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Fundamental Flaws in the Underpinning Research: Indigo House Group (2017-2019)

In 2017, Scottish Government commissioned The Indigo House Group to undertake scoping research on short term lets in Scotland.

Indigo House “are a house of experts, offering an unrivalled range and depth of integrated services to help clients solve the challenges that housing organisations and social enterprises face in today’s uncertain environment”[1]. The emphasis on housing should not be underestimated. This should be considered alongside the fact that the More Homes division is leading on this legislation, and it is within the portfolio of the Cabinet Secretary for Housing.

In a March 2017 a document from Indigo House, entitled ‘SG short lets discussion topic guide – ASSC’ sent to the ASSC as part of the Scottish Government’s Expert Advisory Panel on the Collaborative Economy, states:

“For the purposes of this research short-term lets are those properties supplied through both traditional business models, and emerging models – the so-called ‘collaborative economy’ – which connects individuals via online platforms, enabling the provision of goods and services, assets and resources without the platform company holding ownership of the traded good. The most well-known example in the short term let market is AirBnB, but other operators exist including Home Away, Booking.Com, HomeAway, Flipkey and Housetrip.”

They quote Jamie Steed, Consumer and Competition Policy Unit, Scottish Government as saying:

“Scottish Government have also been receiving an increasing volume of correspondence about the effects short-terms lets are having on the housing market in Scotland.  To help understand the drivers behind this and gather comparative data about the multiple sources short-terms lets are being marketed through we have commissioned specialist housing consultants to provide us with scoping research.  This research will help inform our expert panel on whether collaborative platforms are effecting Scotland’s housing market in comparison to traditional models.”

Indigo House’s document goes on to say that “the research will help inform the Scottish Government’s expert panel on whether and in what ways collaborative platforms are affecting Scotland’s housing market in comparison to traditional tourism letting models such as B&Bs and hotels

In April 2017, Indigo House published their Scoping Report on the demand and supply of short term lets in Scotland informed the Scottish Government’s Expert Advisory Panel on the Collaborative Economy[2]. 

Their recommendations to Scottish and local governments then was to regulate this growing informal holiday lets sector (AirBnB and similar) to help manage –

  • the impact of increasing short-term lets on permanent residential supply
  • the impact on change of amenity for existing residents and communities (increased noise and rubbish)
  • potential increased health and safety risks through the effective change of use, and
  • balance these risks with the positive impacts that short-term lets can have on Scotland’s tourism.

In August 2017, the ASSC wrote to the Chair of the Expert Panel on the Collaborative Economy, outlining our grave concerns with the scoping research[3]:

“This analysis relied heavily on the use of so-called ‘data scraping’ from an unreliable third-party site. While the report briefly mentions the “limitations” of this kind of data, the authors then go onto state that it provides a “fair representation of the trends in the emerging market.” In fact, scraped data is subject to numerous assumptions which can, in turn, lead to unsupported conclusions. Relying on this type of data does not lead to sound policymaking.  

“In addition to problems with the underlying data from the scoping report, we also have concerns with the level of dialogue between Indigo House and key stakeholders. Both Airbnb and the ASSC supplied evidence-based data, which would have helped to provide a clearer representation of the Scottish short-term rental market. Both organisations met with resistance from Indigo House that this data would be able to be used. While the authors maintain that their research involved “in-depth consultation”, this has not been the experience of our organisation. I understand that Indigo House was asked to consult with the ASSC on 12th March 2017.  For inexplicable reasons, they chose not to do this.

“With this in mind, it should not be forgotten that Indigo House were awarded £9,950 by the Scottish Government, on a non-competitive tender, to undertake this scoping research over a two month period. Despite this substantial use of taxpayers’ money, they have singularly failed to consult in an appropriate manner with key stakeholders involved in the short-term let market – the very organisations who would be most affected by any regulations pursued.

“Given the profound consequences of any potential disproportionate government regulation, we would implore the Panel and the Scottish Government to take a thorough evidence-based approach which relies on the most accurate data available from a diversity of sources, not flawed research designed to fit the desired policy outcome of its authors.“

In 2019, The Scottish Government again commissioned Indigo House to undertake research to find out more about the impacts of short-term lets – both positive and negative – on communities, with a focus on neighbourhoods and housing. In their document entitled Scottish Government research on the impacts of short-term lets on communities in Scotland, they claim that the research:

“will involve short-term lets hosts, residents, local businesses[4] and other community actors, such as local development organisations and neighbourhood groups”

“The research focuses on short-term accommodation booked through online platforms. Traditional self-caterers are not the focus of this research. Self-caterers who use online platforms to advertise their properties may be recruited to the research as hosts and traditional self-caterers will be included in the research as local business.

