Governing Airbnb in Amsterdam and Singapore: A Comparative Study on Governance Strategies and Styles

Airbnb as a sharing economy initiative

The sharing economy refers to a market form in which consumers enjoy temporary access to under-used physical goods through innovative technologies (Botsman & Rogers, 2010). Many citizens share “sharable” goods, such as boats, cars, rooms, books, toys, and computers, through sharing economy platforms (Schor, 2016). Various drivers have enabled the diffusion of sharing economy platforms worldwide. Internet access and smart-phone apps have been recognized as key drivers, significantly facilitating the diffusion of, and accessibility to, these sharing services. Meanwhile, service digitalization has increased both opportunities for new areas of entrepreneurship and the democratization of some businesses by reducing barriers to market entry (Oskam & Boswijk, 2016). Moreover, the financial crisis and its fallout have forced people to look for alternative sources of income; houses, cars, couches, and other idle assets started providing new sources of income for many unemployed and under-employed individuals. The quick and unexpected growth of the sharing economy has stimulated positive contributions, such as new employment opportunities for individuals and the regeneration of local communities. However, there are also concerns related to its practices and modus operandi (e.g., tax, regulations, labor, and consumer issues). The economic compensation introduced by this new sector and its evolution, for example, has often been associated with negative externalities. One of the most common criticisms relating to these businesses is that sharing should not involve “profit exchange.”

Airbnb is a particular type of sharing economy. Reviewing the literature on Airbnb and the sharing economy, we distinguish three key characteristics: empowerment through technologies, profit-seeking, and individuals’ initiatives (Schor, 2016).

First, the Airbnb initiative exemplifies the ability of emerging innovative technologies to empower ordinary citizens. The Airbnb platform designers set rules to regulate the interactions between hosts and guests (Oskam & Boswijk, 2016), and Airbnb has a reputation rating system that allows both hosts and guests to post their comments on each other (Allen & Berg, 2014). Furthermore, Airbnb hosts set the price of the accommodation, which they can modify according to seasonal demand.

Second, Airbnb is essentially a for-profit initiative, even if sharing economy services are generally lower in costs than market alternatives. Particularly with peer-to-peer platforms, value can be redistributed across the supply chain (producers and consumers), in part because producers’ costs are lower thanks to the use of under-used assets (Schor, 2016). Airbnb charges service fees to both hosts and guests for each interaction (hosts 3% and guests 6%–12%). Numerous Airbnb hosts have many properties, and they earn a great deal of money through short-term rentals. However, some authors argue that Airbnb exploits workers because it does not provide necessary welfare (such as insurance) for them although it earns substantial profits from them.

Third, Airbnb is not an initiative of a community or of a citizens’ collective, but of individual entrepreneurs. Some sharing economy initiatives, such as Time Banks and Tool Libraries, are launched by local communities with the aim of resolving local issues. Different from them, the Airbnb platform was established by two graduate students, also called micro-entrepreneurs. They received financial support from venture capitalists to advance the development and expansion of the platform (Schor, 2016).

Before the COVID-19 pandemic erupted, the Airbnb platform collaborated with governments around the world to have all hosts following their local rules. It first started with the one-home-one-host policy in critical markets like New York and Barcelona. It has been cooperative in Amsterdam by accepting the 60-day limitation. Also, it agreed to share hosts’ data with local tax authorities. In Barcelona, Airbnb tried to start a dialog, but the authorities did not seem to collaborate with it. Despite the fact that the European Court of Justice decided that Airbnb was correct and should not be considered responsible for the hosts’ actions given that it has been recognized as a mere service-providing platform, the company nonetheless preferred to dialog with local governments and to show its willingness to stop hosts’ illegal actions. This is confirmed by the fact that Airbnb policy teams were established in all of its local offices. Regarding the future of Airbnb, all its strategies and vision are at a standstill because of the COVID-19 pandemic. It is currently focusing its attention on survival. To date, it has fired thousands of people around the world. Its development in the future is consequently full of uncertainties.

