Daily room rental via mobile phone applications offers more bang for the buck for travellers, especially in pricey and tourist-oriented locations, but hosts are facing a global crackdown by government authorities and hotel operators denouncing such short-term lodging as illegal.
Airbnb's current internet listing claims it has more than 61,000 rooms, suites and homes ready for short-term occupancy but it faces a possible blanket ban.Despite the unlawful status in many countries, San Francisco-based Airbnb has become an increasingly popular choice for travellers looking to book sweet spots for a reasonable price to rest.
But a recent Thai court ruling has increased scrutiny for Airbnb and its hosts.
People who rent out their rooms via Airbnb on a daily or weekly basis are acting illegally, according to a recent court ruling handed down to the Wan Vayla Condo in Hua Hin, Prachuap Khiri Khan.
The court ruled that people renting out their rooms have not obtained a licence to run a hotel business under the 2004 Hotel Act. Only rentals of 30 days or more would be legal.
If enforced nationwide, the ruling could be the beginning of the end for companies like Airbnb in Thailand that have consistently said their business is legal here.
Call for action
Similar to booming ride-sharing apps like Grab and Uber, the peer-to-peer business platform has shaken up the hospitality business. But the argument against Airbnb goes deeper, with some saying the house-sharing app not only destabilises the hotel industry, but also encourages landlords to prefer short-term rents rather than long-term contracts, worsening the quality of life among property residents.
Arunsri Kittithakorn, operations director of Flat Monthly Co Ltd, an operator of an online reservation platform for rooms and residences, urged the government to take action on illegal businesses in Thailand such as Airbnb and Uber.
Ms Arunsri also called on the government to discuss the matter with the private sector as soon as possible to seek ways to protect legal or registered operators and put illegal operators out of business.
"If the government allows illegal businesses to remain in the market, it will affect the hotel business because of lost customers to non-registered hotels," she said. "Moreover, it could be troublesome for other tenants living in the same building."
If the government cracks down on illegal hotel operators, she said, it will benefit both real estate and hotel businesses because tourists will return to stay at registered hotels.
Michael Hogg, chief executive of Flat Monthly, said now is a turning point for illegal accommodations and platforms promoting and facilitating such activities.
"It is not surprising the government is cracking down on booking platforms like Airbnb, as it was really just a matter of time," Mr Hogg said. "We recognised that eventually there would be a clampdown."
Flat Monthly was formed late last year with a focus on offering monthly rental accommodation solutions through an online platform, thus complying with the law.
But increasing tourist arrivals, short-term business assignments, medical tourism and long-stay tourism are driving demand for condo-style accommodation in Thailand. Unfortunately, the domestic market has not been able to provide an efficient and legal solution to meet rising demand, Mr Hogg said.
Airbnb's current internet listing claims it has more than 61,000 rooms, suites and homes ready for short-term occupancy but it faces a possible blanket ban.
Flat Monthly estimates that there are 60,000 vacant condominiums in Bangkok alone, with landlords facing a dilemma as to what to do. They cannot find long-term tenants because of oversupply, but they also cannot sell on a nightly basis because it is illegal.
It is a lengthy process to educate landlords and investors about the need to look for alternative solutions to take advantage of legal technological platforms and digital marketing, Mr Hogg said.
The rental real estate market is extremely fragmented and unprofessionally managed, he said, making the experience a headache for both landlords and tenants.
Many overseas investors have purchased properties assuming a steady income stream from rentals, but few have found this to be a reality, he said.
Often properties are sold with the expectation that investors can make a 5-7% yield. However, investors fail to realise that yield is only achieved when the property is occupied, Mr Hogg said.
In most cases, condominiums remain empty for years because of oversupply and poor sales and marketing. The real yield is actually 0%.
The supply glut, the underperforming real estate agent market and a lack of marketing channels have left many foreign and local investors in a desperate situation.
"What we hope is Flat Monthly can rescue these investments for the owners and provide consistent 6-8% yields on their properties, which is legal," Mr Hogg said.
Advocates for Airbnb
Despite dissent against Airbnb, there is a considerable number of advocates for the company, including in Thailand.
Thai Airbnb hosted more than 1.2 million guest arrivals between February 2017 and 2018, earning 4 billion baht as a result.
