4

Some also characterize sharing economy as an “offspring of the peer-to-peer (“P2P”) business

model,” 5 since its dynamics involves obtaining or sharing the access to goods and services

through community-based online services and platforms.6 In fact, the Organisation for Economic

Co-operation and Development (OECD) identified P2P sharing as one of the three categories of

online platforms “[s]pecialized in matching demand and supply in specific markets, enabling

P2P sales and rentals[,]”7 the other two being P2P selling8 and P2P crowdsourcing.9 With that, it

can be inferred that sharing economy can both refer to a phenomenon and a business model. It is

a phenomenon that reflects the consumers’ shifting preference to avail of the asset-sharing

services of ordinary people. And, it is a business model adopted by online platform companies in

facilitating these sharing economy transactions.

1 AIRBNB 16, p. 6
2 AIRBNB 16, p. 5
3 AIRBNB 16, p. 6, citing (Frenken et al., 2015; Meelen & Frenken, 2015).
4 https://opinionator.blogs.nytimes.com/2013/06/05/its-not-just-nice-to-share-its-the-future/
5 AIRBNB 4, Talia Loucks, citing Peer-to-Peer Rental: The Rise of the Sharing Economy, THE

ECONOMIST (Mar. 9, 2013), http://www.economist.com/news/leaders/21573104-internet- everything-


hire-rise-sharing-economy. (last accessed June 24, 2017).
6 AIRBNB 16, p. 6, citing(Hamari et al., Forthcoming 2015).
7 AIRBNB 16, p. 7, citing OECD (2015)

8 (e.g. eBay and Etsy);


9 (e.g. Mechanical Turks, Kickstarter, AngelList
Sharing economy usually involves two participants: (1) the “peer provider” who provides

assets to rent, share or borrow; 10 and (2) the “peer user” who consumes the products and
11
services. Transactions operating under this model are typically mediated by Internet

platforms.12 The Sharing economy eliminates the need for intermediaries to facilitate transactions

between production and consumption, and instead, replaces it with platforms that enable peer-to-

peer transactions.13

Consumers are now redefining their values and are leaning towards new priorities.14 They

Euromonitor branded this

B. The Home-sharing Phenomenon

1. The Home-sharing Industry Landscape

As noted earlier, the sharing economy in the lodging industry is not new. Sharing homes

and rooms have already been practiced in other countries way before the advent of smartphones

and online applications. In 1953, Swiss and Dutch Teacher Unions devised homeswaps without

monetary consideration for economical ways to travel and meet locals. 1516 As early as 1972,

Servas International, a non-profit group,17 has already offered home-sharing services for non-

commercial purposes as part of its peace movement after the World War II. 18 Advancement in

technology, however, has revolutionized the concept and utilized it for commercial purposes.

10 RACHEL BOTSMAN & Roo ROGERS, WHAT'S MINE IS YOURS: THE RISE OF COLLABORATIVE
CONSUMPTION 63 (HarperCollins Publishers 2010).
11 RACHEL BOTSMAN & Roo ROGERS, WHAT'S MINE IS YOURS: THE RISE OF COLLABORATIVE

CONSUMPTION 63 (HarperCollins Publishers 2010).


12 Airbnb 20, p. 5
13 AIRBNB 1, p.488
14 EM 1, p.5
15
16 Euromonitor 1 p. 9
17 https://www.servas.org/
18 https://www.servas.org/en/history
In essence, sharing economy in the accommodation sector provides a platform for owners

to rent out their homes and properties to interested vacationers and allows transient guests and

travelers to browse through home rentals or vacation properties worldwide online – accessible to

smartphones, computers and tablets. 19 These online home-sharing platforms are entities that

facilitate exchange between property owners and guests. 20 To distinguish hotels and other

lodging types, Euromonitor International classified online platforms facilitating home-sharing

services under “short-term rentals,” which covers rentals obtained through these online home-

sharing platforms. 21
Sometimes these companies are referred to as “alternative

accommodations,” since these do not fall under any of the traditional categories in the lodging

industry, 22 and the classification of these entities remain to be unsettled in many jurisdictions.

