MPs call for "level playing field", and more responsibility from "Sharing Economy" platforms

 We welcome the publication today (18 July 2018) of a report on the so-called “Sharing Economy” by the All-Party Parliamentary Group (APPG) on Tourism, Chaired by Gordon Marsden MP (left) . The Report calls for “a level playing-field for all tourism businesses”, and calls for Airbnb-type properties and similar small B&Bs to be treated the same way. 

It also calls for platforms to "ensure that hosts have, as a minimum, undertaken a fire safety assessment, a health and safety assessment and, where relevant, have Gas Safe certification. Accommodation providers should not be allowed to register properties without proof of these assessments". 

These recommendations echo what the Bed & Breakfast Association has been calling for since 2012, and our own evidence to the APPG given in February.

The APPG notes the scale of the issue, saying “PWC estimate that sharing economy businesses in the accommodation sector generated £3bn in sales during 2015 and that this level of revenue could rise to nearly £30bn by 2025 with around 50% of all rentals undertaken in the UK being conducted by peer-to-peer networks”. (Airbnb alone already has well over 168,000 listings in the UK, compared to 25,000 or so B&Bs.)

A key recommendation in the APPG Report is for the Government to consult on a “low-cost statutory registration scheme for tourism accommodation businesses”. In the past, the B&B Association has opposed registration schemes because of the added red tape and cost, but we are now prepared to consult constructively on the principle, because if a simple and low cost scheme could be devised (and the devil is, as ever, in the detail), the burden of registration could well be worth it for the overall benefits it would bring to our members in leveling the playing-field and reducing unfair and illegal competition.  It would also of course help to protect the public, by bringing the safety checks on Airbnb-type premises up to closer to the level of those on our members.

(Every business serving breakfasts to paying guests already has to comply with a national registration scheme in any case, as they have a duty to register as a “food business”.)

The Report emphasizes the importance of “Delivering a level playing field for all tourism businesses”, and says “considerable concerns have been expressed that hosts providing accommodation via sharing economy platforms do not comply with health and safety regulations”

The Report says: “All visitors are entitled to a minimum level of safety, regardless of the type of accommodation they use and method by which it is booked. It is responsibility of all agents, regardless of whether they are sharing economy platforms or traditional booking agencies, to ensure that the products they supply meet these minimum standards. We have found that the systems in place for informing hosts of their legal responsibilities are inadequate, to the extent that some even allow hosts to register properties if they confirm that they have no fire safety equipment installed.”

“The sharing economy has argued that regulatory requirements should be proportionately less for businesses listed on their platforms. The APPG for Tourism agrees with the principle of proportionality, but supports the Government’s view that existing legislation, especially that related to fire safety, is already based on proportionality. We also believe that there is no valid basis to contend that B&B accommodation provided via a sharing platform warrants different regulatory treatment to the same B&B accommodation not listed on sharing economy websites. Further, there is significant evidence to suggest that a large and growing number “professional” operators use sharing platforms to list properties, thereby making any attempt at categorisation a moot point.

“While finding that the legislation that applies to accommodation businesses is fit for purpose, we have identified significant issues regarding enforcement. Most sharing economy platforms do not reveal the address of the property until a booking is made. This, combined with sharing economy companies refusing to provide property details on the basis of DATA Protection and significant cuts to councils expenditure on enforcement, means that few, if any, sharing economy properties are ever inspected.

“The APPG for Tourism recommends that the Culture Secretary launch a consultation on using his powers under the Development of Tourism Act 1969 to establish a low-cost statutory registration scheme for tourism accommodation businesses. Such a scheme could be devolved to councils and would help resolve the main issues identified by this Inquiry. Namely, it would:

• Help ensure that all businesses complied with regulations
• Provide enforcement officers with a database of tourism accommodation properties so that they could target their resources to those properties they deem to be the highest risk
• Provide councils with greater ability to manage tourism in their area
• Provide HMRC with a means by which to ensure that all businesses pay the appropriate level of taxation.

“The APPG also recommends that the Government provide Local Authorities with powers to set rules regarding the use of residential properties for Tourism Accommodation so that local solutions can be developed that balance the benefits generated by sharing economy accommodation with needs of local residents. These powers include:

• The ability to set the maximum number of days per annum that a property can be used for tourism accommodation
• The ability to require the owner of the property to be present if a property is used for tourism accommodation”

Other recommendations by the APPG:

