Posted on 04/17/2017 2:58:31 AM PDT by Altura Ct.
Last year, Airbnb underwent a rough regulatory patch. The short-term rental company became a Federal Trade Commission target last summer after three senators asked for an investigation into how companies like Airbnb affect soaring housing costs. In October, Gov. Andrew M. Cuomo of New York signed a bill imposing steep fines on Airbnb hosts who break local housing rules.
The two actions appeared unrelated. But one group quietly took credit for both: the hotel industry. In a presentation in November, the American Hotel and Lodging Association, a trade group that counts Marriott International, Hilton Worldwide and Hyatt Hotels as members, said the federal investigation and the New York bill were “notable accomplishments.”
Both were partly the result of a previously unreported plan that the hotel association started in early 2016 to thwart Airbnb. The plan was laid out in two separate documents that the organization presented to its board in November and January. In the documents, which The New York Times obtained, the group sketched out the progress it had already made against Airbnb, and described how it planned to rein in the start-up in the future.
The plan was a “multipronged, national campaign approach at the local, state and federal level,” according to the minutes of the association’s November board meeting. Continue reading the main story
The documents provide an inside look at how seriously the American hotel industry is taking Airbnb as a threat — and the extent to which it is prepared to take action against it.
In the past, hotel executives typically played down the privately held company’s impact on the $1.1 trillion American hotel industry. As recently as December, a Marriott executive dismissed Airbnb as not “really making headway in the corporate environment, which is really our bread-and-butter business.”
Yet there is now little mistaking that Airbnb is encroaching on the traditional hotel business. The company, which is based in San Francisco, was founded in 2008 as a way for people to easily list and rent out their spare rooms or their homes online. Since then, about 150 million travelers have stayed in three million Airbnb listings in more than 191 countries, according to the company.
Airbnb has raised more than $3 billion and secured a $1 billion line of credit, according to the research firm CB Insights. Brian Chesky, Airbnb’s chief executive, has said the company could be ready to go public in a year. Investors have pegged Airbnb’s value at around $30 billion; in contrast, Hilton’s market capitalization is $19 billion and Marriott’s $35 billion.
The Hotel Industry’s 2017 Plans to Combat Airbnb “Objective: Build on the success of 2016 efforts to ensure comprehensive legislation in key markets around the country and create a receptive environment to launch a wave of strong bills at the state level while advancing a national narrative that furthers the focus on reining in commercial operators and the need for commonsense regulations on short-term rentals.” Read the original document.
All of that has hurt hotel operators. Airbnb has brought hotel pricing down in many places during holidays, conventions and other big events when room rates should be at their highest and the industry generates a significant portion of its profits, said Vijay Dandapani, chief executive of the Hotel Association of New York City, which works with the American Hotel and Lodging Association.
The industry’s plan against Airbnb shows “the hotel cartel is intent on short-sheeting the middle class so they can keep price-gouging consumers,” Nick Papas, a spokesman for Airbnb, wrote in an email. “With more than 250 government partnerships over the last year, we have shown our seriousness of purpose when it comes to putting in place fair rules.”
The national hotel association said its push against Airbnb was not about the platform’s financial impact on hotels.
“Airbnb is operating a lodging industry, but it is not playing by the same rules,” Troy Flanagan, the American Hotel and Lodging Association’s vice president for state and local government affairs, said in an interview. The main prongs of the association’s plan to constrain Airbnb include lobbying politicians and state attorneys general to reduce the number of Airbnb hosts, funding studies to show Airbnb is filled with people who are quietly running hotels out of residential buildings and highlighting how Airbnb hosts do not collect hotel taxes and are not subject to the same safety and security regulations that hotel operators must follow. The group said it would focus its efforts in key markets, including Los Angeles, San Francisco, Boston, Washington and Miami.
The efforts were spearheaded last year by Katherine Lugar, chief executive of the American Hotel and Lodging Association. The trade group began to form alliances with politicians, affordable housing groups and neighborhood associations. The industry also forged relationships with hotel labor unions — which it typically faces off against on many issues — about dealing with Airbnb.
In total, the association has a $5.6 million annual budget for regulatory work.
In New York, the association began working with local affiliates to lobby state legislators and the governor’s office to adopt steeper fines for New York City hosts that list on Airbnb in violation of local law, a move that hotel operators had hoped would help increase their business.
The association also sought help from politicians in Washington. In its documents, the group said it had worked with Senators Brian Schatz of Hawaii, Elizabeth Warren of Massachusetts and Dianne Feinstein of California. The three Democrats sent a letter to the Federal Trade Commission in July “raising concerns about the short-term rental industry,” one of the hotel association documents said.
Ms. Feinstein’s office referred requests for comment to Mr. Schatz’s office. Mr. Schatz’s office and Ms. Warren’s office did not respond to requests for comment. The association also met with legislators and attorneys general in dozens of other states to discuss how Airbnb hosts often do not comply with rules imposed on hotels, like anti-discrimination legislation, local tax collection laws, and safety and fire inspection standards. In some markets, the group said, Airbnb is dodging payment of local lodging taxes. In other places, it encouraged officials not to collect taxes from Airbnb hosts so as not to legitimize short-term rentals. The association claimed legal and regulatory victories last year in Chicago, San Francisco and Los Angeles, as well as in states like Virginia, Tennessee and Utah, where laws were being passed to restrict Airbnb activity. The organization also funded research conducted by a professor at Pennsylvania State University to show that many Airbnb hosts were breaking the law.
