Airbnb shows sharp rise. Can short term rentals keep it up?

Revenues from short term rental platforms rose sharply in Greece this year as the sector became the economy’s strongest performer, according to a report prepared by Grant Thornton.

However, the strong performance has hoteliers up in arms who are pushing for ways to contain the industry they say is not playing by the rules.

In the report, data shows that revenues from platforms such as Airbnb and are seen reaching 3.4 billion euros in Greece this year, up from 2.9 billion euros in 2019.

Best performing sector

Since 2016, growth rates in short term rentals in Greece have been averaging at about 15 percent per year, reflecting growth in the country’s tourism sector.

"There is no industry that has more than doubled in size in recent years, and from the numbers it appears that this is a market that has a significant impact on the country's tourism product," said Panagiotis Prontzas, Head of Strategy & Investments at Grant Thornton Greece.

Like elsewhere in Europe and the US, the renting of properties for a couple of days to visitors has provided homeowners with an alternative source of income as travel returns to pre-pandemic levels. But the shift to these platforms is being blamed for housing shortages, particularly in large urban centers, and creating unfair competition in the hospitality industry.

There are also rising concerns about the strain caused on the country’s infrastructure and safety issues.

"The size (of the industry) is such that it greatly affects the tourism product that we promote internationally. In addition to quantitative data, there is also a question of qualitative characteristics, in terms of the quality of the tourism product (offered), the risk of health and safety and the burden on cities and their infrastructure", Prontzas added.

Pressure for change

Hoteliers are turning up the heat on the government to regulate the industry. Hotel investors and operators argue that many apartments rented on these platforms are not from individual owners looking to get some extra money but from large scale investors leasing whole apartment buildings as they sidestep rules and taxes applicable in the sector.

Despite the pressure, Greek government officials are reluctant to take action after initiatives adopted elsewhere in Europe proved to be unsuccessful. In cities such as Barcelona and Amsterdam, limitations were introduced on short term rentals, only to be later overturned by courts.

With interest rates going up and the real estate market headed for a slowdown as elections approach in Greece next year, officials in Athens are keen to avoid any move that could harm the sector.

The proposals put forth by hoteliers include placing a 90-day limit on properties appearing on short term rentals, limiting areas where Airbnb is available and preventing companies from taking part in the business (leaving the platforms for individuals only).