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Holiday rental advertising occupies contested territory in Spain. The Barcelona government recently announced fines of €60,000 for HomeAway and AirBnB for advertising properties without tourist licences. Against the backdrop of this wrangling, challenger LaComunity.com, which has a licenced properties-only policy, has ambitious plans to use new investment funds to quadruple its listings and expand internationally.

Does this signal a shift in the balance of power in Holiday rental advertising towards smaller, more service intensive sites?

Holiday Rental Regulations require a licence

Spain requires holiday rental properties to have tourist licences. Each region sets its own rules regarding what types of properties can be offered as short-term rentals, and what is required for licencing. For example, in the Balearic Islands single-family homes are allowed tourist licences, but not apartments. There is considerable friction in Spain between tourist industry professionals and peer-to-peer offerings like Uber and AirBnB. HomeAway, however, operates on a traditional classified model: it is free to use for travellers and homeowners pay an annual subscription fee to advertise.

HomeAway issued a statement via PR spokesperson Laura Rivera Casares in response to the Barcelona fine, which stated that HomeAway complies with its legal obligations and will, “take all necessary legal action in order to defend our position.” It added: “We consider that the decision to impose a sanction to online platforms is not an appropriate solution. It builds an important obstacle to free competition, innovation and the generation of new business opportunities.”

“Free competition” has put Spain’s established tourist service providers on the defensive, and given the size and power of the hotel industry, digital Holiday rental advertising will likely face further regulatory battles.

The LaComunity Model in Barcelona

LaComunity founder Francesc Sanz Puigdemont started the website because he saw a gap in the online holiday rental market. “The existing brands didn’t offer great user experience, you paid owners directly for bookings which wasn’t safe,” he said. “My idea was a model where safety came first. Users don’t want surprises.”

The ethos of LaComunity is to remove caveat emptor from the vacation rental experience. “On most sites the booking is between the client and the property owner, but that’s not how we run our business,” said Sanz. “If someone books through LaComunity we are responsible for everything that happens.”

A key way to reduce fraud or disappointment is to ensure that every property advertised has a tourist licence. Sanz says the company adheres to regional policy: “When a tourist licence is compulsory we don’t advertise apartments that don’t have a tourist licence.”

This requires extra effort to check each property’s status, and reduces the pool of available properties. However, Sanz felt the benefits outweighed the drawbacks. “We focus on big companies who rent vacation accommodation. These clients have bigger-than-average amounts of bookings and spend more money than individuals. We focus on the higher-priced market and make commission on each booking.”

The New Model Market?

Industry experts are sceptical of official intervention. “History is full of governments trying to stop new forms of commerce, but it never works,” said Fernando Encinar, communications director and co-founder of idealista, which owns the holiday portal Rentalia. “The internet revolutionised buying a car and looking for a house, it will revolutionise tourism. The solution is not to prohibit but to modernise and improve services.”

Rather than fighting Holiday rental advertising, he suggested hoteliers will start buying and running home-style apartments. “The industry is going to have to change, to offer more services, to unite.” This in turn, will drive the evolution of online rental platforms. Holiday rental advertisers will be called upon to manage and meet the expectations of ever-more informed, empowered and vocal consumers. With regulatory pressure on one side, and customer demand on the other, digital companies have an increasingly active role to play in the physical world.

“Things are going to change, which is good,” said Sanz. “The vacation rental market is huge and expanding. It is good to make clear rules and give customers a clear experience.”

Information gleaned from a recent issue of the Classified Intelligence Report (The AIM Group)