Governance strategies and styles in governing sharing economy initiatives

Most successful sharing economy firms are gigantic players in cities’ industries, particularly in transportation, accommodation, and dining. Their spread in many cities has resulted in substantial discussion and debates among various actors, most of which are related to the impacts that these sharing economy platforms may have on public interests (Schor, 2016). Nowadays, governments around the world still face difficulties in successfully managing these platforms (Frenken & Schor, 2017). Studies conducted by governance scholars have led to the use of various concepts, such as network governance, multi-level governance, meta-governance, agile governance, and adaptive governance (Li, 2019). In these governance theories, there is an implicit assumption that, to achieve a win-win governance outcome, collaboration between various actors is required (Whitehead, 2003). Governance strategies adopted by governments must be shared and negotiated among various actors in order to accomplish mutual goals (Klijn & Koppenjan, 2016). This collaboration approach is justified by the fact that go-alone strategies have proven to be ineffective and counter-productive (Li & Ma, 2019; Li et al., 2018).

The current literature on Airbnb and the sharing economy in general (Cortz, 2014; Frenken & Schor, 2017) does not discuss and examine differences in governance strategies and their consequences. Recent strands of governance theory have conceptualized governments’ attempts to influence self-organizing forms of governance without reverting too much to traditional hierarchical forms of command and control in terms of the exercise of meta-governance (Klijn & Koppenjan, 2016). Meta-governance is concerned with how political authorities promote and guide the self-organization of governance systems through the use of various strategies. Building on the literature on meta-governance and relating it to the context of home sharing platforms, three different governance strategies can be identified: monitoring, developing a framework, and active network management (Klijn & Koppenjan, 2016; Whitehead, 2003).

Strategy 1: Monitoring: this means that meta-governors closely supervise, or have oversight of, the evolution of the self-organizing initiatives. For the governance of Airbnb, this strategy, for instance, implies that meta-governors monitor the operation of home sharing platforms to ascertain the number of host listings. Based on this monitoring, local governments may provide feedback toward Airbnb on its operation or on the number of complaints received. Another example of this strategy is governments collecting more information before they make decisions regarding the regulation of Airbnb.

Strategy 2: Developing a framework: this means that meta-governors impose caps, mostly by developing regulatory frameworks, with the aim of controlling or restricting the expansion of self-organizing initiatives; or what Whitehead (2003, p. 7) calls “self-regulation in the context of regulation.” Regarding the governance of Airbnb, this strategy is indicated by the establishment of a permit system that obliges hosts to register with it, limiting the number of people who can stay in a unit, restricting short-term rentals to certain areas, or limiting the number of days per year a unit can be rented out (Gottlieb, 2013). Los Angeles, for example, does not allow hosts to rent out apartments that are not their primary residence. Other examples are that Paris prohibits rentals for less than a full year, and the local government in San Francisco requires local citizens to obtain a permit for short-term rentals.

Strategy 3: Active network management: this means that meta-governors actively manage and participate in the network. This is also typified as hands-on meta-governance as opposed to the first two strategies, which imply a hands-off style of governing. Active network management includes activities like conflict management, brokering compromises, and facilitating the interaction between stakeholders in the network (Edelenbos et al., 2018).

These three strategies can be implemented by different governance styles. Voets et al. (2015) recognize two different governance styles in governing self-organizing initiatives: hierarchical and collaborative, depending on whether the shadow of hierarchy is enacted. The hierarchical style, in line with the shadow of hierarchy notion, means that meta-governors (threaten to) intervene on the basis of authority or coercion. The collaborative style implies that meta-governors apply a horizontal and negotiation approach to implement meta-governance strategies. This style might result in a partnership between meta-governors, Airbnb, and other actors, in which they all assume certain responsibilities in implementing joint decisions, rules, and regulations. These three different governance strategies and the two governance styles are regarded as a heuristic tool for us to analyze how meta-governors govern the Airbnb initiative in both Singapore and Amsterdam. Their relationships are presented in Table 1.

