Airbnb Gets a Green Light From Arizona, Can Texas Be Far Behind?
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Airbnb’s meteoric growth has shaken the hospitality industry, and is making homeowners mighty nervous about who their next-door neighbors might suddenly be. There have been regulatory fights to leash the short term rental site from New York to Barcelona.But the insane growth just keeps on.
In the summer of 2010, three years after the company started in San Francisco, about 47,000 people stayed with an Airbnb host. Last summer, almost 17 million people stayed at an Airbnb. It’s the biggest competitor to Austin-based VRBO HomeAway, though the HomeAway folks look down their noses at Airbnb somewhat.
The mainstream tourist industry reminds me of the established taxi companies who fought Uber and Lyft: they are stuck with an uneven playing field having to charge hotel taxes and buckle under regulation, unlike their Airbnb buds. This often makes Airbnb a more economical option for travelers.
But what if your temporary landlord ends up being Norman Bates?
Well, that playing field is leveling somewhat: in February of 2016, Chicago adopted a 4.5 percent hotel tax , now included in the price of a Chicago Airbnb listing.
The tax changed the rentals not one iota: Chicago continues to have a high Airbnb occupancy rate compared to other cities. And Chicago has great hotels.
Even Airbnb’s hometown San Francisco, in 2014, made short-term rentals legal, but slapped on restrictions such as limiting spaces to be rented up to 90 days per year, if the owner is not present.
In 2015, another amendment was proposed to further reduce the 90 days to 75 days, but the amendment was not passed. But in June of this year, a new law was endorsed that put the burden on Airbnb to verify if hosts are registered with the city, which is a requirement for short-term rentals.
And now comes Arizona …
Arizona just passed a bill that outlaws cities and municipalities from prohibiting short-term rentals. It is an effort to relieve people’s fears that they won’t be penalized if they turn their home into a piggy bank for a few nights, while encouraging them to follow local regulation and yes, cough up some tax the municipalities might otherwise lose.
Have no doubt the hotel industry is not happy.
I had an interesting conversation with the folks on Swiss Avenue a few months ago. These are the folks who are angry over the weddings taking place at our Aldredge House (full disclosure: I am a member of the Dallas County Medical Alliance which owns Aldredge House and is fighting to keep it. So yeah, maybe a little bias). They were telling me that Airbnb “would never be permitted on Swiss Avenue.” In fact, the neighbors there have shut down many a home-run business in the interest of preserving tranquility.
But then other sources have told me that City Councilman Philip Kingston is bullish on Airbnb. The Kingstons (both Phillip and Melissa) are big advocates for using back houses as rentals to create more affordable housing options in high-rent areas. They both are focusing on revising City code to allow for full-size kitchens in accessory dwelling units, which would then be eligible for short term rental.
Perhaps the Kingstons see the potential for the tourism industry and the City to profit off it. Cities generally have regulations about licensing and paying taxes, but of course, those rules are often not enforced, unless by neighbors who snitch.
If short-term rentals were to become illegal in the U.S., the effect would go beyond inhibiting travelers and hosts — it would also affect many businesses. Pricing companies and consulting websites are based on the existence of short-term rentals. Airbnb is an excellent way to help pay for a vacation home or pied-a-terre. Even the European Union (EU) has expressed its support for technology services such as Airbnb and Uber, offering non-legally binding guidelines and restrictions commensurate with public interest such as safety or social policy.
As long as they get their piece of the pie… what do you think of Airbnb and efforts to curb its growth? Should texas follow in Arizona’s footsteps and should Realtors lead the way?
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The cow is out of the barn so I’m not sure what the big fuss is. I’ve stayed in Air b n b’s all over the world. The bottom line is economics —indeed. Its GOOD for the economy. The folks using this service basically would NOT be using hotels. It allows a whole new segment of society to travel, those of us that cannot afford ridiculous hotel prices and those of us that can only afford to travel/ prefer to travel and stay in a HOME where we can cook, be in a neighborhood, get a real flavor of a town. SO an entire new segment of tourists, SPENDING $$$. This is a no brainer. There is not a reason in the world to slap a tax on the folks providing this service. There are also people that have used this as a way to determine WHERE to BUY! What a GREAT idea. Stay in different locations for a month, figure it out and THEN purchase. This is yet another example of big business trying to squeeze the little guy. SO many of my friends use this as an income stream and they cannot do without it. The odds of having “Norman Bates” as your guest are about zero. Leave well enough alone. I mean what next? Banning people from having movies shot in their homes? OR taxing that? Banning folks from home based businesses? What, will we see “self-employed policing” of those with cottage industries run out of their homes. Can we say SLIPPERY SLOPE???
Karen: it has and they are fighting back by trying to attract Millennials:”The hotel industry is fighting back.Airbnb’s remarkable success and a $25 billion valuation has come at a cost — to competitors. It claimed almost $1 billion in disruption revenue last year, by some estimates.”. But I agree with you, how far will municipalities and the states go in telling us what to do in our own homes? That’s the problem I have on Swiss Avenue and yes, I admit a bias here. But those folks bought knowing full well that Aldredge House was owned by the DCMS. Why should the city of Dallas limit us leasing our home? By the way, when you have grandchildren, being in a home is far better than a hotel. You have a laundry room, a kitchen,a quiet bedroom for the children to sleep in while you watch TV in the den. I think hotels are right to be scared — being in a home is far superior to a hotel!
Homes used as filming locations are already taxed, it’s called income tax (Filmmakers usually pay separate taxes for filming). People using their homes for home-based businesses are taxed based on their personal and business income. Neither of these usages have added taxes based on usage. But many travel-related services like rental cars, hotels and hotel-like spaces do have additional tax burdens usually applied by cities to get tourists to pay for things like sporting arenas. So yes, regardless of the use, if a home is being used in a way that incurs additional taxes, you should/must pay them. Now if you want to say that those taxes shouldn’t exist in the first place and that no one should pay them, I’m with you. Those taxes will likely be passed to local residents as increased sales taxes. But an unlevel playing field I can’t agree with. Same with Uber, Lyft, etc. Pay the same taxes taxis pay or eliminate the taxes on taxis. “Disruption” isn’t supposed to be a clever way to avoid taxes.
The problems with neighbors usually stem from noise and disruption…which is what put Aldredge House’s boob in the proverbial wringer.