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EU debates hitting Airbnb with tougher regulation

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The EU is debating guidelines that would classify the accommodation booking company Airbnb as a “gatekeeper” platform, paving the way for much stricter regulation under its new Digital Markets Act.

As they prepare to introduce the first big overhaul of regulations for internet companies in two decades, officials in Brussels are discussing the criteria to judge which online platforms are “gatekeepers”, such as their revenues and user numbers.

Officials are still unsure, however, whether to adopt a narrow set of criteria to capture just the biggest platforms, such as Google and Amazon, or whether to apply the definition to as many as 20 companies.

Two people with direct knowledge of the discussions said Airbnb’s inclusion on the list was a “real possibility” because of its large share of the short-term rentals market. Booking.com, Airbnb’s rival, may also be classed as a “gatekeeper”.

More than half of homes which offer short-term stays are listed on Airbnb, compared with 37 per cent on Booking.com and 22 per cent on Expedia, according to figures from the analytics company Transparent, which analyses global holiday rental listings.

Companies classed as gatekeepers by the EU may face regulations to force them to share their customer data with smaller rivals and to ban them from giving preferential treatment on their platforms to their own products and services.

The hotel industry, already in disarray because of the disruption to global travel from the coronavirus pandemic, has stepped up its lobbying campaign for more regulation of online booking platforms, such as Airbnb and Booking.

“We want a level playing field in an environment where things are extremely difficult,” said one senior hotel industry executive.

Jacques Lovell, public affairs manager at Hotrec, the trade body for hotels in Europe, which has been at the forefront of the lobbying efforts, said that Airbnb’s dominant position in the short-term rental market meant that he assumed it would fall under the EU’s new “gatekeeper” rules: “When we say short-term rental, we say Airbnb, which I think says it all.”

A draft of the new Digital Markets Act is expected to emerge in early December.

Airbnb, which is gearing up for a multibillion-dollar public listing before the end of the year, said: “Travel is a competitive industry and we do not believe that Airbnb, or the sectors in which we operate, raise the concerns that the commission has identified with other companies. Competition in travel has brought significant benefits to European consumers in terms of choice, access and lower prices.”



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Bullying Russia yearns to be treated as a great power

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The writer is the author of ‘Putin’s Russia’ and a member of the Liberal Mission Foundation

At their Conference on the Future of Europe, which opened on May 9, EU leaders invited citizens to “join the debate” on the path ahead. In Washington, President Joe Biden has called for “togetherness” as he announces ambitious plans to transform the US economy and society. For the west, the way to deal with crises is to build images of a better, shared future.

By contrast, Russia is turning to the past in its search for unity. At a Red Square military parade, also held on May 9, President Vladimir Putin asserted that the Soviet people had fought “alone” on their road to victory over fascism in the second world war. In this way, he confirmed that Russia and the west are on opposite trajectories.

Putin’s emphasis on his nation’s past achievements could secure stability in Russia for a while. His rule benefits from the fact that the Kremlin today faces no serious internal or foreign threats. Why, then, is Putin acting like some geopolitical Alfred Hitchcock and creating suspense in international relations, forcing western leaders to play “who blinks first”?

As Russia’s chief decision maker, Putin’s personal moods obviously matter. However, more important is the logic of the Russian system of power, with its demand for recognition on the world stage of the nation’s great power status. According to this logic, Russia cannot be ignored and must be a member of the global concert of powers. It believes macho bullying is the entry ticket to the concert.

Despite the crackdown on domestic dissent and the anti-western rhetoric of state propaganda, the Kremlin’s policies are aimed at preventing Russia from turning into a sealed-off fortress. For in order to be a great power, Russia has to sit at the same table as its peers. To satisfy its global aspirations and conform with the logic of its domestic power arrangements, Russia has to be simultaneously with the west and against it.

In a sense, Putin is getting what he wants. Biden has suggested holding a US-Russian summit, and EU leaders are trying to keep open lines of dialogue with Moscow despite low levels of mutual trust. However, if western governments hope to find a modus vivendi with Russia, they may be disappointed.

For the price that the Kremlin is willing to pay for the risks its policies are incurring is higher than the costs that the west is ready to impose on Russia for causing disruption. In effect, the west is pursuing a dual-track policy towards Russia of containment and co-operation. In recent times, however, this policy has run into the problem that co-operation stalls every time the west feels a need to deter Russia. If they want their approach to work, western countries will have to do a better job of compartmentalising the two tracks.

There are important differences with the cold war era of Soviet-western confrontation. In those decades, the Soviet Union unintentionally consolidated western unity by behaving in ways that strengthened the west’s commitment to principles of liberal democracy and the rule of law. Nowadays, post-Soviet Russia undermines the west by mimicking its liberal principles and getting “inside” western societies through its political and economic elites, business operations and powerful lobbying machines.