The remarkable growth of this new industry gave rise to a plethora of companies engaged in

online home-sharing platforms that mostly cater to short-term rentals.

The two pioneers and by far the largest online home-sharing platform providers today are

Airbnb and HomeAway. HomeAway was founded in 2005, three years before Airbnb’s arrival in

the industry. HomeAway has also performed well in facilitating rental of holiday homes online

but Airbnb’s annual growth of its peer-to-peer rooms has been significantly superior for the past

five years.23 Since then, Airbnb has commercialized the concept of peer-to-peer home-sharing,24

and has made online platforms an attractive ground for other players to enter the market.

19 http://kickerdaily.com/posts/2015/07/airbnb-hails-philippines-as-the-fastest-growing-market-in-
southeast-asia/
20 Airbnb 20, p. 5, citing Sangeet Choudary, How the Hotel Industry Got Blindsided . . . And Why Yours

Could Be Next, FORBES (July 7, 2014, 11:12 AM),


http://www.forbes.com/sites/groupthink/2014/07/07/how-the-hotel-industry-got-blindsided-and- why-yours-
could-be-next/#70403ae1557f.
21 EM 1, p. 4
22 EM 1, p. 4; airbnb 20 p.7
23 Euromonitor 1, p.8
24 https://www.nytimes.com/2017/03/13/travel/airbnb-alternative-home-share-rentals.html
As mentioned, HomeAway25 as well as VRBO26 are engaged in similar business with

Airbnb but also offer variations in their services as an effort to distinguish itself with Airbnb. 27

Some home-sharing companies, i.e. Onefinestay, 28 and Oasis 29 are akin to hotels, since these

companies now include luxury division in their home-sharing service portfolios.30 Companies

like Mister B&B 31 and Noirbnb 32 target demographic niches that have allegedly experienced

discrimination under some Airbnb hosts.33 Other home-sharing groups, i.e. Perfect Experience34

and Tripping.com 35 find their potential in centralizing the home-sharing options to specific

regions and smaller networks.36 Even online travel agencies, like Booking.com,37 have ventured

into home rental services.38 House-swapping services also flourished through the offerings of

GuesttoGuest39 and HomeExchange,40 where some require annual membership fees, while others

earn points for either reciprocal or non-reciprocal hosting.41

Airbnb has spurred the growth of home-sharing or urban rentals in different cities

worldwide. 42 The proliferation of online home-sharing companies reflects a high demand of

home-sharing services and the profitability of the industry. In the United States alone, private

accommodation rentals earned about $32 billion in 2016, and these earnings are expected to

25 https://www.homeaway.com/
26 https://www.vrbo.com/
27 https://www.nytimes.com/2017/03/13/travel/airbnb-alternative-home-share-rentals.html
28 https://www.onefinestay.com/
29 https://oasiscollections.com/
30 http://fortune.com/2015/03/10/fancy-airbnb/; https://www.nytimes.com/2017/03/13/travel/airbnb-
alternative-home-share-rentals.html
31 https://www.misterbandb.com/
32 http://noirbnb.com/
33 https://www.nytimes.com/2017/03/13/travel/airbnb-alternative-home-share-rentals.html
34 http://www.perfectexperiences.com/
35 https://www.tripping.com/
36 https://www.nytimes.com/2017/03/13/travel/airbnb-alternative-home-share-rentals.html
37 https://www.booking.com/
38 https://www.nytimes.com/2017/03/13/travel/airbnb-alternative-home-share-rentals.html
39 https://www.guesttoguest.com/en/
40 https://www.homeexchange.com/en/
41 https://www.nytimes.com/2017/03/13/travel/airbnb-alternative-home-share-rentals.html
42 https://www.nytimes.com/2017/03/13/travel/airbnb-alternative-home-share-rentals.html
increase up to $37 billion by 2018.43 Research shows that “home-sharing platforms now account

for around 25% of total available hotel room nights in global gateway cities in US and Europe.44

