Harald Wiedenhofer, at the annual meeting of the Hellenic Chamber of Hotels in Athens


Ladies and Gentlemen,

Thank you very much for inviting me to the annual meeting of the Hellenic Chamber of Hotels. I did not hesitate to accept this invitation as I am aware of the difficult challenges Greece is facing nowadays. I am the General Secretary of the European Trade Union Federation in the Agriculture, Food and Tourism sector. We have 120 national affiliates “from farm to fork” which are representing 2.6 Mio trade union members in Europe. Since many years we have a very constructive social dialogue with Hotrec, the European Association of the Hotel and Restaurant sector.

You know that trade unions and employers have sometimes different approaches and interests. But we also have strong common interests in a flourishing Tourism sector with successful businesses and sustainable employment. More than 90 % of the enterprises in the H&R sector are small businesses. But they are employing most of the employees in sector. And the tourism sector is one of the very few with rapid growth and a very positive employment perspective. Compared to 331 million arrivals in 2000, EU28 countries received 457 million international tourists in 2014. This is also leading to increased demand for tourist services and new trends in the sector like the sharing economy. This per-to-peer-based sharing of access to goods and services (coordinated through community-based online services) is also referred to as collaborative or C2C economy. The collaborative consumption model is used in online marketplaces such as eBay as well as emerging sectors such as social lending, peer-to-peer accommodation, peer-to-peer travel experiences, peer-to-peer task assignments or travel advising, carsharing or commute-bus sharing. It is not limited to tourism, but tourism has been one of the sectors most impacted.

Two years ago this was not even an item on the agenda of the World Tourism Organisation. Now it becomes a major issue as it is really a mega trend. According to the WTO two-thirds of tourism offers are already from sharing economy versus only one third from traditional travel providers. The term “sharing economy” began to appear in the early 2000s, as new business structures emerged due to the Great Recession. It is not a new concept, but digital revolution brought this to a new level, by facilitating transactions via online platforms which match demand and supply, which allow transactions on a scale not possible before. In 2011, collaborative consumption was named one of TIME Magazine’s 10 ideas that will change the world. The UK Government in its 2015 Budget has set out objectives to improve economic growth including making Britain the “…best place in the world  … to help unlock the potential of the sharing economy…”

The Harvard Business Review argues that “sharing economy” is a misnomer, and that the correct word for this activity is “access economy.” The authors say, “When “sharing” is market-mediated — when a company is an intermediary between consumers who don’t know each other — it is no longer sharing at all. Rather, consumers are paying to access someone else’s goods or services”. This economy is operating in all parts of the tourism sector. Uber and BlablaCar are operating for example in the transport sector, Greeters as a tour guide. Concerning accommodation we talk about 9flats, Homeaway, Wimdu or Airbnb which are renting living space on a daily, or weekly, monthly or even longer basis. I want to focus my contribution on the example of Airbnb. Airbnb means “airbed and breakfast”. Airbnb went online in 2008.

Airbnb says about itself: I quote:”Traditional Hotels are experts as far as services are concerned. They are working with a handbook. We are experts of hospitality which comes from the heart.” “We are democratising the hospitality and we are the real revolutionaries.” “We are not offering an accommodation but a home.” “With Airbnb you travel not to Paris. But you live in Paris.” “Airbnb promote global peace and a better world.”

