From Housing Market to Hotel Industry: The Misuse of Subsidies and Policies in the Era of Airbnb and its Fivefold Negative Impact in Aruba


The rise of the sharing economy has seen companies like Airbnb revolutionize the way we travel. While this innovative platform has undoubtedly provided travelers with a unique and often affordable way to experience new destinations, recent studies suggest that Airbnb may also be having several significant negative impacts on local economies and communities.

1. Rising Housing Prices

One of the most significant impacts Airbnb has had on local economies is the increase in housing prices. As more homeowners choose to rent their properties to tourists, the number of homes available for long-term rental decreases. This reduction in supply can lead to an increase in housing prices, making it more difficult for locals to find affordable housing​.

2. Income Inequality

Airbnb’s platform may also be contributing to income inequality. Studies have shown that Airbnb hosts in major cities are disproportionately white and male, and that the majority of Airbnb listings are owned by people with multiple properties. This suggests that the benefits of Airbnb are being enjoyed predominantly by those who are already wealthy, exacerbating economic inequality​.

3. Negative Impact on Local Businesses

Airbnb could also be having a negative impact on local businesses. A recent study found that for every 1% increase in Airbnb listings in a city, there was a 0.42% decrease in revenue for local businesses. This is because people who stay in Airbnb rentals are less likely to go out and spend money at local restaurants and shops​.

4. Unfair Competition and Losses for the Hospitality Industry

Despite the growing popularity of Airbnb, data suggests that it has not significantly harmed the hotel industry. However, the threat that Airbnb poses to the hospitality sector cannot be ignored. Airbnb hosts do not face the same level of regulation and overheads as traditional hotels, creating an uneven playing field. Furthermore, some local economies are dependent on the hospitality sector, and the loss of revenue and jobs can have a significant impact on these economies​.

5. Misuse of Subsidies and Policies

In places like Aruba, Airbnb owners are taking advantage of subsidies and policies intended for residents, not businesses. This misuse can lead to losses for government and utility companies and create an unfair advantage over residents and other businesses. The misuse of subsidies and policies can also undermine the sustainability of local economies and communities, leading to calls for greater regulation and oversight of Airbnb and similar platforms.


The proliferation of Airbnb has led to unintended negative consequences on local economies. From escalating housing prices to exacerbating income inequality, the platform’s effects are far-reaching. Particularly worrying is the exploitation of subsidies and policies meant for residential use, resulting in an unfair advantage for Airbnb owners over traditional businesses and residents. This misuse also leads to significant financial losses for both the government and utility companies. Therefore, it is critical for governments to enforce tighter regulations and ensure Airbnb hosts are held accountable to the same standards as other businesses, to protect the affordability and sustainability of local housing markets.

Aruba Tourist Channel