Partly for these reasons, the west finds it hard to set clearly defined “price tags” for what it deems unacceptable Russian behaviour. The Kremlin’s recent military build-up on Ukraine’s borders was evidently no red line for the EU. Yet to accommodate Moscow simply encourages its assertiveness.

Nevertheless, a bitter irony may lie in store for Russia. Putin’s international bullying beefs up his image as a strong leader at home. Yet the Kremlin’s continual testing of western patience serves to undermine Russia in more subtle ways.

After the Soviet Union’s collapse, Moscow learnt to use the west as an economic and technological resource. The Russian elite made the west its home. But to preserve the west as a resource, Russia needs the trust of western partners. Instead, the Kremlin’s Hitchcock-style games of suspense provoke western suspicions and an instinct to fall back on deterrence.

There is a potential trap for the west, too. Its dual-track policy helps Russia’s power structures, as they have evolved under Putin, to limp on. The Kremlin and its agencies engage in international behaviour that the west finds disagreeable. But the west can hardly try to undermine them without running the risk that Russia would plunge into instability. Is the west really prepared for the huge uncertainties of a world in which the existing power structures in Moscow unravel before any domestic alternative is available to take their place?



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PiS unveils ‘Polish Deal’ to lift economy

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Poland’s conservative-nationalist government has set out plans to boost health spending and cut income tax, as part of a sweeping programme designed to bolster the economy in the wake of the pandemic.

The so-called Polish Deal, which will include support for housebuyers, pensioners and families, as well as tax cuts for low and middle-earners, is widely regarded as an effort by the ruling Law and Justice party (PiS) to set out its stall ahead of parliamentary elections due at the latest in 2023.

Like most countries in the EU, Poland has been ravaged by Covid-19, with the pandemic claiming more than 70,000 lives and tipping the economy into recession for the first time in three decades.

Prime minister Mateusz Morawiecki said the Polish Deal — which will be buttressed by loans and grants from the EU’s recovery fund — was a chance to fulfil Poles’ dreams of catching up with richer countries in western Europe, as well as to expand the country’s middle class.

“We have a huge opportunity in front of us,” he said. “[In the past] we always had to worry about freedom from external oppression. But today, we can care about the freedom to decide about the rules of social and economic growth on our own sovereign Polish conditions.”

As part of the changes announced on Saturday, PiS and its two smaller allies plan to boost spending on the underfunded health system, parts of which have been overwhelmed by the pandemic, from 5 per cent of GDP in 2020 to more than 7 per cent in 2030.

The tax system will also be rejigged. The income-tax-free allowance will rise to 30,000 zloty, and the threshold at which Poles start paying the higher 32 per cent rate of tax will rise from 85,000 to 120,000 zloty per year.

Mortgage rules will also be revamped and guarantees will be provided to make it easier for the young to buy property, while the rules around building permits will be relaxed. There will also be further benefits for families with young children, and pensioners, as well as a programme of investments that PiS claimed would create 500,000 new jobs.

Morawiecki and his fellow speakers at the congress of the ruling camp gave few details on financing for the tax cuts.

Jaroslaw Gowin, deputy prime minister and head of Agreement, one of PiS’s two junior coalition partners, conceded richer Poles would have to pay more taxes, but did not go into detail. He also said the state budget would be hit.

Poland’s finance minister Tadeusz Koscinski told the FT that the tax cuts would partly be funded by faster growth. However, he added that the fiscal shortfall would also be partly covered by higher social security payments from workers and business, resulting from changes that would push more workers from self-employment to full employment contracts, and from the removal of a cap on social security payments for the self-employed.

Koscinski said the annual net cost to the state budget of the tax cuts would be about 7bn zloty. He added that there would be a further 3bn zloty in subsidies to co-finance investments by local governments that had lost revenue as a result of the tax changes.

Adam Czerniak, an economist at Polityka Insight, said the government’s assumptions about faster growth helping to cover the cost of the government’s plans were “optimistic, but I think they can happen”.

However, he expressed concern that the changes around housing — which include state guarantees on home loans for young borrowers — could cause a booming market to overheat.

“Guarantees on down payments are very risky at this point in the business cycle in the housing market,” he said.



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Gastronomes look beyond pandemic to a revolution in French fine-dining

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Chef Yannick Alléno used to serve a €395 menu featuring langoustines and foie gras at his three-starred Michelin restaurant near the Champs-Elysées.

But as France prepares to allow restaurants to reopen for outdoor service next week after six months of closure, he will instead be serving up burgers at his wine bar for a fraction of the price. 

