The Spanish Supreme Court has delivered a verdict supporting the authority of regional governments to impose tourism rental regulations according to their own needs and circumstances.
The decision will be a blow to those supporting the principle of an open and unregulated market, especially AirBNB and those working in the secondary tourism rental market, but welcomed by Hoteliers and those seeking greater control over tourism.
The Case Explained.
The Spanish National Commission of Competition and Markets, CNMC, (think Monopolies and Mergers Commission), brought the case before the Spanish Supreme Court. They argued that the regulations imposed by some Spanish Regions that prevent private property owners letting property to tourists constitutes an unfair trading environment, stifling competition to Hoteliers in the commercial tourism sector.
Had their argument have won the day it would have vindicated the arguments of AirBNB and their ilk that the restrictions placed upon them were unfair. It is reasonable to assume that those penalised under the regional regulations would have sought to have their fines and restrictions overturned. The Balearic Government fined AirBNB a six figure sum, and though the booking portal still appears to advertise unlicensed property in the Balearics, the Balearic Government’s restraint of their trade has seen a huge decrease in the availability of property for tourist rental.
The CNMC brought a test case against the autonomous region of Castile & León. Following presentations and evidence the court decision was in full support of the rights of Spain’s autonomous regions to decide upon their own regulations in tourism accommodation and registration.
Specifically, and as the decision related to the Castile & León test case, they upheld the regional government’s right to specify the frequency and duration of letting allowed, a subject that has also been hotly contested in the Balearics.
They also confirmed the Regional Government’s right to insist that private property owners letting to tourists should fulfill similar criteria to that required of hotels. These include requirements such as offering a given standard of facilities and furnishing, offering 24 hour support contacts, affixing signage to the exterior of the property etc.
The biggest issues in the Balearics have been those of zoning and type. Where and what type of property can be rented. These were not covered specifically in the judgement, though the overriding important factor is that the court says Regions can decide on regulations according to local need.
The Decision Explained.
Hoteliers. The accommodation owning commercial tourism will be delighted with the outcome. It is in their interest to exclude private property owners’ rentals which they argue drag prices down unfairly, as the private property owners do not have to cover the overheads of the hoteliers in such considerations as staff social security payments, insurance, security and safety standards etc.
Local Authorities. Tourism income has been of long standing importance to many of Spain’s regions, and it would be in their interest to support the lobbying of the Hoteliers as sometimes their single most important economic sector. However in recent years many areas have also found increasing political pressure to curb the consequences of unregulated tourism both in terms of its effect on the available housing stock for its own population, and the environmental impact on infrastructures stretched to breaking. Ibiza is one of the most extreme examples of these factors, and had the court given a different decision it would have potentially caused the greatest administrative calamity imaginable to an Island that is basing a large part of its strategy on these tourism controls.
The CNMC. Obviously, as it was the CNMC who brought the action, and their view is that regardless of the motivation for introducing their regulations, in doing so the regional Governments have created a situation that affords an unfair trading advantage to the hoteliers and therefore should not be allowed.
Booking Portals. Sites such as AirBNB are based almost entirely upon the private property owning sector. Other sites such as Booking.com offer both Hotel accomodation and privately owned properties. Both models would obviously prefer an unregulated market, but both have now been dealing with the consequences of regional regulations for several years – and not only in Spain. Restrictions have been introduced by many European countries as private renting has contributed to a shortage of housing availability. Berlin was the first to introduce fines directed to the portal instead of the individual property owner.