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Table 1.

Government Strategies and Governance Styles in Governing Self-Organizing Initiatives.

Strategies’ styles	Monitoring	Developing frameworks	Active network management
Hierarchical	Metagovernors supervise the functioning of self-organizing initiatives. For example, governments monitor the number of hosts in Airbnb.	Metagovernors create frameworks in governing self-organizing initiatives. For example, governments establish rules in regulating Airbnb.	Metagovernors function as mediators to manage interactions among various actors. For instance, governments organize roundtable meetings to reconcile the conflicts of various stakeholders involved in governing Airbnb.
Collaborative	Metagovernors and the other actors jointly supervise the operation of self-organizing initiatives. For instance, government and Airbnb share data with each other to jointly supervise the operation of Airbnb.	Metagovernors and the other actors establish rules based on their consensus in governing self-organizing initiatives. For instance, governments and Airbnb jointly establish rules for governing Airbnb.	Metagovernors and the other actors jointly manage their interaction processes. For instance, governments and Airbnb jointly function as facilitators to broker compromises among stakeholders.

As a response, Airbnb takes actions to cope with government interventions and neighborhood concerns. It refuses to share its users’ data with governments (Nguyen et al., 2016). Moreover, it has sent lawyers to offer support for its hosts in appeal processes, made background checks to ensure the authenticity of its users’ information (Interian, 2016), formulated alliances with other short-term rental companies, organized lobbying activities, had face-to-face conversations with government officials, released reports to illustrate its complementarity to the traditional accommodation industry (Oskam & Boswijk, 2016), and proved its contribution to local development (Guttentag, 2015). These different actions could be generally categorized into two different styles—go-alone versus more cooperative (cf. Edelenbos et al., 2018). A go-alone style of response means that sharing economy companies take uncooperative actions to cope with government regulations, whereas a cooperative style implies that sharing economy platforms initiate and take collaborative actions with regulators to mitigate negative externalities.

The Singapore case

Housing is a key asset for the Singapore economy. In 2015, it was found that the “Residential Building” category accounts for 7.2% of the GDP in Singapore. In total, Singapore has 1,322,900 residential units. Among them, 74.1% are public housing and 19.4% are private houses. Nowadays, more than 80% of Singaporeans live in public housing. Because of its owner-occupier housing structure, Singapore is widely known as a “home owning” nation (Chua, 2000). For middle- and high-income citizens, the Singapore government provides various choices of unsubsidized private housing units. Singaporeans own 90% of houses, and home equity accounts for 40% of their net worth. After the 2008 economic crisis, house prices for both private and public houses experienced a sharp rise in Singapore. This worsened the affordability of houses for citizens. However, lowering the value of housing might lead to the collapse of the Singapore economy given its dependence on real estate. Since 2009, the Singapore government has initiated cooling measures to control house prices. After several rounds of interventions, house affordability for Singaporeans has improved, and the economic situation has not suffered much (Deng et al., 2019).

In 1960, the Housing and Development Board (HDB), a key housing management agency, was established. It, as an autonomous statutory board, is in charge of public housing in Singapore. In 1964, it started a public housing program. This program allowed Singaporeans to own public properties for 99 years, after which government would reclaim them (Thong et al., 2000). Another key housing management agency is the Urban Redevelopment Authority (URA). On 1 April 1974, it became an independent statutory board under the Ministry of National Development. It is Singapore’s land use planning and conservation authority, and it is in charge of private housing. Because the price of private housing is very expensive for Singaporeans, most of them rely on the state to provide housing (Chua, 2000). Originally, the Singapore government ambitiously planned to provide public housing for 90% of citizens. Later, it reduced this to 75% because it found that many Singaporeans desired to have their own private housing. The Singapore government consequently became the monopoly supplier of housing and it assumed responsibility for providing housing for all Singaporeans.