That a superstar chef such as Alléno, whose stable of high-end restaurants from Courchevel to Marrakesh hold more than a dozen Michelin stars, is changing strategy underscores the difficulties facing France’s grands restaurants as they seek to recover from the ravages of the coronavirus pandemic

“We have to inspire people to come here by sparking their curiosity,” he said of the Pavillon Ledoyen, the neoclassical building that houses several of his restaurants, including the three-starred Alléno Paris.

Such temples to French gastronomy have long catered to wealthy foreign tourists, who will happily pay more than €1,000 for a meal for two as long as they experience l’art de vivre à la française. But with international travel severely curtailed by the pandemic, such customers are not expected back for some time. 

Chef Yannick Alléno
Yannick Alléno operates high-end restaurants from Paris to Courchevel and Marrakesh that hold a dozen Michelin stars combined © Francois Durand/Getty

Attracting locals is the new challenge, as well as retaining employees, many of whom have left the sector and its notoriously challenging working conditions. Many restaurants are also saddled with large debts after taking state-guaranteed loans to ride out the crisis.

“I have three years of struggle ahead,” said Alléno, adding that half the group’s €4m in cash reserves had been spent. “For three-star restaurants, there will be many casualties.” 

His flagship restaurant used to generate more than three-quarters of revenue from foreign diners, mostly from Asia and the US. As there is little point reopening without them, the doors will remain shut until September. Alléno will for now experiment in the less-formal location as he plots an overhaul that seeks to drag fine-dining into the 21st century.

“Everything must change,” he said, quoting the title of the book he co-wrote during lockdown. In it, he called for a revamp of everything from the style of service (warmer, more personalised) to staffing (more flexible and family-friendly).

French haute gastronomie traces its roots back to visionary 19th-century chefs such as Auguste Escoffier and Marie-Antoine Carême, who created a cuisine based on rich sauces and meticulous — often theatrical — service. For decades it was considered the world’s best and became a key part of French identity.

But its popularity has faded in recent decades thanks to competition first from the flashiness of molecular gastronomy and then the pared-back Nordic style. As French haute cuisine lost ground, it became much more expensive, putting it out of the reach of many.

“The pandemic has exposed that the business model of high-end restaurants in France simply doesn’t function without tourists,” said Joerg Zipprick, co-founder of La Liste group, which ranks the world’s best restaurants.

“This is a relatively new development. It used to be that . . . a local doctor or manager would come to these places to celebrate a special occasion. No longer.”

Zipprick said that for the top chefs, many of whom had spent the past year experimenting with takeouts and meal kits, success depended on their willingness to adapt.

A customer picks up his order from Baieta in Paris
Baieta restaurant in Paris. Many top chefs have experimented with takeouts and meal kits during the past year © Franck Fife/Getty

Diners would not want fussy and experimental dishes on their return, he predicted, but would instead want to eat good food at a nice restaurant in the company of friends and family.

“No more technical stuff or food that requires a long explanation from the waiter about the fermentation process. People don’t want their meal to be a work of art,” Zipprick said.

The last time French cuisine reinvented itself was in the 1970s when chefs such as Paul Bocuse and the Troisgros brothers created nouvelle cuisine. The movement, less opulent and calorific than the fine-dining that preceded it, put fresh and high-quality ingredients to the fore and service became less formal. 

Alléno believes top restaurants must aim to tailor experiences by talking to clients beforehand about the occasion for their dinner, the guests and their tastes.

This “concierge service” approach would allow menus to be better planned, improving the customer experience and the economics for the restaurant.

“If I know I only have three people who’ll eat langoustine on a given night then I don’t need to order six kilos just in case,” he said. “It really changes things for the kitchen.” 

Others are being even more radical. Daniel Humm’s three-starred Eleven Madison Park in New York will no longer serve meat and seafood when it reopens next month, as the Swiss chef seeks to show that sustainable and environmentally conscious eating can be compatible with luxury.

However, Éric Fréchon, the three-Michelin-starred chef behind restaurant Epicure at the five-star Le Bristol Paris hotel, played down expectations of radical change.

“Things will return much as they were before,” Fréchon said, noting that the hotel’s restaurants had a significant local client base. “People have missed the experience of haute gastronomie for so long they’ll be eager to come back.”

Fréchon said he would retain some coronavirus-era innovations, including the €1,390 “gastronomy and to bed” package that is marketed as a one-night staycation for locals that includes dinner in their suite or hotel room.

“For New Year’s Eve we had 60 servers running back and forth to rooms, it was really difficult,” he said. “But it allowed us to reach new clients who perhaps would not have dared to come to a three-star restaurant. Now we have to keep them.”

Additional reporting by Domitille Alain in Paris



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