Tourism, financialization, and real estate: the transformation of the holiday rental market

From the perspective of an Alpine town with high tourism intensity, this paper adds to the literature on the political economy of short-term rentals (STRs). While holiday apartments are a relatively new phenomenon in cities, connected to the emergence of the platform economy, in many Alpine destinations, they have constituted an important segment of tourist accommodation for many decades. This is the situation in our case study town, Garmisch-Partenkirchen (Bavaria, Germany), where many holiday apartments have traditionally been part of detached houses. Drawing on qualitative fieldwork, the paper seeks to answer two questions: (1) How has the holiday rental market changed with the rise of digital platforms? (2) What socio-spatial consequences did the transformation of the holiday rental market have? We found that the profound restructuring of the STR market is primarily related to two interconnected reasons: (a) To the growth and professionalization of traditional STR management companies, and (b) to a growing number of external investors, particularly wealthy private individuals, who acquire holiday apartments as capital storage and financial investment. Due to the extremely high real estate prices, newly built apartments are almost exclusively offered on the STR market, which in turn causes rental and building prices to rise again. For policies in rural areas, it is of utmost importance to take those new platform-related (financialization) dynamics into account. While local property owners and non-local investors drive the restructuring of the holiday rental market, benefiting from escalating real estate prices and from the extraction of tourism rent, the non-property-owning population is priced out of Garmisch-Partenkirchen. The explosion in real estate prices has meant that it is almost impossible for tourism employees to find affordable housing, which, in turn, is becoming a burden for labor-intensive tourism businesses. This highly unequal socio-spatial development is becoming an ever-greater problem for the town.