This Malaysian island has now banned Airbnb. And it isn't first to do so

Airbnb is facing ongoing conflict with new rules and regulations being implemented in cities across the world to regulate tourism. Penang becomes the first city in Asia to ban the platform entirely


Photo: Bloomberg

Vasudha Mukherjee New Delhi
The Penang state government has recently banned most short-stay accommodations, including Airbnb, in residential units across the Unesco-listed Malaysian island of Penang. This move, effective from May 25, aims to regulate the behaviour of tourists and address concerns raised by local residents. Penang is the first state in Malaysia and Southeast Asia to implement such measures, with the objective of curbing disruptive tourism practices.

New regulations in Penang

The new regulations, released by the government of Penang, prohibit the use of residential units for short-stay accommodations, as typically advertised on platforms like Airbnb and 

Only commercial properties, such as serviced flats and select office spaces, are allowed to host short-term guests. However, these commercial rentals must register, pay annual fees, and obtain approval from 75 per cent of the other residents in their building. The guidelines further stipulate that guests can stay in an approved commercial rental unit for a maximum of three days per booking and limit each unit's usage to 180 days per year. Violating these regulations incurs a fine of 200 ringgit ($44).

Why the ban?

The Penang state government told local Malaysian media that the ban was due to the need for regulation after several instances of misbehaviour by tourists, causing disturbances to local residents. State Housing Committee chairman Jagdeep Singh Deo told Free Malaysia Today his hopes that the new provisions would eliminate illegal accommodations and address the concerns raised by the community. The government has received complaints about unruly behaviour, noise disturbances, and the inappropriate use of shared facilities by short-stay guests.

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Impact on Airbnb and other short-term rentals

The decision to restrict short-stay accommodations has received mixed reactions. According to the South China Morning Post (SCMP), local Airbnb representatives tried to dissuade Penang decision-makers, but their appeals were unsuccessful. Airbnb argued that the regulations would limit Malaysians' ability to share their homes in strata buildings and reduce affordable accommodation options for domestic and international travellers.

The report added that hosts expressed concern about the ban's impact on their livelihoods, particularly during the economic challenges posed by the Covid-19 pandemic. The rental market in Penang has been affected by a surplus of residential properties, and platforms like Airbnb and provided homeowners with higher returns from their vacant units.
The Asia Travel Technology Industry Association (ATTIA) that represents travel and tourism companies responded the "ban", stating that short-term rental accommodation (STRA) restrictions imposed were "jeopardising a significant slice of tourism revenue for everyday Malaysians and the overall tourism economy of Malaysia".

However, the statement issues by the association added, "ATTIA and our partners stand firmly in support of fair and sensible STRA regulations. We greatly look forward to collaborating with all relevant authorities to support and educate travelers and STRA owners on responsible STRA practices.”
Government's response

The Penang state government maintains that it is addressing the grievances of long-term residents in condominiums and properties with shared facilities, adds SCMP. 

Currently, the ban only applies to Penang Island, excluding Seberang Perai, the mainland part of Penang state. Some proponents of the ban hope it will be extended nationwide, with the Malaysian Association of Hotels (MAH) supporting the move, suggesting that regulated short-term rentals can bring in much-needed revenue and increase tax collections, reported SCMP.

Why are cities trying to ban Airbnb?

Airbnb became popular following its launch in 2008 due to budget accommodation options and the promise of additional income for hosts.

Airbnb provides a platform where hosts can list their properties, and travellers can search and book their desired accommodations. Hosts set the price, availability, house rules and may provide additional services for their listing. Guests can choose the accommodation based on their needs, location and budget. The platform mediates the communication and transactions between the two, charging a service fee from both the host and guest for using the platform.

In recent years many have complained about the neighbourhood disruptions from parties thrown by guests at the listing and safety concerns regarding the guests who book the listings. While the sites work to verify the users' identities, they cannot share any information due to privacy laws. This means hosts cannot be sure about the background of the people renting the accommodation and vice versa.

The situation reached its peak when lockdowns were imposed during the Covid-19 pandemic. Airbnb had to issue a temporary party ban in 2020. The platform codified the party ban in June 2022: "Historically, we allowed Hosts to use their best judgment and authorise parties when appropriate for their home and neighbourhood. The policy will continue to include serious consequences for guests who attempt to violate these rules, varying from account suspension to full removal from the platform."

In 2021, the platform reportedly suspended 6,600 for attempting to violate this ban.

On the state level, issues on taxation and compliance have been raised, as these short-term accommodations can bypass laws normally followed by the hospitality industry. Furthermore, it has created problems for people to find long-term rentals, as landlords can charge higher prices for short-term boarding than long-term or permanent renters.

Cities imposing strict rules on Airbnb

According to a report by Forbes in January 2023, Paris, Barcelona and Amsterdam have some of the most severe policies on Airbnb and other short-term rentals in Europe. The report added that many European cities, including Berlin, Bologna, London and Prague, are actively pushing and lobbying against the platform.

Each city is developing their own policies and regulations for the platform. For example, Barcelona properties must have a Tourist Use House License, while landlords in Paris must register each listing separately.

According to the report, the issue is gaining momentum worldwide, with Brazil, Japan and Turkey also looking to impose new rules and regulations on the platform.

Since each city has its own regulations, many media reports warn travellers to closely check the rental rules of the cities they are looking to explore.

Florence may also ban short-term rentals

On Thursday, June 1, Reuters reported that Florence, Italy, was looking to ban short-term rental platforms like Airbnb from its historic centre under the "save historic centre" proposal. The proposal, submitted by the city's mayor, Dario Nardella, also proposes tax breaks for more permanent forms of residence and new compliance laws for short-term rentals, such as allocating national identification codes for residential properties rented to tourists.

The report added that this might be coming as a response to the increasing low salaries, property shortage and high inflation driving towards a property shortage in Italy that has highly impacted low-wage earners and students.

First Published: Jun 6 2023 | 4:02 PM IST

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