• “That the Government urgently assess whether local enforcement agencies have adequate resources to carry out safety inspections of tourism accommodation businesses. This has significant implications for large towns and cities were the provision of sharing economy accommodation in high rises and houses in multiple occupation is becoming more prevalent.
• That sharing economy companies take greater responsibility for informing hosts using their platforms of their statutory obligations, especially in relation to health and safety and fire safety.
• That sharing economy accreditation schemes such as those developed between Airbnb and Quality in Tourism, are rolled-out across all properties on all sharing economy platforms.
• That sharing economy companies develop and implement procedures that ensure that hosts have, as a minimum, undertaken a fire safety assessment, a health and safety assessment and, where relevant, have Gas Safe certification. Accommodation providers should not be allowed to register properties without proof of these assessments.
• That Sharing Economy companies explain to hosts before they register that having paid guests staying in their property will affect their home and contents insurance, mortgage, leasehold agreement and that they should purchase public liability insurance.
• That the sharing economy industry work with the insurance sector to help develop domestic Home and Contents Insurance products that are not invalidated if owners have paying guests for a set number of days each year.
• That the public liability insurance provided by sharing economy companies is of the same standard, with the same levels of cover, as commercial products.
• That far more attention needs to be given, and more research undertaken, as to the experiences of, and impact on, those living in close proximity, either as physical neighbours, or in the neighbourhoods of, properties being used regularly by sharing economy businesses.”

The Bed & Breakfast Association welcomes the report, and calls on the Government to use its powers to take action on areas highlighted in the report, including especially:

• Requiring peer-to-peer platforms to fully, properly and explicitly inform their “hosts” of their legal responsibilities;
• Requiring peer-to-peer platforms to refuse to list properties that do not fully comply with the law;
• Requiring peer-to-peer platforms to identify premises owners to statutory safety regulators (eg Fire & Rescue Authorities) on request (without demanding a Court Order), so the regulators can perform their duty to protect the public.

We also stand ready to play a constructive and positive role in consultation with the Government about a low-cost statutory registration scheme for tourism businesses.

For our part, we are also open to following the Report’s recommendation to “find constructive ways of working together” with sharing economy businesses “to generate new opportunities and enhance customer experiences”.  We are happy to co-operate, innovate and find ways of developing the UK’s hospitality offer (currently, as the APPG notes, worth 7.1% of  UK GDP and providing 9.6% of UK jobs) – but always in ways underpinned by trust and responsibility.

European Commission finds Airbnb's terms & condistions illegal, and orders it to change them

The European Commission today announced that Airbnb has been found in breach of EU consumer law on many counts – primarily for lack of price transparency as well as other unfair commercial practices. The decision will require changes to Airbnb’s business model and its "unfair" terms and conditions.

This is a very significant step, as such an action is rare and involves coordination of all 28 EU Member States (and Norway and Iceland) via what is called the Consumer Protection Cooperation Network (CPCN).
 
To comply with EU law, Airbnb will now have to denote on their site whether the ‘host’ is a commercial operator or an individual, present final prices upfront (ie inclusive of taxes and additional service fees etc), and change their host’s ability to cancel services at the last minute without having to indemnify the consumer. The EU's demands also free up the consumer to sue a host who has caused them harm, thus increasing the responsibility of the host (which has up to now been limited by Airbnb's terms and conditions). The full list of unlawful practices they engage in are extensive and are detailed officially here.

Airbnb now has until August to amend its business practices to ensure compliance, or potentially face a fine.
 
The European Commissioner for Justice and Consumers said: "More and more consumers book their holiday accommodation online and this sector has brought many new opportunities to holidaymakers. But popularity cannot be an excuse for not complying with EU consumer rules. Consumers must easily understand what for and how much they are expected to pay for the services, and have fair rules - e.g. on cancellation of the accommodation by the owner. I expect Airbnb to follow up swiftly with the right solutions.”

David Weston of the Bed & Breakfast Association said: "We are delighted that the European Commission has taken such strong and bold action today to protect EU consumers from Airbnb's unfair contract terms, its misleading pricing, and its illegal denial of their hosts' responsibility for their guests' safety. This will help move slightly closer to levelling the playing-field with B&Bs and small hotels".

Toprooms.com reduces commission to 5% to attract B&Bs and independent hotels

As part of their on-going support for the B&B sector, booking software supplier eviivo are reducing the commission on their exclusive toprooms.com website from 15% to just 5%.

Unlike regular booking sites, toprooms.com doesn’t feature big corporate hotels and budget chains.  Instead it lists thousands of independent hotels, B&Bs, pubs with rooms, cottages and apartments across the UK, making it the perfect website for travellers looking to book authentic and characterful properties with a story to tell.

From now, any booking on the site will attract the new, lower rate, which is intended to help properties make the most of what is looking to be a fine summer season.  The 5% commission is reinvested in its entirety to advertise the site and generate bookings for the community of eviivo users.

A further change will also see eviivo users able to take advantage of bookings via the eviivo Co-op channel, entirely commission free. This unique referral service allows properties in the eviivo community to receive referrals from other eviivo properties in their area when they are full, and vice-versa.

