The U.S. Hotel Industry's War Plan to Beat Airbnb

by Mark Kolakowski, Investopedia, April 18, 2017 (excerpts)

After years of downplaying the threat from Airbnb Inc., the $1.1 trillion U.S. hotel industry has mapped out a concerted game plan to combat the fast-growing home and apartment sharing service, The New York Times reports. Traditional hotels argue that Airbnb has achieved an unfair competitive advantage by skirting a myriad of laws, regulations and taxes, and the big lodging chains are mounting an intense political lobbying campaign at the state and local level that targets Airbnb for noncompliance….

Since its founding in 2008, over 150 million travelers have stayed in about 3 million dwellings listed on Airbnb in over 191 countries, according to statistics from that company cited by the NYT. Not only has Airbnb drawn customers away from hotels, it also has exerted downward pressure on hotel prices and profits. The competitive losses are particularly bad during peak periods such as holidays, conventions and major events, as Vijay Dandapani, CEO of the Hotel Association of New York City, told the NYT….

The campaign against Airbnb by the American Hotel and Lodging Association (AHLA) rests on the contention that Airbnb is a short-term, for-profit lodging service that should be bound by the rules applicable to hotels, a spokesman told the NYT. The war plan focuses on lobbying politicians and state attorneys general, with the main points of contention being: many Airbnb hosts are turning residential building into de facto unregulated, untaxed hotels; states and municipalities are losing hotel tax revenues, which are not collected by most Airbnb hosts; most Airbnb listings do not conform to the fire, health, safety, security, Americans with Disabilities Act (ADA) and anti-discrimination regulations applicable to hotel operators.

In Washington, last July Senators Brian Schatz (D-Hawaii), Elizabeth Warren (D-Massachusetts) and Diane Feinstein (D-California) have asked the Federal Trade Commission (FTC) to investigate Airbnb's impact on rising housing costs, at the AHLA's urging, according to a document from that organization obtained by the NYT.

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 AHLA already has scored legislative and regulatory successes that restrict the ability of Airbnb to operate in Chicago, Los Angeles and San Francisco, as well as in the states of Virginia, Tennessee and Utah, the NYT reports. Additionally, a New York State law enacted in October imposes big fines on Airbnb hosts who break local housing rules, and various jurisdictions outside the U.S. have passed restrictive laws….

The AHLA has a $5.6 million annual budget for regulatory work, the NYT says. According to the full text of AHLA's plan as published in the Times, the key targets for their lobbying efforts in 2017 will be cities that they list as critical, Los Angeles, San Francisco, Boston, Washington, D.C. and Miami, as well as the states of Maryland, Michigan, Ohio, Colorado, Louisiana, Florida, Indiana, Hawaii, Massachusetts, New York, Virginia and West Virginia, where they believe that precedent-setting legislation can be passed. In Texas, Florida, Georgia, North Carolina, Utah and Virginia, the AHLA is battling Airbnb's support for "pre-emption" legislation that would allow short-term rentals throughout those states, regardless of local laws.

Besides, lobbying, the association also is funding academic research to prove that Airbnb hosts routinely break local laws, including "millionaire Airbnb landlords" who are large-scale commercial operators dodging hotel taxes. This is intended to explode the Airbnb narrative built around middle class "mom and pop" casual listers. Interestingly, in some locales the AHLA is encouraging officials not to legitimize Airbnb by collecting lodging taxes from hosts, the Times reports. Apparently, the AHLA is playing for larger stakes in those places, looking to have Airbnb shut down entirely.

Additionally, the AHLA is joining forces with tenants' groups, affordable housing campaigners and neighborhood associations, the NYT adds. These constituencies are opposed to the reduced availability and increased price of apartment space resulting from the conversion of dwelling units into de facto hotel space listed through Airbnb. They also are concerned about reports of rowdy and destructive Airbnb renters. Furthermore, the AHLA is making common cause with hotel unions, who fear lost jobs and wages as Airbnb makes inroads into hotel occupancy rates and profits. For politicians, the above constituencies are orders of a magnitude larger, and more vocal, than the number of people who list dwelling spaces for short-term rental through Airbnb.

In an email quoted by the Times, Airbnb spokesman Nick Papas said that "the hotel cartel is intent on short-sheeting the middle class so they can keep price-gouging customers." He also said that "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."

read … The New York Times