“Hotels are specifically excluded from this research, although small hotels and B&Bs, and traditional self-caterers that do not use platforms may be consulted as local businesses.”

In the Indigo House ‘Hosts Survey’ (26th July 2019), it states that the “Scottish Government have commissioned Indigo House Group, in partnership with IBP Strategy Research, to carry out research about the impact of short-term lets via online platforms on local communities.

““Short-term lets” for the purposes of this research means holiday lets and other lets to non-residents on online platforms such as Airbnb, Booking.com, Citylets.co.uk, Gumtree.com, HolidayLettings.co.uk, HomeAway.co.uk, OneFineStay.com and TripAdvisor.co.uk.”  (It is relevant to note that OneFineStay is owned by Accor Hotels and therefore would be exempt from licensing if classified as ‘hotel’).

With this research being undertaken, and very little clarity on the intended outcome, the ASSC sought clarification that professional ASSC members would be consulted.

In a joint letter from ASSC, UKHospitality and Scottish Tourism Alliance, dated 13th June 2019 to Kevin Stewart MSP, the three associations highlighted their concerns with the Indigo House Research Project into Short Term Lets:

“As representatives from the hospitality, traditional holiday let and tourist industry, we are contacting you regarding the recent announcement that the Scottish Government have commissioned Indigo House consultancy to conduct research into the impact of short-term lets on housing and communities in Scotland.

“All of us support the responsible and sustainable growth of tourism in Scotland and that we must strike an appropriate balance between local communities and our tourist economy. As such, we support the evidence-led approach from the Scottish Government and the launch of the consultation into the regulatory framework for short-term lets. We have continuously strived to be as constructive as possible with our engagement with the government from the work of the Scottish Government’s Expert Advisory Panel on the Collaborative Economy, to the work of the Short-Term Let Delivery Group, up to the new consultation launched earlier this year.

“However, following our attendance at the short term lets stakeholder event on 12th June in Edinburgh, we would like to request some further information on the nature and scope of the aforesaid research by Indigo House.  

“We would appreciate it if you could supply some information to the following questions: 

  1. What are the precise terms of reference for the research project?
  1. We note that the research project will “involve short-term lets hosts, residents, local businesses and community actors. Please may you: (a) confirm whether professional holiday let operators, including those who do not use online platforms, will be approached to participate in the case studies; (b) confirm whether those in the tourist industry be represented in these case studies; (c) explain the difference between “residents” and “community actors”.
  1. Can you provide the five locations in Scotland in which the case studies will be undertaken? 
  1. What are the questions being asked? 
  1. Will the wider tourism industry / accommodation sector be consulted during the research? 
  1. If this research is considered critical to the shaping of Scottish Government’s policy regarding STL, it is of concern that the results will not be available until well after the consultation closes on 19th We consider this to be inconsistent with reaching well-informed policy decisions affecting the tourism accommodation sector. When was the decision taken to commission Indigo House to conduct this research?

“This will be a key piece of research so it is vital that it is fair and balanced to all those concerned. We all wish to offer our insight and expertise to what could be a valuable piece of research to inform the Scottish Government’s approach to the regulation of short-term lets in Scotland.

“We would appreciate a reply at your earliest possible convenience.


“Fiona Campbell, CEO, Association of Scotland’s Self-Caterers

“Marc Crothall, CEO, Scottish Tourism Alliance

“Willie Macleod, Executive Director, UK Hospitality (Scotland)”

Despite a lack of reply, we found that the study was focused on 5 specific areas (ones that had already expressed concerns about the impact of STL on housing):

  • Edinburgh Central (specifically the New Town, the Old Town and Tollcross)
  • Fife, East Neuk (specifically Elie/ Earlsferry, St Monans. Pittenweem, Anstruther / Cellardyke and Crail but NOT St Andrews)
  • Glasgow Central (specifically Anderston, Yorkhill, Merchant City)
  • Fort William
  • Skye

Indigo Houses’ ‘STLs research information for platforms 190619’ document states that “these locations have been selected based on the level of urbanisation (mix of urban / rural), the number of Airbnb listings and their growth, the percentage of listings relative to the total number of dwellings, and the level of area deprivation. The areas represent typologies through which the different experiences of the participants will be explored”.

The Scottish Government’s research questions, via Indigo House, were:

  • How do short-term lets and their growth affect communities across Scotland?
  • Do people perceive an increase in short-term lets in their local area and in what ways?
  • Who is affected by short-term lets and in what ways?
  • How does the short-term lets experience differ for each of the following groups: local residents, people who host short-term lets, as well as other community actors, such as local businesses?
  • What, if any, are the differences between the impact of short-term lets in urban and rural Scotland?

Source: Indigo House (2019).