“We are trying to showcase and bust the myth that Airbnb supports mom and pop and helps them make extra money,” Mr. Flanagan, of the American Hotel and Lodging Association, said. “Homesharing is not what this is about.”
This year, the association plans to fund more anti-Airbnb research and roll out a testimonial campaign of people hurt by home sharing, “to provide a counterweight to Airbnb’s strategy of presenting a unified, working-class face,” according to the group’s documents. The campaign will be “a cornerstone of the 2017 communications strategy,” it said.
Edward Walker, a professor at the University of California, Los Angeles who focuses on grass-roots lobbying by businesses, said such a public call to mobilize against Airbnb was unusual. But because Airbnb itself has “quite effectively gotten hosts involved in its advocacy work,” the hotel industry will have to break with conventional lobbying, too, he said. The hotel association’s efforts have succeeded in disrupting some Airbnb hosts. Sebastian de Kleer, owner of Globe Homes, a short-term rental company based in Los Angeles, had listed some of his properties on Airbnb for more than a year. But Airbnb canceled his Los Angeles listings from its site in March 2016 after the hotel association argued to local politicians that Airbnb hosts like Mr. de Kleer were raising the cost of housing in the city by renting out properties for short-term use rather than for long-term tenants.
“Because there was so much pushback here in Los Angeles, we got kicked off” Airbnb, Mr. de Kleer said. “That was $250,000 in reservations. It was not very professional.” Mr. de Kleer said he had since gotten over his removal from Airbnb in Los Angeles. He still uses the site to list his many properties in Palm Springs, Calif., where short-term rentals are common and are not controversial.
Warren, unions, and the hotel cartels.
Here’s your American Greed.
Cumulatively, they’re too stupid to understand their own boats are floated by the success of other people with great ideas. So they destroy with regulation.
This is one large reason. why our economy is, and has been, stagnant.
But socialists and communists and ‘partnership’ fascists are like AGW alarmists...convinced beyond reason and logic.
Like most cartels, the multinational lodging companies (Marriott, Hilton, Hyatt) are in collusion with big government. The hotels want to maintain their oligopoly by using the police power of big government to wipe out emerging, lower cost, competitors.
State and local governments are always looking for new sources of revenue and particularly enjoy taxing out of town visitors by loading extra usage taxes on lodging, car rentals, conventions.
Follow the money. This is crony capitalism at its finest and a consequence of the federal government essentially ending the enforcement of anti-trust law in the 1980’s.
Amen.
Crony capitalism via regulation and nanny-state concern-trolling are two of the biggest hammers in the toolbox.
“many Airbnb hosts were breaking the law” probably means they are “breaking” “laws” that many people don’t “follow” in their own homes anyway, like having a smoke detector in every bedroom &c.
Fire code inspection:
Sprinklers; fire extinguishers; breaker-bar exit doors;
Electrical inspection; central GFCI;
Wheelchair ramp.
Zoning variance.
Handrails.
Mandatory, huge and beyond reason, liability insurance.
Emergency lighting and smoke/ CO detectors...in steel conduit.
Kinda takes the charm out of yer little cottage on the beach, eh? Not to mention the incentive to bother trying to tent it at all.
And you won’t be going on vacation anytime soon...and renting that hotel room in Virginia Beach...cuz you’ve been punked by Liz Warren.
Agreed. Solution: Remove the ridiculous rules imposed on hotels. Remove the taxes imposed by the Tourism bureaus.
Yes.
The problem I have with airbnb is that the hosts don’t have to or simply won’t abide by rules that hotels do. Be consistent. Also, despite the spin, the vast majority of airbnb hosts are professionals renting out places, not joe6pack making a spare buck and mostly in super large metros (NYC has ~100x as many airbnb units at Charlotte, NC for example)
Indeed it does. But why should the hotel industry be required to have those, but airbnb hosts not?
But the only guy who will be put out of business is joe6pack. The main Airbnb hosts here in the rural areas are homeowners. There are some pros running multiple homes to rent out but the county board came to a reasonable conclusion about them: make them register and apply safety regulations, but don't tax them.
Maybe because the contract is between two private persons for the temporary rental of a private non-corporate residence. Reasonable is that the owner of the property abide by local and state requirements for long-term rentals of private residential property.
Regulation as you suggest is a death-blow to to opportunity the model represents...and a mitigation of prosperity.
The hotel industry isn’t trying to force compliance for airbnb hosts out in rural areas. Their efforts have been where the airbnb locations were - NYC, SF, LA, Chicago, Miami, etc. Airbnb’s revenue is nearly entirely from tier 1 gateway cities (the aforementioned cites) and tier 2 destination cities (Austin, Nashville, Orlando). Rural areas generate less than 1% of their revenue.
Why does it matter if its corporate or not? Either the regulations make sense or they don’t. And actually, most airbnb units are in fact business run (LLCs, etc) not mom and pops making a few bucks.
Another crony capitalist scam, and one that is eating all of our lunches.
Crony capitalists - companies going rent seeking with big government politicians - help build the regulatory state, seeking protection from competition.
Prima facie evidence that the Free Market really does not exist in this country. And that it’s been destroyed by Crony Capitalism to even a greater degree than by surging Socialism.
The taxi cab industry is trying to do the same to Uber. They’re only failing because Uber ranks just between sex and student loan forgiveness on the list of favorite Millenial things.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.