In Southeast Asia, Singapore, Bangkok and Kuala Lumpur – the biggest international tourist

cities in the region – receive 45 million international arrivals annually, and home-sharing makes

up about 2% of occupied room nights and is estimated to grow up to 5% by 2020.45

The growth of this home-sharing industry is primarily attributable to the changes in

consumer trends and technological innovations that facilitate online transactions.46 The lack of

state or local regulations governing home-sharing, however, is also responsible for the

proliferation of these online home-sharing platforms. Legislations in different jurisdictions are

still catching up with the fast-paced expansion of their operations. Several countries have

responded differently to this trend, in an attempt to find a middle ground between allowing the

home-sharing industry to flourish without compromising public welfare and consumer

protection. On one hand, some countries passed laws that are more welcoming to the industry,

while, other states, on the other hand, went up to the extent of banning short-term rentals within

their jurisdictions, thus hampering the operations of these online platforms. The wide-ranged

approaches of different states to the home-sharing phenomenon is a telling sign of its

complexity, hence, calls for a continuous study and effort on the part of both the government and

private sector to come up with the most economical and secured response.

2. Legal Acceptance in Different Jurisdictions

43 https://www.nytimes.com/2017/03/13/travel/airbnb-alternative-home-share-rentals.html, citing
http://www.phocuswright.com/Travel-Research/Research-Updates/2017/US-Private-Accommodation-
Market-to-Reach-36B-by-2018
44 http://www.jll.co.th/thailand/en-gb/Research/sea-industrial-revolution-may-2016.pdf
45 http://www.jll.co.th/thailand/en-gb/Research/sea-industrial-revolution-may-2016.pdf
46 EM 1, p.5
Legislation on short-term rentals is currently wide-ranging at both national and local levels,
ranging from bans, improving legislation, collaboration on tax collection, or a complete lack of
action by legislators.47

C. Home-sharing in the Philippines [INSERT MORE INFO]

Rental periods in Philippines are becoming shorter to the extent that sometimes, with

Airbnb hosting, rental becomes on a daily basis.48 The Philippines is a promising market for the

home-sharing companies, given that its real estate and tourism industries are flourishing. 49 In

fact, Airbnb Southeast Asia Regional Director JJ Chai said that Philippines is one of the fastest

growing markets of Airbnb across Asia.50 From 2014 to 2015, the growth of Airbnb listings in

the country is 300%.51 Most of Airbnb listings are from the most popular tourist destinations in

the country, including Manila, Boracay, Baguio, Tagaytay, Davao, and Cebu.52 In 2015, listings

in the nation’s capital, Manila, are more than a thousand, while Baguio and Tagaytay both have

more than 200 listings. 53 To further expand their growth in the Philippine market, Airbnb

partnered with Smart Communications Inc. in 2015, which provided Airbnb discounts to Smart

and PLDT Home subscribers.54

Airbnb status as a corporation in Philippines: registered or not?

47 EM 1, p.6
48 http://www.bworldonline.com/content.php?section=Property&title=developers-should-tap-airbnb-
market----colliers&id=145246
49 https://www.dotproperty.com.ph/blog/airbnb-in-the-philippines
50 http://www.bworldonline.com/content.php?section=Economy&title=airbnb-sees-phl-listings-rising-by-
300%-this-year&id=117786
51 http://www.bworldonline.com/content.php?section=Economy&title=airbnb-sees-phl-listings-rising-by-
300%-this-year&id=117786
52 http://kickerdaily.com/posts/2015/07/airbnb-hails-philippines-as-the-fastest-growing-market-in-
southeast-asia/
53 http://kickerdaily.com/posts/2015/07/airbnb-hails-philippines-as-the-fastest-growing-market-in-
southeast-asia/
54 http://lifestyle.inquirer.net/211473/smart-and-airbnb-partner-to-bring-personal-hospitality-to-ph/
For purposes of this thesis, the proponent would examine the home-sharing phenomenon in the

Philippine context using Airbnb as the main subject of the thesis, given that it is one of the

successful pioneers in the home-sharing industry.

