6th June 2018

– Richard Voisey, Nwes Business Consultant

Whilst some markets decline, others are launched, and others mature and grow significantly. One successful launch kicked off in 2008 in San Francisco, USA to become Airbnb.

Idea

Shortly after moving to San Francisco in October 2007, roommates and former schoolmates Brian Chesky and Joe Gebbia could not afford the rent for their loft apartment. The men came up with the simple idea of putting an air mattress in their living room and turning it into a bed and breakfast.

Growth

Initially set out to make few bucks, the business now operates an online marketplace and hospitality service for people to lease or rent short-term lodging including holiday cottages, apartments, homestays, hostel beds or hotel rooms. From its humble beginnings, the company now has over 4 million lodging listings in 65,000 cities and 191 countries, and has facilitated over 260 million check-ins.  

Many people in the UK have taken the opportunity to build thriving businesses and increase income opportunities through the Airbnb marketing tool.

Implications

Governments around the world have been watching the business develop closely to monitor consequential issues, such the image on the traditional accommodation markets, health and safety implications and the collection of taxes.

Case Study

Singapore is one such country. They have adapted a law under the state’s new rules, which state that private homes can only be rented to a minimum of three consecutive months.

A Singapore court recently fined two Airbnb hosts a total of S$60,000 (£32,540) each for unauthorised short-term letting in the first such case under the new rules. The two men had pleaded guilty to letting four flats in a condominium for less than six months without permission from the Urban Redevelopment Authority (URA).

Prosecutors sought fines of S$20,000 per charge for a total of S$80,000 for each of the two defendants. Defense lawyers sought fines of S$5,000 per charge. Judge Kenneth Choo fined the two hosts S$15,000 per charge each. He said the fines would serve as a signal to deter others from pursuing such business to make a quick profit.

Private homes in Singapore are subject to a minimum rental period of three consecutive months, while for public housing, home to about 80 per cent of Singapore’s residents, it is six months.

Research

When starting a new business or launching a new produce or service, it’s always worth fully researching the legal implications in place and reviewing potential or impending rule changes that could affect the business.

Tips  

  • Understand the legal requirements for the business undertaking, avoid naivety.
  • Read hard copy and/or trade publications to monitor topical news.
  • Join trade associations who often lobby political platforms on behalf of the industry.
  • Read the business press.
  • Network with people with your industry and with other professionals.

 

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