But ladies and gentlemen, Airbnb is anything else but not a charity organisation. Their “hostpreneur” – how they call the hosts – have to pay a service fee of 6 – 12 % which depends on the booking amount and on top of this another surcharge of 3% for currency conversion. Today they are already offering more than 2 Mio accommodations. More than 60 Mio people have already booked their accommodation through their website, 25 Mio last year only in 191 countries around the world. The earnings of Airbnb run up to nearly 1 Bio in 2015. There are no informations on the fortune of the Airbnb founder available. But the Uber EO Travis Kalanick has an estimated fortune of 5.3 bn $. He now appears in the super rich list of Forbes. Airbnb has been valued at more than 20 Bio €. This places the company ahead of major chains such as Marriott and Starwood in market valuation. Airbnb wants to get listed at the stock exchange in 2016. How competition is reality already today is shown by the example of Spain. In Spain almost 50% of the capacity in urban tourist accommodation is marketed by P2P platforms. In 4 major cities the P2P platforms offers already greatly exceed the capacity offered by the regulated accommodation sector. In many big cities like Berlin, New York, Paris or Barcelona many homes are not available for permanent tenants anymore but only for city tripper. Whole streets are misused because more and more multiple whole units are being rented out at the same time by one single host, essentially operating as a rental agency. And indeed online travel agencies which had been trading with the regulated sector earlier are engaging more and more in P2P platforms. In August 2015 Airbnb made a 1,5 bn $ investment in China in partnership with Chinese investment firms. It actually becomes more and more an attractive field for real estate investors. There is a transition from sharing one’s space to renting it for profit. Commercial suppliers deliver exactly what Airbnb benefits most: complete apartments, all year available. This is exactly what property investors are looking for. So we are not talking about a niche sector any more. We talk about big business. We a talk about new monopolies in a quite decentralised sector with SME. Therefore it does not come as a surprise that Airbnb offers training to its clients , the hosts:

How to become a better entrepreneur?

How can we optimize the pricing and the value?

How can you work with weekend and off season tariffs and

How can you juggle with early booking or last minute discounts?

The slogans of these training seminars of Airbnb are – I quote:

“Money matters” and Make your entry on the website of Airbnb a “cash machine”.

Airbnb’s new target group are now business traveller.What they want to offer is “bleisure”: a combination of business and leisure. They are offering its hosts a new certificate – called “Business Travel Ready” which is including a round a clock check-in. And they are cooperating now with digital lock services which eliminate the personal key handover as host-absent rentals are dominating more and more their business. The “friendship between the guest and the host”, which was the starting point of these platforms, is more and more disappearing. It becomes a normal touristic product.

What do the clients say – the guests as well as the hostpreneurs? You can visit the website – called “airbnbhell”. This website seems to be so successful because Airbnb is deleting critical comments of their customers on their website.

Consumers and consumer organisations are complaining about nearly everything:

  • the quality of the apartments,
  • the prices,
  • opaque fees
  • business rules with more than 30 pages;
  • Irish law and not national law to be applied.
  • Guests are complaining that
  • they did not get what they have paid for and
  • did not get any compensation.
  • there are no contact points in case they need support
  • no responses to complains etc.

The key question for us is: Which are the impacts on the traditional business? These impacts are huge. First, the costs of Airbnb are much lower. The airbnb platform has near zero marginal cost, in that a new room can be incrementally added to the platform with negligible overhead.

Airbnb offers a much wider range of products and services than hotels: Airbnb user can rent anything from an apartment to a yurt. Airbnb can potentially expand supply where ever houses or apartments already exist. They do not have to build new accommodations or to employ new staff. This kind of competition is lowering prices which harm your revenues. Secondly, your hotel businesses are subject to lots of regulations in all countries which comes at higher costs and administrative obligations while the sharing economy does not abide to health and safety standards, consumer protection, liability rules, employee’s rights and protections or fiscal obligations. 3 star hotels in Spain for example have to comply with 244 regulations, similar sharing economy properties with 12 regulations only.

This is a classical case of unfair competition. And this has a huge economical impact. According to studies in the US each 10% increase in Airbnb supply results in 0.35% decrease in monthly hotel room revenue. But Airbnb annual growth rates are nowadays far more than 100%. Other studies report a decrease of 10-15% in certain regions. This has also a huge impact on jobs and the type of jobs. Airbnb does not really need staff as they are more a virtual company. Traditional hotels are a very labour intensive business, Airbnb not at all. You are offering training and apprentiships for hospitality jobs, Airbnb IT, finance and marketing jobs. You are contributing to the social inclusion by offering jobs to young and often unqualified workforce Airbnb does not. You are offering jobs for employees nearly everywhere all over the country, Airbnb just in their headquarters, global IT- and call centers. In a sharing economy risks and responsibilities of the employer are transferred to the employees. A platform like Airbnb does not see itself as employer but just as an intermediary. Employees of the platform provider are not employees but self -employed. They are deprived of their rights and must bear all the risks like accidents and illness and all their  pension- and social security contributions themselves. These are also new challenges for the social security services but also the social partner.

