Airbnb in Amsterdam

Case Summary
Airbnb’s business model
● Airbnb was a platform that connected travellers that were looking for an authentic local experience to
hosts that had an extra room to rent.
● It was based on the concept of shared economy, sustainability and community based tourism as a
development engine for cities
● Airbnb thrived on its proposition to offer travellers a way to select lodging with a more local character and
experience than they would get from a typical hotel.
● Airbnb was committed to being good partner to cities which was evident from its move of hiring the
head of Civic partnerships before a CHRO or a CFO.
● The vast majority of local residents in the Airbnb community rent out their homes on a part-time basis.
They could use extra money to pay their expenses, create new businesses, and work on new initiatives.
● While Airbnb benefitted both the locals and the travellers in some way, it escalated issues like
circumvention of the short stay regulations by hosts, by taking it to a larger scale.

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Amsterdam as a lucrative destination for Airbnb
● Amsterdam was a popular choice as a city of residence along with travel. (It ranked 11 out of the 460
cities assessed in Mercer Quality of Living rankings in 2014.) However it was plagued by space issues.
● Tourism made strong post-financial crisis recovery with highest growth rates in demand of hotels
● The city was anchored by cultural institutions and iconic and intriguing tourist locations
● Amsterdam took innovative approach to such space issues by constructing artificial islands to iconic
canal system to accommodate its rising population
● The city also attracted big industries and was building an innovation economy by playing a pioneering
role in inventing capitalism and emphasizing free trade and globalism
● The concept of gedogen, or activities that are ‘technically unlawful but officially accepted’, is deeply
rooted in Amsterdam's heritage of openness and tolerance.
● Amsterdam employed a more collaborative approach towards issues, which made it conducive for
companies to enter and thrive in Amsterdam
● Airbnb opened in Amsterdam in 2008 and from then, the number of Airbnb listings surged five-fold
between 2012 and 2015. In 2015, 575,000 international visitors utilised the Airbnb website to find and
book a hotel in Amsterdam.

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Hoteliers’ issue with Airbnb

● In the first of the meetings, the hoteliers aggressively claimed that what Airbnb was doing was dangerous
and irresponsible
● In the next meeting they even alleged that Airbnb built the website with the sole purpose of
circumventing the law and avoid paying taxes
● Hoteliers raised questions on the legality of the short term holiday rentals on Airbnb and other
platforms
● Hoteliers were also aggrieved because they could hardly fill up their rooms despite low prices, while
Airbnb gew by many folds
● Airbnb hosts did not have to seek licenses or pay taxes like the hoteliers
● Some Airbnb hosts used the platform to conceal their illegal activity of renting a short term holiday stay
for longer periods

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Governments’ issues with Airbnb
● The threat of Disneyfication of the historic centre was a long term issue that worried government of the
city
● Airbnb had a general perception of being a US based company that only cared about profits instead of the
preservation of housing stock
● A historic shift in the ruling party in Amsterdam led to increased friction between government and
Airbnb, as the new party campaigned on privatising and liberzing the property market.
● Taking legal action against Airbnb was a lost cause for Amsterdam as it would have been governed by
both Dutch and American law and it would have taken forever for the case to be closed.
● Airbnb did not pay taxes and was not regulated unlike other hoteliers
● Government was apprehensive towards the disruptive guests that could potentially create nuisance in the
social environment
● Ensure safety of guests that could be jeopardised by violation of fire codes as a result of overcrowding was
another worry of the government
● The threat of disruptive guests affecting the lifestyle of the people in the neighbourhood of houses being
rented.

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Negotiations between Airbnb and the
government
● The first two meeting between the Airbnb, hoteliers and city officials were aggressively handled by
hoteliers where they alleged that Airbnb was circumventing the law.
● In february 2014, Amsterdam announced a new category of accommodation, namely, ‘private vacation
rental’ over the already existing categories of ‘Bed & Breakfast’ and ‘Short Stay’
● The private vacation rental could be booked for a maximum of 4 persons for a maximum of 2 months a
year and had to pay the tourist tax.
● The city also stopped handing out licences for short stay properties in Amsterdam
● For enforcement of the regulations, Airbnb and the government had been trying to work out an MOU that
was a non-binding agreement underscoring each party’s commitment to the other.
● The amsterdam officials had a 3 part agenda for negotiating an agreement
○ Fair- eliminating inequity in collecting tourism taxes
○ Safe- not renting to more than 4 people at once in view of fire codes and to prevent tragedy from
overcrowding
○ Quiet- Education outreach and setting up of a hotline number to handle complaints regarding
disruptive guests.
● The Amsterdam officials were also keen on making Airbnb to cooperate on
○ Preventive Enforcement- Upfront blocking of illicit listings
○ Active Enforcement - After they were revealed to be in breach of the guidelines, Airbnb was
required to block hosts and addresses from using the platform.
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 The Impasse between Airbnb and Amsterdam
government
Insufficiency of MOU in
convincing government
The company's planned promises, which
included regulatory education, enforcement
support, and tax collection, may not be enough
to clinch what would be Airbnb's most wide
relationship with any city in the world.
Amsterdam’s demand to
access Airbnb’s data
Amsterdam requested access to Airbnb's data to
make it easier to police the new legislation, but
Airbnb was concerned about user privacy.
Some outside organisations backed Airbnb's
refusal to reveal private user information,
arguing that government overreach threatens
human privacy.
Prevent Disneyfication of
Amsterdam
Amsterdam is a city that had worked hard to
establish a healthy balance between being a
booming tourist destination and a thriving
city for residents. And that equilibrium was in
jeopardy with the rapid growth of Airbnb.
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Thank
You!