Disrupting disruption
Two recent court rulings on short-term condominium rentals in Hua Hin via Airbnb should not be seen as the beginning of the end of online homesharing platforms. The cases rather stand as a reminder that Thailand’s existing laws cannot catch up with this and other innovative business models triggered by the fast-changing internet. Instead of cracking down on individuals who just want a small share of the economy, we should amend or invent laws and regulations to accommodate and regulate these evolving business models.
Two condo owners in the resort town of Hua Hin have been handed fines for renting their rooms out to Thai and foreign customers on a daily or weekly basis. This is because the 2004 Hotel Act requires that one must obtain a hotel business licence to do that. Without the licence, only rentals of 30 days or more would be legal.
Before the recent debate over the legality of Airbnb bookings, the Thai public had witnessed endless wrangles over the “illegal operation” of ride-hailing services such as Uber and GrabTaxi.
While the home-sharing model upsets the hotel industry, the ride-sharing platforms have angered traditional taxi operators and their drivers.
It is understandable why the established businesses have cried foul about the arrival and increasing popularity of these services. They are losing some of their revenue to both platform providers and individuals who rent out their place to visitors or drive personal car to service passengers.
But allowing people to make an earning out of their home or car can help them get a share of the thriving economy, even if it is a small share. It also gives customers a wider range of services to choose from.
These sharing platforms do not have to remain illegal or be operated in the grey area of business, as they have been. Rather, we need proper regulatory frameworks that would allow these business to operate and pay taxes. Meanwhile, there should be certain restrictions to, for example, ensure customer protection or, in the case of the home-sharing model, prevent real estate speculation.
It is true that online home-sharing platforms, such as Airbnb, Homelidays and Abritel, have faced attacks or mounting crackdowns by authorities in many cities around the world — due to outdated regulations that bar short-term rentals or unlicenced lodging businesses. Many cities also require holiday accommodation services to pay tax.
Nonetheless, with the sharing economy in mind, a number of countries and cities have permitted short-term home-sharing services as long as they have registered with local authorities, follow the restrictions on the maximum duration a person can rent out their place for, and the maximum number of guests.
In France, for example, hosts have to register with the local authority and display a registration number of their listing on the website. The maximum duration is 120 days a year and the maximum number of guests per stay is limited to four.
Amsterdam has similar rules but will cut the maximum duration from 60 to 30 days a year in a bid to thin out tourists.
This type of service is illegal in Thailand because the Hotel Act is outdated, not because it is a bad thing.
It is the same for the ride-hailing model, which is not legally allowed to operate because the 1979 Motor Vehicle Act bars unregistered cars from providing such a service.
If the government is serious about supporting innovation as part of its Thailand 4.0 economic agenda, it should make these new business platforms legal.
Without a doubt, proper regulations are needed. Having service providers registered with local authorities can ensure both their safety and that of their customers, while enabling tax collection.
We don’t have to be hostile to the disruptive innovation platforms that can help diversify the economy. Our laws just need to be able to catch up with them.