The rise of and the illegal, short-term rental

Nearly three years ago, I first noticed and questioned many professional innkeepers about the site.  Did they feel threatened by it?  Did they feel we should expose them for the obvious issues of supporting and promoting businesses that did not pay taxes and that had no concern for safety?  I sent an email to the owners, questioning them on some of this, and of course never received a reply.  Plus, I was ticked off that they co-opted our industry’s brand in their name – “BnB”.

Since then, the site has skyrocketed to internet fame, rounding up major funding and moving on the fast path to IPO (I suppose the brass ring for most internet start-ups).  All the while, I’m wondering when…just when will something terrible happen at one of these apartments that are advertised on the site?  When will someone question the sustainability of a web site that supports illegal businesses?  When will someone cry foul on the tax evasion?  Many cities have rules against property owners renting out rooms by the night or week without being either a licensed hotel or B&B of some kind.   Looking back, I suppose I should have cried foul a lot louder and a lot earlier.

I have been talking about AirBnB at meetings of innkeepers all across the country for two years.  My reference to them had to do with how ridiculously easy it now is for anyone to rent out a room in their pad to travelers, and we should pay attention to them as a new competitor.  Many innkeepers would dismiss it and tell me that this really isn’t our competition; travelers looking to stay in someone’s apartment are not interested in staying in a bonafide, professionally-run B&B.  I will concede that the typical AirBnB customer is not likely a perfect demographic match of the typical B&B customer.  But, I have also told innkeepers that they need to do a better job to capture the Gen X and Y generations, or they will bypass us for something like AirBnB.  If you go to their web site, you’ll see some pretty darn attractive places.  Very seductive, although I wonder if they only showcase the nicest of the nicest properties on their homepage.  Are many of the rest average apartments or worse?

I’m not anti-competitive by any means.  I strongly believe in healthy competition, but I also believe in a level playing field.  Innkeepers have toiled and invested hard-earned dollars to navigate (and even change) city hall to be recognized as legitimate businesses in communities across this continent.  Between unfriendly zoning regulations, fire inspections, town council votes, food safety licensing, commercial kitchen requirements, occupancy taxes, etc, etc, etc – many in our industry worked tirelessly over the past three decades just to be allowed to open a professionally-run, four-bedroom B&B.  Then you see how easily thousands of people are now offering lodging in unsafe, unregulated environments?  I probably sound like sour grapes to many reading this – and that’s not my intent.  I think there are legitimate concerns here.

Take the case that made national news last week involving a young woman who rented her apartment on AirBnB to someone who vandalized and robbed her.  And the founder of AirBnB had the gaul to say thereafter that safety is a top concern of theirs?  I couldn’t believe what I was reading.  What exactly was AirBnB doing up to that point to ensure the safety of both the traveler and the person renting the room or apartment?  Unless they were conducting background checks, how could they really do anything?  Worse yet was a case in 2009 where a traveler was raped by someone who offered lodging through the site  CouchSurfing and AirBnB are not quite the same breed of lodging (one is closer to vacation rental, while the other is closer to staying on a couch with a stranger -  oh wait, that’s actually what it is), but both sites are only relying on traveler reviews and the wisdom of the community to provide some semblance of safety and trust.

My opinion, for what it’s worth, is that everyone should follow the law, and no web site should be allowed to propagate illegal products or services.  If the law is wrong, outdated or unfair, then get the law changed.   (Side bar – the NYC anti-short-term-rental law that passed in NY was terrible legislation, as it also outlawed legitimate, professionally-run B&Bs that have been paying taxes for years and years to the city – innkeepers are working hard on getting the law amended.)  Vacation rentals, overnight sublets and the like are good and necessary options in our market.  Think of Mardi Gras in New Orleans.  Do you think such an event could thrive without all the illegal renting that goes on during such festivities?  Same for the Masters in Augusta.  You get the point.  But when such lodging options are available every night of the year?  It’s time for communities to step up and either go after these illegal rentals, or welcome them with regulations and taxation that are equal to what B&Bs must go through and pay.  They benefit from the hard work of all the local people, businesses and agencies working to bring in tourists and travelers, but don’t contribute back in any way.

As of right now, these are my own opinions – not an official position of PAII.  But that might change soon.  My suggestion to innkeepers – if you are moved by the fair playing field argument and have concern for the safety of people visiting your town or city – is to alert your tax collectors, fire inspectors and zoning officials about properties on sites like AirBnB.  I feel it necessary to reiterate – I’m all for vacation rentals (love staying in them, by the way) and other forms of short-term rentals, but not if they are breaking the law or evading their responsibilities to be regulated and taxed.  Spread the word, folks.

Author: Jay Karen

Jay is the President & CEO of the Professional Association of Innkeepers International.

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