To find out more about the eviivo community or to book a demo visit eviivo.com or call 0800 422 0088

 

CMA Announce “Enforcement Action” against Online Travel Agencies

Competition regulator acts after B&B Association’s five formal complaints last July

 

The CMA today launched “enforcement action against a number of hotel booking sites” that it believes “may be breaking consumer protection law”.

As part of its ongoing investigation launched last October, the Competition and Markets Authority (CMA) has identified widespread concerns, including:

Search results: how hotels are ranked,

for example to what extent search results are influenced by factors that may not be relevant to the customer’s requirements, such as the amount of commission a hotel pays the site.

Pressure selling: whether claims about how many people are looking at the same room, how many rooms may be left, or how long

a price is available, create a false impression of room availability or rush customers into making a booking decision.

      

Discount claims: whether the discount claims made on sites offer a fair comparison for customers. For example, the claim could

be based on a higher price that was only available for a brief period or not relevant to the customer’s search criteria, such as comparing a higher weekend room rate with the weekday rate for which the customer has searched.

  

Hidden charges: the extent to which sites include all costs in the price they first show customers or whether people are later

faced with unexpected fees, such as taxes or booking fees.

The CMA will be requiring the sites to take action to address its concerns, where they are believed to be breaking consumer protection law. It can either secure legally binding commitments from those involved to change their business practices or, if necessary, take them to court.

Andrea Coscelli, Chief Executive of the CMA, said: 
“Booking sites can make it so much easier to choose your holiday, but only if people are able to trust them. Holidaymakers must feel sure they’re getting the deal they expected, whether that’s securing the discount promised or receiving reliable information about availability of rooms. It’s also important that no one feels pressured by misleading statements into making a booking.

“That’s why we’re now demanding that sites think again about how they’re presenting information to their customers and make sure they’re complying with the law. Our next step is to take any necessary action – including through the courts if needed – to ensure people get a fair deal.”

The CMA’s investigation was launched in October, and covers concerns raised by the Bed & Breakfast Association to the CMA last July and in a meeting with CMA officials in September.

David Weston, Chairman of the B&B Association, says: “The Bed & Breakfast Association are absolutely delighted that the UK competition regulator, the CMA, has today announced “enforcement action” against Online Travel Agencies (OTAs) that it believes are breaking consumer protection law. The areas covered are those we raised in our five formal complaints to the CMA last July - ie false “discounts”, false availability claims and other “pressure selling” techniques, manipulated search rankings influenced by payments to the OTAs, and false “Best Price” guarantees. The CMA’s very welcome action will help move the balance of power a little from these global tech giants – who are after all only intermediaries - back towards the small businesses that actually own the accommodation booked, and provide the hospitality.”

In addition to its enforcement activity, the CMA has sent warning letters to a range of sites, demanding they review their terms and practices to make sure they are fair and comply with consumer protection law.

It is also referring a number of concerns around online hotel booking sites’ price guarantees and other price promises to the Advertising Standards Authority (ASA). The CMA has asked the ASA to consider whether statements like ‘best price guarantee’ or ‘lowest price’ mislead customers and what conditions must be met for companies to make such claims.

The CMA continues to assess the evidence it has gathered on the practices of other online hotel booking sites and could launch further enforcement cases in due course.

Anyone wishing to provide further evidence on the issues being considered can do so at: https://www.gov.uk/cma-cases/online-hotel-booking

EU proposes new rules to combat the "unfair" practices of OTAs and search engines

The European Commission has this month proposed new rules to combat “unfair trading practices” by online platforms including online travel agents (OTAs) and search engines including Google.

The Commission said hotels, B&Bs and guest houses would be among those to benefit from the rules aimed at creating “a fair, predictable, sustainable and trusted business environment” online.

The proposals provide for “increased transparency”, the introduction of dispute resolution schemes – including a right for trade associations to bring court proceedings – and the establishment of an EU body to monitor the effectiveness of the measures.

“Providers of online intermediation” including Booking.com, Expedia, Google, Facebook and others will be required to publish policies detailing:

• “How they treat their own goods and services compared to those used by professional users"; and
• “How they use contract clauses to demand the most-favourable range or price of products and services.”

They will also be required to “set out the general criteria that determine how goods and services are ranked in search results”. (The B&B Association gave evidence to the EU and CMA of how OTA search rankings of B&Bs and hotels are misleading and manipulated.)

They would also have to give “reasonable minimum notice” of changes to terms and conditions. This proposal would prevent abuses such as the minimal notice recently given by one big OTA to B&Bs and hotels about its change of treatment (in the OTA's favour) of commission on cancellations, for instance.

Explaining the new rules, the Commission said: “The current position of online platforms as mediators of business - customer relationships allows them to engage in unfair trading practices that can cause significant economic harm to the businesses that use them.”

Elżbieta Bieńkowska, EU commissioner for the internal market, industry, entrepreneurship and SMEs, said: “[This] approach will give EU businesses the transparency and redress mechanisms that will help them embrace the digital economy.”

