Sunday Extra: Regulate, licence Airbnb hosts like hotels

Sunday Extra: Regulate, licence Airbnb hosts like hotels

By PETER T. TOMARAS

Since its 2008 launch, when founders Joe Gebbia and Brian Chesky rented an air mattress in their private San Francisco residence, Airbnb has become a huge player in the lodging world. Their company achieved its 5 millionth night booked internationally in 2012; today, Airbnb boasts 3 million lodging listings in 191 countries. In Minneapolis-St. Paul, Airbnb hosts exploded from 1,000 to 5,500 rooms in one year in anticipation of overflow Super Bowl crowds.

Anyone with rentable space in a home or apartment building can sign on as a host; Airbnb is simply a broker, collecting percentage fees from both guests and hosts. Like online transportation companies Uber and Lyft, Airbnb transacts bookings and payments through mobile applications. Millennials and tech aficionados are quick to seek savings and convenience with Airbnb versus traditional hotels.

A recent News-Gazette article announced that Champaign-Urbana Airbnb hosts welcomed more than 8,000 guests in 2017, who paid $925,000 (apart from fees), according to Benjamin Breit of Airbnb Midwest.

Breit then makes the ridiculous claim that Airbnb does "not appear" to be hurting hotels because the Illinois Office of Tourism showed a 4 percent increase in hotel revenue in the same year. While on rare occasion Airbnb helps visitors who cannot find hotel rooms (UI graduation and homecoming weekends), the rest of the time private hosts are taking significant market share from hotels. Competition arises in any business field. But this playing field is far from level.

Hotels make huge capital investments, are subject to licensing, inspections, and OSHA safety dictates, pay occupancy taxes to state and local governments, and pay income taxes. Breit claims Airbnb remits the state hotel tax (6 percent) on its bookings, but local hosts do not pay municipal hotel taxes (7 percent for C-U). Currently, Champaign Airbnb hosts are subject to no city codes or licensing. To its credit, this spring Champaign will study the situation and propose regulations.

Meanwhile, Airbnb hosts (who can sign up by filing a profile and photo from their phone or watch) are advised to have property-damage insurance, but are not required to have liability insurance. Whatever might happen, you're not covered. In some cities (Chicago), Airbnb hosts are subject to regulation, but local hotel operators face unfair, and possibly unsafe, competition. Does every Airbnb host have smoke detectors and safe egress? Hotels must provide ADA-compliant rooms; Airbnb hosts do not have to consider the disabled.

Also, although hosts now receive rent revenue in interstate commerce, there is no mention of increased property valuations. With no reporting required, how would assessors know?

Finally, Airbnb does not issue 1099s (copy to IRS) unless a host's revenue reaches $20,000 or hits 200 annual rentals. How many hosts, I wonder, will declare their rental income beneath these limits?

I admire entrepreneurship, but I also believe in fair competition: Airbnb hosts should be regulated just as are licensed hotels and B&Bs. The legitimate lodging industry rightly sees unregulated, unlicensed Airbnb hosts as illegal hotels.

Peter T. Tomaras is a writer and hotel consultant. Email him at innkeeper88@att.net.

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CommonSenseless wrote on February 13, 2018 at 7:02 am

The answer is not to regulate more...it is to deregulate the hotels.  ADA is a perfect example of government overreach.