Holiday rentals and the urban transformation

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Varnika Srivastava


The ever-expanding real estate market has never previously been so full of holiday rentals. While the phenomenon has only exploded in the past few years, the effects of short-term rentals on urban space have brought about a transformation in the socio-spatial structures of many cities. From the creation of a previously non-existent market to gentrification, the effects of short-term rentals have only just emerged in the past decade. This paper will focus on the challenges and opportunities that lie in the short-term rental market and their effects on the socio-spatial distribution in urban spaces, along with how the emergence of this new market has restructured cities. This paper also addresses the effects of failing to incorporate the social dimension in an urban restructuring that comes about through these short-term rentals.


The news has been filled with increasing prices of housing and mortgages in the past few months. This rise in housing prices is due to a variety of reasons, which range from demography to recession. However, one trend that has been on the rise in the past decade has been a shift in the perception of housing as a shelter to that of an investment, with buying houses and remodeling them for the purpose of selling them becoming common in countries like the US. In this shift towards housing as a front of investment, short-term rentals have popped up everywhere. With rising globalization and an increase in tourism, it is no surprise that a new market was created in the form of short-term rentals. This shift was not entirely unexpected. As tourism increased, many homeowners in tourist hubs realized that they could rent rooms in their houses for tourists at a lower price compared to that a hotel and still make a good profit. Platforms like Airbnb have made this market expand at an unprecedented rate.

Short-term rentals and their social-spatial impact on cities

The movement of housing is seen as a viable investment and a source of income has led to vacation rentals representing the new gentrification battlefront, with both middle- and lower-income groups being displaced by tourist investors (Gant, 2016). By removing reasonably priced long-term rental properties from the market, short-term rentals add to the gentrification of communities (Wachsmuth & Weisler, 2018). Putting up a property on platforms like Airbnb is relatively easy, with little or no oversight. For a landlord, the potential revenue stream by putting up a property for short-term rental is huge. Cities and towns all around the world are increasingly debating whether and how to regulate short-term rentals in light of their effects on property markets. There have been legislative standoffs sparked by housing agitation all over North America and Europe (Robertson, Oliver, & Nost, 2020). In fact, Airbnb specifically has created a new type of rent gap that is culturally appealing and globally recognizable by introducing a new potential cash stream into the housing markets that is systematic yet geographically unequal (Wachsmuth & Weisler, 2018). A variety of different housing actors, including developers, landlords, tenants, and homeowners, can take advantage of this rent gap, which can materialize quickly—in advance of any diminishing property income. It also requires no new capital, making the shift to short-term rental even more appealing.

While the social impact of short-term rentals remains clear, the spatial effects and the urban transformation it brings about are much more nuanced and unfortunately not much studied. Among the studies done in cities where short terms rentals are most prominent, like Barcelona, New York, Berlin, Amsterdam, and London, Cocola-Gant (2016) writes that short-term rentals and gentrification basically feed off each other (Gant, 2016). Tourism accelerates gentrification which causes land prices to go up. It can also be observed that tourists are more the consumers of the gentrification process rather than the producers. There is a huge gap in the purchasing power of tourists and local residents (the ones who are being displaced because of gentrification). This gap leads to market pressure on landlords to make the spaces unaffordable for local residents (Robertson, Oliver, & Nost, 2020). In short, tourism creates opportunities for gentrification through short-term rentals that would not have existed based on local demand, which leads to the eviction of middle- and lower-income groups. The areas in cities with these rentals are seeing land prices go up, with the displaced population being pushed to the peripheries of cities, causing a change in the spatial structure of cities.

Final Remarks

The effects of short-term rentals and the transformation that it has brought to the urban space are clear. In the social sphere, it leads to gentrification, through the eviction of lower-income families by landlords, who can earn much more by turning their property from affordable housing to short-term rentals catering to an ever-growing tourism market. In terms of spatial effects, short-term rentals are causing land prices to go up, and are pushing lower-income households to the periphery of cities. This leads to urban inequalities rising, and some neighborhoods being considered inherently ‘bad’ because they are dominated by lower-income residents.

The solution to this problem is not simple. Lack of regulation on short-term rentals has led to this explosion of gentrification through tourism, but introducing new restrictions can also as easily backfire (as was seen in New York City vs Airbnb lawsuit, see Wachsmuth & Weisler, (2018) for details). Cities all over the world are rushing to create laws governing short-term rentals, but we still know very little about which attempts at regulation have been successful thus far and which have been politically possible. In addition, authorities don’t necessarily speak with the same voice or even have the same fundamental interests. Therefore, researchers must have a deeper understanding of the political economy of short-term rentals. They must know what motivates various state and civil society actors to hold divergent views on how short-term rentals should be controlled and why they spend a lot of money doing so.


  1. Gant, A. C. (2016). Holiday rentals: The new gentrification battlefront. Sociological Research Online, 21(3), 1-9.
  2. Robertson, D., Oliver, C., & Nost, E. (2020). Short-term rentals as digitally-mediated tourism gentrification: impacts on housing in New Orleans. Tourism Geographies, 1-24.
  3. Wachsmuth, D., & Weisler, A. (2018). Airbnb and the rent gap: Gentrification through the sharing economy. Environment and Planning A: Economy and Space, 50(6), 1147-1170.