E. Advantages of Home-sharing

The dynamics of home-sharing benefits all parties involved. Airbnb profits from being a

mere intermediary between the host and the guest. Owners can make better use out of their

underused belongings by renting them out or “sharing” them with others via the Internet. 55

Consumers enjoy efficient service and cheaper prices, while producers capitalize on transforming

spare capacity into a productive asset.56 Home-sharing likewise promotes the city’s tourism and

hospitality57

[ADD MORE]

F. Home-sharing Regulation

http://www.bworldonline.com/content.php?section=Property&title=developers-should-

tap-airbnb-market----colliers&id=145246

“Airbnb has a hold on the family, the millennials, and a certain kind of traveler, a budget
traveler. Airbnb would have an impact on a three star rather than a five star development,

http://www.thejakartapost.com/travel/2017/06/09/airbnb-gets-green-light-in-japan-with-

home-sharing-laws-passage.html

http://www.philstar.com/cebu-business/2017/03/08/1679013/dot-works-regulating-home-

sharing-app-airbnb

55 Talia Loucks, Travelers Beware: Tort Liability in the Sharing Economy, (2015) 10(4) Wash. J.L. Tech. &
Arts 329 at 330.
56 Henderson, supra note Error! Bookmark not defined. at 8.
57 http://news.abs-cbn.com/business/05/26/14/how-airbnb-helping-promote-pinoy-hospitality
Recently, there has been a movement calling for regulation of the so-called “Airbnb

phenomenon,” in various jurisdictions. In fact, some states in United States and other countries

have declared the practice of Airbnb hosting as illegal. 58 These legal challenges that Airbnb face

are caused by the different problems that both Airbnb hosts and guests experience. Hosts become

subject to lawsuits, fines, and eviction notices due to unawareness of the legal implications of

renting out their houses in Airbnb.59 In Philippines, the hotel industry, which has been adversely

affected by the rise of the Airbnb phenomenon, has been lobbying for the formulation of a

“regulatory legislation to regulate the proliferation of non-hotel accommodations which visitors

to the country can now avail of through the online booking websites such as Airbnb.”60 Private

and public sectors of the industry [INSERT PH hotel association] principally argue that the

Airbnb and other similar platforms play the same game as the hotel industry but do not play with

the same rules, particularly in terms of licensing, paying taxes and complying with sanitary and

safety regulations that the hotel companies fulfill before operating.

The foregoing are only some of the controversies associated with Airbnb hosting.

Nevertheless, the proponent of this thesis intends to focus on the determination of the legal

relationships governing among parties involved in Airbnb hosting – i.e., Airbnb, hosts, guests –

and the legal implications of these relationships in the context of tort liability.

58 http://www.investopedia.com/articles/investing/083115/top-cities-where-airbnb-legal-or-illegal.asp
59
Ron Lieber, A Warning for Hosts of Airbnb Travelers, N.Y. TIMES (Nov. 30, 2012) available at
http://www.nytimes.com/2012/12/01/your-money/a-warning-for-airbnb-hosts-who-may-be-breaking-the-
law.html
60 http://www.philhotelowners.org.ph/dot-looks-to-regulatory-legislation-to-address-airbnb-phenomenon/
Furthermore, it is notable that the Terms and Conditions of Airbnb states that registered users of

the Airbnb application that reside outside the United States and the People’s Republic of China

are deemed to be contracting with Airbnb Ireland UC.61

Many P2P services are closely analogous to traditional service providers. For that
reason, sharing platforms often seem to fall under the purview of laws
governing traditional service providers.49 The following discussion will
address two features of these regulatory frameworks. First, modern statutory
schemes have roots in common law special relationships, and accordingly
impose limits on the freedom of contract between users and providers on
sharing platforms. Second, state and local regulatory agencies create complex,
overlapping requirements for providers and platforms.so However, sharing
platforms differ substantially from traditional service providers, and the
sharing economy does not neatly fit into existing regulatory frameworks."
Many providers and platforms cannot comply with local regulations. Others
face uncertainty as a result of gaps or ambiguities in the law.s2 To address these
problems, sharing platforms have advocated strongly for new rules tailored
specifically for P2P service providers." This Part concludes by discussing the
various interests at stake in the ongoing debate over how to regulate the
sharing economy.62

61
62 AIRBNB 8, p. 1076