By Lambros Karageorgos
[email protected]
The head of Europe hotel & restaurant/café association (Hotrec), Susanne Kraus-Winkler emphasized this week that the share economy in Europe’s tourism is beneficial, although it cannot continue to function without rules or unfairly compete with the traditional hotel sector.
In an interview with “N”, Kraus Winkler, one of the founders of the Loisium Wine & Spa Resort Hotel Group, called for measures by national governments in the EU in order to allow competition to flourish.
In a direct intervention over the exponentially growing phenomenon of online bookings of private dwellings and payment over the Internet – as characterized by the now widely popular Airbnb – she called for an immediate legalization of such activity.
Kraus Winkler said clear terms and regulations (duration of the stay, type of dwelling etc) should govern this emerging sector of Internet application-fueled individual-to-individual transaction.
“There cannot be two parallel economies, an officially organized one and an unofficial and unregulated one. The first is an economic sector that contributes 126 billion euros to public coffers in 2013 from the hospitality industry, for instance, and the other doesn’t pay taxes,” she added.
Along those lines, she praised a recent initiative by the Greek government, in cooperation with Airbnb, to create a register for short-term leasing of private lodgings, similar to what New York City recently proposed.
She also termed Greece as an attractive investment destination in the hotel sector.
Hotrec is the umbrella association of national trade associations representing the hotels, restaurants, cafés and similar establishments in Europe.
1. What is the Hotrec view, about sharing economy in the tourism industry? Does a single regulatory model response from all EU countries can be effective?
The new business models of the now so called ”collaborative” economy, which are occurring in the tourism industry all over the world comprise 2 major aspects, which we have to focus on. One is that they of course also contribute to the diversity of the accommodation offer, may respond to unusual peaks of demand related to specific events, and generate additional tourism flows contributing to the success of tourist destinations. But the other aspect is, that those new business models do not comply with the same rules than hospitality businesses have to from a regulatory and legal perspective, e.g. paying taxes, fulfilling the standards of consumer protection and job creation, etc. and that we need to legalise the situation to ensure both a level playing field and fair competition.
One should recognize that benefits still need to be assessed starting with transparent information such as statistics. Based on Eurostat, there were 13.6 million hotel bed places in Europe in 2014 (+4.7% vis a vis 2012) versus 7.2 million for holiday and short term rental (+4.7% as well), while the European holiday home Association claims 20 million. It could not be considered that 13 million bed places’ growth could occur in less than 2 years nor that 13 million bed places would all be illegal, however, authorities must set the rules and platforms make their homework, such as setting up a simple registration of activity which will solve most of the current problems.
We need to reach a clear definition with the differentiation of business activities carried out on a regular basis versus occasional activities. We consider this distinction essential to set a fair playing field and therefore need to define criteria to differentiate one from the other, such as thresholds (60 days per year) or type of occupancy (full homes or 1 room). Indeed the 1.6 million micro-sized hospitality businesses (often family run businesses) are comparable to the collaborative type of permanent activities (both accommodation and meal sharing). We should also remember that the seasonality of our sector makes it as well for part of it not permanent. Consequently, there cannot be two parallel economies, one formal regulated and one informal not regulated; one which contributes to treasuries (e.g. 126 billion EUR in 2013 for the hospitality industry) and one which would not, one with a sophisticated system of consumer protection to settle things when something goes wrong and one not, and finally one which creates jobs and one which may foster undeclared work and the black economy, due to the lack of rules.
To conclude, I would like to praise the work of Greece and in particular of the city of Athens in trying to regulate the market. Indeed, latest reports suggest that Airbnb is putting forward the idea of a register for short-term rentals to the Greek authorities as recently proposed (although too lately) in New York. We would consider this change as a major achievement.
2. Despite the increase of arrivals in Greece, there is a serious concern that touristic revenues will decrease dramatically, following the trend that has already been appeared in many southern European countries. Do you believe that this decrease is due to the Eurozone crisis and the financial uncertainty of EU population?
Destinations around the world welcomed 956 million international tourists between January and September 2016, according to the latest UNWTO World Tourism Barometer, a 4% increase.
In Europe, international arrivals grew by 2% level between January and September 2016, with solid growth in most destinations. Nonetheless, double-digit increases in major destinations such as Spain, Hungary, Portugal and Ireland were offset by feeble results in France, Belgium and Turkey as commented by UNWTO. As a consequence, Northern Europe grew by 6% and Central and Eastern Europe by 5% while results were weaker in Western Europe (-1%) and Southern Mediterranean Europe (+0%).