Mich Goh, Airbnb's head of public policy for Southeast Asia, said the Thai host community earned a combined US$119 million in supplemental income for the period. Ms Goh said the 1.2 million guests represent 66% year-on-year growth in arrivals.
She attributed the growth to the increasing acceptance of the hospitality platform among Thais as an opportunity to earn extra income and welcome guests from around the world.
"For those looking to save money, Airbnb allows you to stay in less tourist-driven areas, where major hotel branches will not go," said a Mexican expat living in Bangkok identified as Jesus. "For example, instead of staying in Manhattan you can stay in the Bronx or Brooklyn, where you have access to cheaper food and entertainment options.
"Airbnb is not necessarily an inferior option. Having a full kitchen and access to other areas of the house, for example, are huge perks, especially when travelling with family."
Airbnb is also a good bargain for those looking to experience the "feel" of the cities they are visiting.
"In the past, I shared free meals with hosts in Indonesia and had deep 3am conversations with a young couple sharing their home in Seattle," Jesus said.
Lek, a Thai journalist, also prefers Airbnb.
"Instead of staying in a tiny and soulless hotel room, I can live in a fully furnished house or apartment with a variety of facilities to keep our family busy," said Lek, who used Airbnb in Britain. "Airbnb helps me feel more at home, like I actually belong in a foreign city.
"My family would rather be in a cool neighbourhood with bigger rooms, bigger facilities, a kitchen and laundry that makes me feel at home. I can have a 'night in' with some takeaway dinner and the option to mix it up with a homemade meal or my favourite type of eggs and breakfast in the morning."
Lek said Airbnb offers the experience of a local lifestyle, preferring to take a stroll around a little neighbourhood, shop where the locals shop, eat where the locals eat and then return to the comfort of home.
Seeking solutions
The Hotel Act defines a hotel as a place established for business purposes to provide temporary residence for pay, but according to Section 4 it excludes places rented out on a monthly basis.
This is good news for condo owners, as it means they can rent out their place on a monthly basis without worrying about a hotel licence, according to Juslaws & Consult.
The Hotel Act might still apply to condo owners who rent out on a daily basis, as Airbnb has enabled any condo owner to operate his own small "hotel", the firm said.
Weerasak Kowsurat, the tourism and sports minister, said Japan was the first country to let homeowners legally rent out their rooms on an Airbnb platform for about six months a year.
"Japan is so brave to make that decision," he said. "Thailand should keep an eye on Japan as a case study."
Would-be renters will have to register their lodgings with the authorities, and the new law limits total overnight stays to 180 days per year. The new legislation also allows local authorities to impose their own restrictions.
For Thailand, there are some limitations in the early stages, such as a lack of information about accommodation and non-registered hotels in the market. There is also insufficient information on how many properties are being controlled by foreigners.
Though the Thai government recently allowed individual residences with no more than four rooms to operate as hotels, limiting the number of guests to under 20, no one has come forward to notify the authorities because of tax concerns, Mr Weerasak said. These hosts are also not required to have hotel licences, even though they need to be approved by the authorities.
Home-sharing business can help property owners earn more income, but existing hosts should not violate the law, he said.
"Those renting out their residences should consider the safety and privacy of other tenants," Mr Weerasak said. "More importantly, it is about fairness to taxpayers and the government. Hosts also need to consider fairness for registered online travel agents."
He believes there should be a public hearing to seek a proper solution for the entire hotel industry.
Uthai Uthaisangsuk, chief operating officer of SET-listed developer Sansiri Plc, developer of many condominiums in Bangkok and major tourist destinations, said there should be laws and regulations to control home-sharing businesses like Airbnb.
"Current rules cannot control the number of Airbnb rooms, which are mushrooming," Mr Uthai said. "Instead of wasting time trying to crack down on it, the government should make the practice legal.
"If we make it legal, home-sharing can be controlled and the government can gain tax revenue from this business."
He said home-sharing businesses like Airbnb have become a problem at condominiums, as other condo owners feel unsafe when they stumble upon various strangers coming in and out of a complex.
"At some condominiums, both Airbnb and non-Airbnb room owners can negotiate the rules," Mr Uthai said. "Guests are required to register with a juristic person, while Airbnb room owners need to pay higher common area fees than non-Airbnb units."
Airbnb says there are over 61,400 listings in Thailand and the median host income is 67,000 baht annually.