The 2019 Consultation failed to fairly and proportionately consult with operators. The ASSC, UKH and STA’s concerns regarding the scope and nature of the consultation, outlined in our letter above to Kevin Stewart MSP, manifested themselves when the consultation was published.

Indigo House consulted with 592 affected residents, 63 community organisations, Airbnb hosts and just 5 professional self-catering operators. They only consulted in five localities across Scotland – ones that had already expressed concerns about short-term letting and its anecdotal impact on housing supply.

The ASSC obtained the questions that Indigo House asked to the ‘businesses’, and sent the same questions to the ASSC membership, in order to get a clearer picture across Scotland[5]. The results are, unsurprisingly, very different to those highlighted by the Indigo House report.

The ASSC received 107 responses to the survey, carried out in July 2019:

  • The majority of responses (60%) were from businesses based in Edinburgh, followed by 22% in Fife and 10% in Glasgow.
  • The largest regions overall represented were Lothian with 27%, Highlands 19% and Argyll, Isles and Stirlingshire 14%
  • 48% of ASSC Members responding were operating rural properties with 70% describing their business as ‘holiday cottages or houses’ and 24% as ‘self-catering apartments’.
  • ASSC Members responding have been operating over a number of years with 38% being between 1-5 years, 16% 6-10 years and 15% 11-15 years. However, it is worth noting that 5% have been operating for over 40 years!
  • 96% of ASSC Members responding live in the same area that their business/property is operating, with 21% having lived in that area for over 40 years.
  • 96% of ASSC Members responding use online platforms to market their business with their own website (16%) and Airbnb (18%) being the most specified.
  • 52% of respondents specifically stated that they were aware or very aware of short-term lets in their area. Many felt they were very aware of traditional self-catering businesses, but were not aware of the newer business models. 47% felt there had been an increase in the amount of short-term lets in their area over the past 3 years with 67% citing income as the main reason for people offering out a room/property on a short-term basis.
  • 68% of respondents felt that Tourists were the main type of visitors using short-term lets with 70% feeling there had been no change to the type of visitor. Local economy spend (67%) is considered the biggest positive impact to community & income (68%) the biggest positive impact to individual businesses. The vast majority felt there were no negative impacts on community or individual businesses.
  • There are several areas identified for the role of Scottish Government in regulating short-term lets, mainly recognising the difference between professional operators and amateur hosts & ensuring a level playing field (29%) between these. Defining a regulatory framework / minimum standards for amateur hosts was also felt important (28%).
  • It is felt that short-term lets are vital to the economy and support local businesses, it is also widely felt that the sector should be supported more by Scottish Government. It is felt that the differentiation between professional operators and amateur hosts should be recognised.
  • 39% of respondents confirmed they had responded to the Scottish Government consultation and of those not already responded, a further 63%, intended to do so. However, many of those who had not responded found the questions very confusing, difficult to understand or the consultation too long.

Indigo House was only prepared to speak to 2 self-catering ‘businesses’ in each of the 5 areas they are investigating. Indigo House wanted to speak to ‘businesses’ who did NOT use platforms to market their properties. 96% of respondents to our survey use platform, showing a lack of understanding of the sector and its use of marketing channels.

The 2019 consultation failed to provide a definition of short-term letting. There was a lack of differentiation between traditional models of accommodation (‘businesses’) and collaborative economy platform models which has led to where we find ourselves today.

The consultation failed to reflect empirical data provided by the ASSC or Airbnb (Appendix 7[6]). It also conflated a number of issues including residential housing shortages, anti-social behaviour, and tax avoidance. The ASSC attests that the entire 2019 consultation is flawed.

A recent Freedom of Information[7] request reveals that the 2019 consultation cost £96,945.16, excluding Scottish Government Staff costs. Given that the legislation was withdrawn when first laid in February 2021, considered not fit for purpose, one wonders if this has been reasonable use of tax payers money.

In our view the Scottish Government has simply not listened to critics, industry experts, or the local authorities that will be charged to deliver the legislation, but based this legislation on the lobbying of unrepresentative geographically restricted pressure groups. This does not amount to a viable consultation and should not inform legislation which will have far reaching effects on businesses and livelihoods and the wider tourism industry in Scotland.


[1] https://indigohousegroup.com

[2] https://indigohousegroup.com/pressure-is-building-on-the-short-term-let-market/

[3] Indigo House Report Response 180817

[4] See reference that “traditional self-caterers will be included in the research as local business.”

[5] The Impacts of Short-Term Lets on Communities in Scotland Survey, July 2019

[6] https://www.assc.co.uk/wp-content/uploads/2021/01/ASSC-Committee-Submission-Appendices.pdf

[7] https://www.gov.scot/publications/foi-202100243834/

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