In Singapore, tourism has become a growing industry. In the past few years, the number of visitors to Singapore has increased. However, Singapore’s hotel room revenue has declined. For instance, hotels sold −0.6% fewer room nights in the first half of 2017 compared to the same period in 2016. One possible reason is that visitors prefer to seek accommodations through Airbnb rather than stay at hotels. It seems that the rapid growth of Airbnb has negatively affected the hotel industry. This became a cause of concern for the Singapore government.

The case regarding the governance of Airbnb in Singapore is divided into four phases. We distinguished cases into different phased based on changes in government strategies. In each phase, a (new) strategy was adopted or changed by governments. They are elaborated below.

Government style and Airbnb’s responses to government interventions

Regarding governance style, the Singapore government’s style was mainly hierarchical. Without the involvement of the other actors, it regularly monitored the development and expansion of Airbnb in Singapore. Also, it occasionally addressed violations by hosts by repossessing the owners’ apartments. These actions indicate the choice of a hierarchical style in implementing a monitoring strategy. Additionally, the Singapore government developed a new category specifically for short-term rentals without engaging other stakeholders. This indicates the application of a hierarchical style in implementing the strategy of developing a framework.

Regarding Airbnb’s strategy in this case, three strategies can be discerned. First, Airbnb used local media to frame its positive effects on the local economy. Airbnb occasionally showed the benefits of home sharing for Singaporeans in local mainstream media, such as Straits Times and Channel News Asia, with its managers for instance stating that average Singaporean Airbnb hosts made about 5,000 dollars a year. Second, it conducted a survey. When URA was reviewing whether short-term rentals should be allowed, Airbnb conducted its own poll, which showed that most Singaporeans agreed that they should be allowed to rent out their rooms for short terms. Third, it drafted proposals to provide guidelines for the governance of Airbnb. Airbnb talked with URA officials to establish guidelines to govern short-term rentals, including allowing homeowners to rent out only their primary rooms or limiting the number of days for short-term rentals per year. These proposals show Airbnb’s intention to participate in the governance of short-term rentals. In short, these three different strategies indicate that Airbnb dominantly adopts a go-alone style of response to deal with government interventions.

The Amsterdam case

The housing system in Amsterdam has had a long tradition of government intervention since the Housing Act in 1901. Amsterdam has 428,000 dwellings, of which 186,000 are owned by Housing Associations and 178,000 are independent dwellings. In the late 1980s, subsidies for social housing were cut to increase owner-occupied dwellings. In 2011, accessibility criteria to social houses were lowered. Housing prices in Amsterdam were higher than the national average level in 2015. Amsterdam has a lower proportion of owner-occupied housing: 30% versus 60% nationally, a larger social rental stock (at roughly 50% vs. 33% nationally), and a larger private rental market (at over 20% vs. 7% nationally). In Amsterdam, the middle class is the most affected in finding availability of suitable homes. Government attempted to build smaller houses to keep the average rent price affordable. In 2015, the city started to build 8,376 new dwellings and encouraged small households to move to smaller places. These programs did not produce satisfactory outcomes however.

The three main actors involved in the Dutch housing sector are the government, the housing associations, and private sector housing. The government is heavily involved in deciding the maximum rental price, yearly adjustments, and lodgers’ protection. Housing associations are non-profit organizations that act on a commercial basis. Their main duties are to house those people who are not able to find an appropriate dwelling themselves, to contribute to livable neighborhoods, and to provide housing (but not care) for people who are elderly and/or handicapped. It is the main government partner for delivering social housing in the Netherlands.

Amsterdam had 17 million visitors in 2016 and the overcrowded effect is a main concern for government. One of its key strategies is limiting the number of nights to 30 days per year for those who rent out entire apartments (with no license) through online platforms.