Mariya Gabriel, commissioner for the digital economy and society, added: “Platforms and search engines are important channels for European businesses to reach consumers, but we must make sure they are not abusing their power.”

David Weston, chairman of the Bed & Breakfast Association, said: "Although we have not yet been able to study the small print of these very detailed EU proposals, we are delighted that they do seem to be going in the right direction.

"Having held a number of meetings with MEPs and officials in Brussels over the last two years to explain our members' concerns, we are pleased to see that the Commission seem to have understood that the online platforms have been abusing their market dominance, and that the balance or power needs to be redressed in favour of small businesses, and in favour of honesty to the consumer too."

We will keep members informed of the progress of these draft regulations, which the Business, Enterprise, Innovation & Skills department (BEIS) told us last Friday are expected to be passed into UK law (after any revisions made during the consultation process) by the time the UK leaves the EU.

"The growth in short-term let market raises fire concerns" says BBC as Radio 5 Live investigates Airbnb

The growth of home-sharing rental properties is causing fire safety concerns, the National Fire Chiefs Council (NFCC) has told BBC Radio 5 live Investigates as part of a new BBC investigation into the lack of enforcement of rules on properties on Airbnb and similar websites.

Tourism industry leaders told the BBC that a "Grenfell-style incident" could happen unless inspections were enforced. The all-party tourism group of MPs has called for all properties used for short-term lets to be registered.

An NFCC spokesperson said fire and rescue services are "not aware" of how many short-term rental properties are operating in local areas, making it "very difficult" to assess potential risk.

They added: "Without this knowledge of properties essentially operating as a bed and breakfast or hotel, it is almost impossible to carry out an inspection or give owners relevant advice to ensure their buildings are safe."

Fire safety law applies to all properties in which people are paying to stay - even one room, for one night. The rules are enforced by visits to hotels and B&Bs, but fire authorities are not visiting, checking or inspecting similar properties on sites like Airbnb (who have over 168,000 in the UK), unless they have received a specific fire safety complaint.

In 2017, a flat rented out on Airbnb in Plymouth was called a "deathtrap" after a fire inspection (following a complaint) discovered it had toxic tiles, faulty locks and a fire extinguisher that had not been tested for more than 15 years. The owner was given a six-month suspended sentence.

Kate Nicholls of UK Hospitality said there was a large volume of evidence suggesting that commercial landlords were using online home-sharing sites to rent out large properties all year round: "We are potentially risking a Grenfell-type tragedy that would be disastrous for families and further damage our reputation as a safe, attractive tourist destination."

In March, MPs on the parliamentary group for tourism said "all businesses offering accommodation should compete on a level playing field" when it comes to regulation.
But the B&B Association told the BBC there was currently a "total and utter lack of enforcement" of safety regulations in the short-term lettings market.

As the BBC reported, our chairman David Weston said: "The authorities only inspect high-risk Airbnb style properties if someone complains, which is hugely unlikely, or if there is a fire."

David met the head of the Home Office fire safety unit and the heads of the National Fire Chiefs' Council on 13th April for talks about how the enforcement of fire safety rules can be applied to Airbnb properties in the same way as it currently only is to B&Bs.

The officials also agreed that the B&B Association would be invited to help review and replace the current Official Guidance (Do You Have Paying Guests?), after the Hackett Review reports on fire safety enforcement post-Grenfell.

Guests rate B&Bs 8.8% higher than hotels

Above: the overall average guest ratings in 2015 of B&Bs (89.6%) and Hotels (80.8%)

British B&Bs are rated by guests 8.8% higher for quality than hotels, on average, according to new data just released. The study analysed millions of traveller ratings given to hotel and B&B properties on TripAdvisor, which is the world’s largest travel website with 340 million unique monthly visitors, and which lists 350 million reviews covering 6.5 million accommodations.

The study by TripAdvisor found that “smaller, independent accommodations in the UK were providing the biggest boost to the UK's overall average rating” - with B&Bs scoring an average review rating of 4.48 out of 5 (equivalent to 89.6%) compared to 4.04 (80.8%) for hotels in 2015.

Even within the hotel sector, smaller properties were shown to have a ratings advantage over larger properties, with UK hotels with fewer than 25 rooms scoring an average of 4.40 (88%) in 2015 compared to those with 26-100 rooms, where the average is 3.97 (79.4%).

"These figures are excellent news" commented David Weston, Chief Executive of the Bed & Breakfast Association, "Guests clearly love the individuality, character, home-cooked breakfasts and personal service that they get in British B&Bs, which is why - in millions of reviews on TripAdvisor - they score an 8.8% higher rating on average than hotels. These figures from TripAdvisor prove that B&Bs are the favourite accommodation in the UK based on guest satisfaction".