Tech: Malaysia and Airbnb ‘a match made in heaven’, boost for tourism

This article first appeared in The Edge Malaysia Weekly, on January 29, 2018 - February 04, 2018.

With 1.5 million guest arrivals in Malaysia, growing at an average rate of 139% year on year, Airbnb has generated an incredible RM200.4 million (US$50.2 million) for the Malaysian economy in the last year alone.” — Kwok

-A +A

COLLECTIVELY, Airbnb hosts in Malaysia earned US$48.1 million last year, more than double the US$23.3 million they earned in 2016. And that is just 97% of receipts (3% is kept by Airbnb). So when Robin Kwok, Airbnb country manager for Southeast Asia, Hong Kong and Taiwan, says the home-sharing platform is not out to steal business from hotels, many might see that as the “official spin” to placate hoteliers and owners of the businesses the technology platform has disrupted.

“We believe that for us to win, no one has to lose. There have been more than 260 million guest arrivals at Airbnb listings worldwide since it was founded in 2008, and even as more people share their homes, traditional hotels around the world continue to make robust profits. Home-sharing helps more people travel, meet new people and experience different cultures, and that should be good news for everyone,” Kwok says.

She adds that more and more Airbnb guests are choosing to stay outside the traditional hotel districts with neighbourhoods such as Brickfields and Taman Desa in Kuala Lumpur welcoming “a huge number of guests” last year. Places like Lumut, Cameron Highlands, Ipoh and Port Dickson, which are not as well known are also seeing “considerable growth”.

“Travel and tourism today account for 10% of global gross domestic product and 1 in 10 jobs, and Malaysia is no exception. In 2016, Airbnb supported an estimated 4,300 jobs in Kuala Lumpur and injected US$150 million into the local economy through host earnings and guest spending. While travel to advanced economies is projected to grow 2.2% per year, travel to emerging economies, such as Malaysia, is projected to grow even faster at 4.4%.

“By helping them to earn supplemental income through sharing their spare space, Airbnb is encouraging local residents to become hospitality micro-entrepreneurs, driving individual economic empowerment and widespread economic inclusiveness,” Kwok tells The Edge via email.

“With 1.5 million guest arrivals in Malaysia, growing at an average rate of 139% year on year, Airbnb has generated an incredible RM200.4 million (US$50.2 million) for the Malaysian economy in the last year alone. More people are becoming Airbnb hosts and most of the money earned is being injected into local communities, bringing benefits to ordinary people all over the country.”

Sure, there are probably many price-sensitive tourists who book Airbnb to save money, but users also include multi-millionaire celebrities like Lady Gaga (US$280 million net worth), Britney Spears (US$215 million net worth) and Shah Rukh Khan (US$38 million), who each stayed at different luxury vacation homes available via the platform. And it is not just about the castles or six-room mansions with private pools — among Airbnb’s most wish-listed homes in Southeast Asia is a treehouse by Taal Lake in Balete in the Philippines, according to its website. Airbnb also caters to those who want to live like locals or want to stay in a haunted house.

In Malaysia, unique favourites among Airbnb travellers include Malay kampung houses “on stilts” in Kampung Baru, Kuala Lumpur, Jonker Street in Melaka and Yong Yi Yuen, a 100-year-old pre-war heritage house in the middle of George Town, Penang.

According to Kwok, there are about 300 listings within Kampung Baru and Airbnb estimates an economic impact of about US$7 million there last year — US$1 million in host earnings and US$6 million in guest spending. “By being part of the fabric of their local communities, they drive increased footfall and tourist spending to local neighbourhoods, meaning the vast bulk of the money generated by the platform stays within the community.”

More importantly, these unique experiences separate travellers from tourists and Kwok reckons that Malaysia is a brimming culture pot with a lot to offer.

“We are seeing incredible growth in Southeast Asia and Malaysia is a huge driver of that growth. That is no surprise when you consider the incredible variety of traditions and cultures available to explore, and the hospitality deeply ingrained in Malaysian society. All of this makes Malaysia and Airbnb a match made in heaven — curious travellers come from all over the world to experience the country’s true character and personality, while Malaysians are the perfect hosts — open, hospitable and keen to show the very best their country has to offer,” Kwok says.