The case regarding the governance of Airbnb in Amsterdam is divided into three main phases, described below.

Governance style and Airbnb’s responses to government interventions

Regarding governance style, a collaborative approach dominated in this case. In adopting a monitoring strategy, the Amsterdam government established a partnership with Airbnb, and they shared real-time data with each other. The Amsterdam government provided information to Airbnb about hosts who violated government regulations, and Airbnb removed those hosts’ listings from its platform. This indicates the application of a collaborative style in implementing the monitoring strategy. Furthermore, a framework was developed in a collaborative way. Both the Amsterdam government and Airbnb had several rounds of interactions to jointly decide the content of the frameworks developed in 2014 and 2016, respectively. This indicates the use of a collaborative approach to implementing the strategy of developing a framework.

Regarding Airbnb’s reaction to the Amsterdam government’s governance, Airbnb adopted mainly two strategies. First, Airbnb released reports to illustrate its importance to the local economy. The reports showed that home sharing was spreading outside the city center and that the earnings from it helped to boost hosts’ income. Also, as in the case of a recent article in the local newspaper, Parool, it reported the positive effects of the amended 2016 MOU on reducing the number of hosts who were renting for more than the allowed limit of 60 days. Second, Airbnb assumed more responsibilities for governing short-term rentals. The amendment of the MOU in 2016 led to a new era where the 60-day cap was also enforced by the platform itself. Airbnb promised to maintain an open dialog with the Amsterdam government. Specifically, it agreed to share data and attend regular meetings with the Amsterdam government. In short, Airbnb has learned to adopt a cooperative style of response to cope with government interventions.

Comparison of governance practice in Singapore and in Amsterdam

The Singapore government predominantly applied two strategies: monitoring and developing a framework. Over time, the Singapore government favored a hierarchical governance style that enabled it to regulate effectively. It consisted of reducing the negative externalities resulting from Airbnb, and it seems that negative externalities resulting from short-term rentals have been effectively mitigated. Local media reported that URA received 231, 375, and 377 citizen complaints about short-term rentals in Singapore in 2013, 2014, and 2015, respectively, and it received 161 complaints from January to April in 2016. Although there is no accurate number for citizen complaints in 2017, it has been reported that the number of listings on Airbnb reduced from 6,000 to 300 between May 2015 and June 2017 in Singapore. Given the small number of listings, it can be assumed that the number of citizen complaints has decreased. Thus, it can be concluded that the hierarchical governance style adopted by the Singapore government has mitigated the negative externalities resulting from Airbnb.

In the Amsterdam case, local government predominantly adopted two strategies: monitoring and developing a framework, and these two strategies were implemented in a collaborative style. In May 2017, Airbnb released a report showing that illegal hosts/hotels were reduced by almost two-thirds compared to the previous year in the same period. Listings subject to the 60-day limit represent 79% of the entire Airbnb offering in Amsterdam. By the beginning of 2017, only 5% (including hosts with license) were booked for more than 60 days and 1% over 90 days. These data show encouraging results regarding the effectiveness of implementing the 60-day policy and mitigating negative externalities. Furthermore, Airbnb expressed its satisfaction in the collaboration with Amsterdam government. A survey conducted in February 2016 by Airbnb estimated that about 14,200 Amsterdam residents shared their homes in 2015. In March 2017, there were 18,000 active posts on the Airbnb website. In short, the number of Airbnb hosts seems to have increased. However, because of limited data from the government side, we cannot draw conclusions about the effects of the collaboration between the Amsterdam government and Airbnb on mitigating negative externalities.

