By : Suhaini Ibrahim, Senior Teaching Fellow, School of Hospitality and Service Management, Sunway University
From embarking into strangers’ vehicles to entering their homes, the ‘sharing’ economy is already well-accepted even amongst business travelers.
If one were to look up for preferred properties other than conventional hotels for short-term rent in Kuala Lumpur, 300+ properties will appear. That is not a lot, but the same properties may also be listed on Agoda.com, Booking.com, Hotel.com, Asia.rooms, and TripAdvisor portals with labels like Apartments, Homestays, Villas, Vacation Homes and Guesthouses.
Hence, the classification of lodging types is further blurred with the emergence of these informal labels of accommodation. And we know for a fact, that it does not matter what labels they are parked under, as long as they meet the creature comfort needs of affordability, cleanliness and safety for the end-user, the guest.
Competitors of Airbnb for instance, that offer identical booking sites for accommodation services like, 9flats, HomeAway, Housli, Roomorama, Onefinestay, VRBO and Wimdu; all operate on one simple business model – allowing ordinary people to rent out their homes to tourists. The brilliant model is nothing new since Bed and Breakfast (B&B), homesteads and Coachsurfers flourished since the turn of the century.
There are many factors contributing to the viability and sustainability of this innovative lodging sector:
Ease of operation
The Malaysian Association of Hotel Owners (MAHO) reported only 3,126 accommodation providers registered with the Ministry of Tourism, Arts and Culture Malaysia since 2017. But alarming numbers that were not official are some 6,452 short-term rental properties listed under Agoda.com and about 11,698 on Airbnb.
Records show a total of only 4,313 units of Homestays registered throughout Malaysia that had sustainably harvested over RM9mil of revenue in 2020 and over RM6mil for 2021, despite the pandemic.
Although Malaysia’s state governments have taken it upon themselves to regulate Short-Term Residential Accommodation (STRA) businesses in their respective areas, host-owners need only to abide by the existing STRA and other regulations before applying for the permits with their local state authorities. Hosts have the liberty to price their spaces competitively because their primary fixed costs (rent, if applicable and utilities) have already been covered, so there are literally minimal or no labour costs, even the cleaning fees are already charged in the guest rental.
Although studies have shown that intrinsic host motivations include some effortless memorable socio-cultural exchange between the host and guests, running an innovative lodging is obviously a welcomed second income.
We all know of people who have lost jobs or had salary cuts in the last two years of the pandemic. According to Malaysian Digest (2021), an Airbnb host makes more money weekly than his day job, on a monthly basis. Better yet, hosts generally do not charge guests taxes, as the Tourism Tax imposed is not applicable to any rental or hotels with less than 10 rooms.
Distinct from conventional hotels
Cost-savings: Innovative lodgings offer a distinct set of benefits, typically focused around being cheaper than hotels, more convenient, or simpler.One might get a larger room if not the entire house or apartment especially if travelling in groups or with extended families, and definitely more appealing to business travellers as well.
Most properties allow sharing of kitchen and other common spaces, so on the economies of scale, that is a lot of savings on own-cooked meals and per room costs. The sector is no stranger to the business market, offering substantial savings especially for struggling companies with tighter travel budgets.
Connections with the locals and the creation of a sense of place: The novel business model’s best value would be in its ability to offer authentic local experiences. Guests can choose to live like a local, by interacting with the host and local community first-hand, and this is permissible unlike the tourist ‘gaze’ experience from a distance only.
With semi post-COVID travel ‘’revenge’’ roaring in full force globally, local tourists are escaping to nearby rental properties within jungles, beachfronts, waterfalls, hilltops, paddy fields, fishing lakes, farms, fruit orchards and quaint towns or village settings.
Non-guaranteed safety: The properties may be out of the way, in non-urban setting where some driving may be required. Globally, in jurisdiction of a license requirement, the authorities may ask the host to ensure the premise is safe by conforming to any health and safety requirements, which may include placement of fire extinguishers, smoke detectors, and fire-escape or exit doors.
There have been rare reports on guests’ safety being at risks, due to the secluded locations of some remote properties, but then even the safety of guests in hotels that are generally in touristy-areas are also none without risks.
No frills: There is no room service, and the premise might not be cleaned until the guests have checked out. But most guests do not stay long, popular peak periods are among weekenders and short-stays for business travellers.
Availability of adventures and uniqueness of the activities related to the surroundings, however, post the strongest magnet to draw the selfie tourists. And the power of the social media can almost influence travel decisions of destination viewers amongst the ‘fear-of-missing-out’ (FOMO) population a lot faster than WOMA (Word-of-Mouth Advertising) could do when these amazing snapshots go viral.
Legality: Despite growing popularity, many operations even globally, are still illegal probably due to unclear short-term rental regulations. The widespread illegality results from zoning codes and other ordinances many cities have, that prohibit short-term renting without special permits.
Many countries allow short-term letting as long as it does not breach any legal policies of the jurisdiction and no complaints from any persons having reasonable standing to do so, in any type of private properties.
Added with corresponding tourism tax concerns and different regulatory do pave the road for resolutions to drag a long time in settling any legal disputes between hosts and guests.
Privacy: The ‘host’ of a space may be living there at the time of rental, as with a typical B&B, hence guests may not enjoy complete privacy. If the host is absent, there is a possibility of their return from vacation, unless they operate the space as a permanent rental. Living in someone’s residence may seem odd when guests use everything that belongs to the host-owner.
Perhaps for the hosts, the setting-up regulations and registration requirements should not be overly burdensome. These short-term rentals may help reset the tourism industry that is already desperate in need of a rebound. Over time, with product improvement this sector might be more appealing to a greater segment of the mainstream market, hence knocking on opportunity doors to new hosts, sustainably. In these hard times, we could always do with some extra cash.
Suhaini Ibrahim is a Senior Teaching Fellow in Sunway University’s School of Hospitality and Service Management and has acquired 26 years of teaching experience in tourism and business event studies at both public and private universities in Malaysia. She gained industry experience working for international corporations including British Airways Kuala Lumpur in the customer service division and as Group Air Coordinator for A.H. LIGHT Travel Inc in New York City, USA. In October 2012, she was part of a team of 114 scientists and personnel from local universities in the 2nd Temengor Scientific Expedition, led by Universiti Putra Malaysia and WWF (Malaysia), covering 1,500 hectares of Sungai Enam Basin to identify sites for eco-tourism interest. Since March 2016, she became Committee Member of the Business Events Academic Council (BEAC) of Malaysia Convention & Exhibition Bureau (MyCEB). She is currently co-researching on a study of corporate meetings and incentive organiser’s expenditure and spending pattern under MyCEB.