“As more and more people — especially young people — look to travel in new, unique and more authentic ways, we anticipate that Airbnb will continue to grow here, as travellers seek to experience the true magic of Malaysia,” she says, adding that her company is all set to promote the country to the world.

According to Kwok, some of the US$2 million that Airbnb had said it would invest by 2020 to promote and support innovative tourism projects throughout Asia-Pacific “is already being used for some fantastic initiatives around the region — for example, supporting women in rural communities in India”.

And it is just getting started. “We are actively looking to invest in other worthwhile projects and partnerships, including here in Malaysia, over the next three years and look forward to finding new ways to encourage healthy, inclusive and sustainable tourism.”

In Malaysia, nearly eight years after one Hairuddin from Kuala Lumpur made the first Airbnb listing in this country in April 2010, Kuala Lumpur City Hall (DBKL) is the first to require people and businesses leasing out residential properties for short-term stays on sharing platforms such as Airbnb, HomeAway and iBilik to register (for free) at https://elesen.dbkl.gov.my/.

The registration process is seen as positive, signalling that Malaysia is unlikely to go the way of Singapore, which in December charged two property agents with illegally arranging short-term rentals for four condominium units without permission from the Urban Redevelopment Authority. (Singapore joins several cities such as New York, San Francisco, Reykjavik [Iceland] and Barcelona, in having restrictions on Airbnb rentals.)

Taxation could follow, but Airbnb — which sees itself as a company that has leveraged technology to empower millions of local hospitality entrepreneurs to benefit from tourist dollars — is in favour of fair taxation.

“We are extremely proactive in the way we work with policymakers around the world to develop fair regulation — including finding proper ways to collect fair tax revenue from our host community. We are having fruitful conversations with the Malaysian government about the best way to help our community pay taxes here, and look forward to continuing those discussions,” Kwok says.

Since 2014, she adds, Airbnb has voluntarily collected and remitted travel and tourist taxes of over US$510 million in over 340 jurisdictions worldwide. “We look forward to working with the government to ensure that our community pays its fair share of taxes.”

About 81% of Malaysian listings are entire homes while 18% are rooms in a host’s house, which implies there may be fewer people renting out extra space on a full-time basis. The listing of entire homes may not necessarily be investment units but it could be those allowing guests to use their homes and experience their neighbourhoods while they are away.

The fact that Malaysia is the third most popular destination in Asia, according to the United Nations World Tourism Organization and Global Tourism Economy Research Centre, and “one of Airbnb’s fastest growing inbound markets with year-on-year inbound growth of 152%” puts the country high on the priority list for Kwok, whose role includes driving strategic initiatives in the region’s fastest growing markets.

It is worth noting that Morgan Stanley last November argued that Airbnb has reached peak awareness (growth) in the US and Europe and said that privacy and safety issues were on the rise.

While Malaysia is still seeing strong growth, it is worth noting that the total amount that a typical host in Malaysia earns with Airbnb had slipped from US$1,600 per host per year in 2015 to US$1,400 in 2016 and US$1,200 last year. The decline happened even as the number of inbound guests grew and total host earnings doubled. The average number of nights Airbnb guests spent also fell from 2.6 in 2015 to 2.2 in 2017. (For more statistics see the infographic on Page 69.)

Rather than being a sign that Airbnb adoption has peaked here, the reducing average could well reflect rising competition as the number of listings to choose from grows.

“While the average night stay decreased slightly last year, Malaysia saw an incredible 139% year-on-year growth in guest arrivals overall, with 1.5 million curious travellers using Airbnb to experience Malaysia through a local’s eyes. That shows us that the appetite for a new and authentic kind of travel is greater than ever, and that people all over the world want to see the true character and beauty of Malaysia, away from the traditional hotel districts and cookie-cutter tourist trails,” she says. “While there are multiple factors that can impact average host earnings, including an increase in the supply of listings, what we are particularly proud of is the fact that Airbnb is enabling hosts to earn vital supplementary income that helps them pay the bills.”

If the latter (which also applies to hoteliers) could spur Malaysians to market more creative experiences to global travellers, the boost to the local economy would be a win-win for all.

 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.