The different scenarios in Singapore and Amsterdam regarding choice of governance style and the evolution of the Airbnb initiative are understandable for three main reasons. One is that the two cities have a different housing structure and philosophy. Housing is Singapore is regarded as an important part of welfare for citizens (Chua, 2000), and government has promised to provide houses for all citizens. Over 82% of Singaporeans live in public housing. Public housing is not solely for poor people, and many middle-class people and even some rich people may also live there. Nine out of 10 residents living in public housing own their homes. When Singaporeans purchase public housing, they receive grants from government. Therefore, it is highly unacceptable for the Singapore government and citizens to change housing’s primary function. Most citizens agree that houses are not for profit. Meanwhile, the Singapore government taxes private property owners and investors heavily, and only rather rich people are capable of buying private apartments. Hence, most owners of private properties do not need extra income from Airbnb, and they prefer long-term rentals, which obviate the need for them to deal with the hassle of short-term tenants. However, some residents living in public housing are not well-to-do, and they need extra income. A report released by Airbnb has found that 40% of hosts rely on extra income for their daily life, and 15% of hosts require extra income to save them from foreclosure. Each host is able to earn on average 5,000 dollars per month through short-term rentals. Hence, the Singapore government allows the operation of Airbnb secretly; this implies that it leaves some room for the owners of public housing to obtain extra income, although it publicly states that short-term rentals are illegal.

The situation in Amsterdam is different however. Presently, the main concern of the Amsterdam government is that a big slice of the housing availability is taken up by tourist accommodations (Interview R7). Housing rental is rather common in Amsterdam. However, only around 5% of all rental housing is priced between 700 and 1,000 euro per month. This means that, for households with a gross income between 35,000 and 53,000 euros per year (middle income), almost no affordable housing is available. The 2015 Dutch Housing Act requires housing associations to rent out at least 80% of their social housing to households with an annual income of less than 35,000 euros, thereby making social housing more inaccessible for the middle class. The Amsterdam government has realized this issue and attempted to set targets for the mid-market rental segment. However, the number is still not enough to meet the demands of the middle class. The average income of Airbnb hosts is 3,800 euro per month, and, given the high rental prices, local residents are allowed to earn extra income through short-term rentals within annual days of limitations (Interview R7). It is widely accepted in Amsterdam that the key function of housing is for living, not for profit. Consequently, the 60-day limit is regarded as an acceptable solution for both middle-class citizens and government to address the housing availability issue. Because these two cities have a different housing structure and philosophy, regulators tend to have different governance styles in governing Airbnb.

The second reason relates to the governance tradition in both cities. The Singapore government dominates the governance of public affairs, and other actors do not have many opportunities to engage in decision-making processes (Chua, 2000). In contrast, the Netherlands has a negotiation tradition in governing complex societal challenges (Klijn & Koppenjan, 2016). Intensive interactions took place between Airbnb and the Amsterdam government, resulting in the creation of agreements regarding the governance of short-term rentals. Governance tradition therefore might be the second condition explaining the differences in governance styles in governing Airbnb.

The third reason relates to housing management structure. The housing governance structure in Singapore is highly centralized, and public and private housing are predominantly managed by HDB and URA, respectively. These two agencies have sufficient power to design strategies to govern short-term rentals. Other government agencies, such as the fire management agency and the tourist management agency, do not have many opportunities to engage in governance processes (Thong et al., 2000). This governance structure gives more power to HDB and URA to make and enforce rules. The priority of local residents’ interests—a quiet and safe living environment—is consistently emphasized. This has given the Singapore government an excuse to hold a relatively conservative position in advancing Airbnb (Interview R3). The housing market in Amsterdam is not managed solely by the municipality; other actors (such as housing associations and housing-owner associations) play equally important roles. For instance, citizens in one building form a housing-owner association, and the hosts who want to list their home on online platforms and host guests need the permission of the other people in the association. Moreover, different government agencies all have a say in governing housing issues. The fire department, for instance, believes that the number of persons in one unit might result in a fire hazard, and local regulation takes the number of persons in one unit into consideration. Consequently, different concerns of various government agencies and housing associations have to be taken into account. The different housing management structures in the two cases therefore might shape the different governance styles in governing Airbnb.