While most destinations report encouraging results, others continue to struggle with the impact of the still recent negative events; tourism being very sensitive to risks, both actual and perceived. It is therefore essential to build trust and manage reputation of countries at risk. Greece is part of those although remaining one of Europe’s most attractive destinations.
3. Is there any feedback/ data yet concerning the performance in European hotels reservations for the summer season of 2016?
According to our partner MKG Hospitality, since the beginning of the year the global trend in Europe holds its course toward stability.
August 2016 strengthens the trend established in recent months, but with a few developments nonetheless. Compared to August 2015, two countries post a RevPAR showing double-digit growth: Spain, which has been in the lead with a RevPAR up 14.0%, and Poland (+12.1%). Greece (+6.0%) and Portugal (+8.8%) have also had a good summer season. This dynamic may be explained particularly by the improvement in their internal economic context and by the shift of some clientele from destinations affected by the terrorist attacks. The British hotel sector appears to support the effects of Brexit without difficulty (RevPAR:+3.4%), with the drop in the pound sterling being favourable to leisure clientele (predominant in August) who come for shopping.
4. According to you, which are the main factors that affect tourism in Europe? (both from third countries and among EU countries).
Tourism in Europe is doing well, except the countries I mentioned before and we must be proud of our destinations and our tourism infrastructures which are envied by the rest of the world, although new investments are needed. However, we cannot deny that there is an increased competition around the world and that we must be innovative and develop new tourism products to attract tourists from other regions of the world and in particular from China, Japan, Brazil and India. For this, governments have to understand that lowering VAT is key to increase competitiveness, foster job creation and invest in the necessary infrastructures to develop a robust and vivid tourism industry in Europe. Equally important is to reduce costs on labor to keep recruiting working force and invest in skilling the workforce, together with retaining personnel and fostering career development. In addition, we are calling for the ban of parity clauses when online distribution is concerned and for a level playing field vis a vis the collaborative economy when traders are concerned. With a contribution of 126 billion EUR to treasuries, 1.8 million SMEs and of 10 million jobs, the EU Institutions and national governments should understand that the hospitality industry is an essential component of the competitiveness of Europe. However, as said above, while most destinations report encouraging results, others continue to struggle with the impact of the still recent negative events; tourism being very sensitive to risks, both actual and perceived. It is therefore essential to build trust and manage reputation of countries at risk.
5. In addition, which are the main challenges that hotel industry has to confront?
Beyond the challenges already mentioned above, the industry must address skills mismatches and forecast the skills needs of the tourism sector to solve the problem of labour shortage in several parts of the hospitality sector. Besides that, digitalization is one of the major drivers of change in the tourism industry, engaging SMEs in all kind of Internet Communication Technology is therefore a key objective together with promoting the attractiveness of the sector to help fill in the gap and foster jobs creation and growth.
6. How much the “online booking booming effect” affects the hotel industry?
Digitalization disrupted and revolutionized the distribution models in the hotel industry during the last 10 years and is still a matter of constant big change. The recent European online distribution study completed by HOTREC well demonstrates the increasing dependency of hoteliers on online platforms. The share of booking via OTAs was gaining 3% to nearly 23%, the decrease of direct booking by 4% and the nearly zero competitive effect between platforms of the narrow parity clauses promoted by Booking.com show to the wrong direction.
Some countries like Germany, France or Austria already reacted and banned those unfair parity clauses by law or competition authority decisions. We hope that the studies conducted by the national competition authorities in 10 EU countries will result in the ban of parity clauses and therefore boost the whole hotel distribution in all European countries.
Nevertheless, HOTREC started a “Book Direct” campaign, to support their member associations and the hotels all over Europe to find their own way through today’s digitalized booking world challenges.
7. Do you think that Greek hotel market can be considered as an attractive sector for investment?
Indeed, Greece remains one of the real attractive destinations in Europe and its hospitality network is remarkable. The beauty of its historic sites, the high quality of its touristic services and infrastructures and extraordinary islands create a sustainable touristic demand. Today there are plenty of opportunity and big payouts for those hotel products, which are bringing together the right tech and the right user experience for the right market segments especially, when they are at interesting locations. They are creating good feasible return on investments all over Europe as well as in Greece and therefore define Greece for sure a valuable destination for investors.