We really fear that the increased offer of accommodation through “sharing economy” platforms might result in

  • more outsourcing and service contracts
  • a decrease of regular employment
  • the creation of informal jobs
  • a new shadow economy

with even more precarious  solo self employed and undeclared work and without any social dialogue between employers and trade unions and without collective labour agreements and participation rights.

Also labour law has also to be applied in the digital economy. And the implementation has to be controlled as well . But social and legal inspections are much more difficult in the sharing economy as in a hotel.

EFFAT and Hotrec launched last year a joint imitative on European level and asked the European Commission to act now quickly. We need particularly practical measures helping and promoting small and medium sized hotels and restaurants to grow and expand.

We need in general a clear and balanced regulatory environment for the Tourism sector in order to minimize distortion of competition between different business models.

With regard to the sharing economy we expect from public authorities fast actions to guarantee the same level playing field: All service providers in hospitality and tourism have to abide by the same legislation and rules with regard to

  • taxation (e.g. corporate tax, income tax, VAT, tourist tax)
  • health and safety requirements and inspections (e.g. fire safety, food safety, hygiene)
  • process of registration, permits and accessibility (e.g. businesses, guests)
  • salaries
  • employment and social legislation
  • consumer protection
  • environmental protection
  • urban planning and housing,
  • proper distinction between residential and commercial properties

In case sharing economy service providers create jobs, they shall be bound by the same obligations with regard to their workers as regular hospitality businesses, e.g. concerning

  • working conditions
  • remuneration and benfits
  • social security
  • health & safety at the workplace
  • collective agreements
  • workers’ rights
  • qualification & training

There cannot be some burdens for some people but not for others. The European Parliament appears broadly in favour of Airbnb-type companies, and called on regulators to encourage their development in Europe. The EU Court of Justice is currently looking into whether Uber is a ‘tech’ platform or a service provider, in a case referred by a Spanish judge. The EU Commission announced an initiative towards sharing economy in March. But I am afraid we cannot expect better regulation but just “more guidance and information on the application of existing rules as a policy response”. But the EU authorities have to be aware:

As long as the sharing economy has not to abide to the same rules this kind of business is destroying much more jobs than they are creating new jobs and this process is actually subsidized by the tax payers.

We have to be realistic: we are not going to get rid of the shared economy. P2P has found its place in the modern traveller’s itinerary. The food and dining and other sectors are rapidly catching on, too. The Liquid Space, which facilitates on-demand work space rentals at major hotel chains has a client roster that includes Marriott, Ritz-Carlton, Renaissance, Hilton and many more. More and more traditional actors in the Tourism sector are already cooperating with these platforms. The sharing economy is not at its ends. It is just at the beginning. It is becoming probably an even stronger competitor in the years to come. But this competition you face with the sharing economy is different from competition with other firms. Yes we need regulations and rules and the same legal level playing field. But you have also to ask yourself as entrepreneur: Can you learn from the experiences of the sharing economy? Can you benefit from it? Can you become in future even better and more competitive as well? And this is not always first of all a question of reducing costs. It is about quality and professionalism, it is about sustainability and hospitality and last but not least it is about new and changing expectations of consumers in a changing world. You have to particularly figure out how to connect what’s going on in the world of technology to the hospitality business.

EFFAT and Hotrec are jointly working on these common challenges since many years. We as trade unions are really prepared to continue this fruitful cooperation in future as well. Trade unions are fighting everywhere for more holidays and days-off and for holiday benefits. The Tourism sector is always benefiting from this successful development.

Ladies and gentlemen,

We cannot save the world. But our Touristic product brings people from different countries and cultures together. They learn to better understand each other and learn that they can even benefit from other cultures.

This is key in times of growing crises, conflicts and nationalism. And I particularly wish you, the Greek Tourism business with your great hospitality that you get successfully through these very tough times in this wonderful country and touristic destination.

Leave A Comment

Leave a Reply

Your email address will not be published. Required fields are marked *