Airbnb/hotel playing field beginning to level
 
Airbnb/hotel playing field beginning to level
26 SEPTEMBER 2014 2:31 PM
Airbnb (finally) will start collecting and remitting occupancy taxes in San Francisco next week. That’s a big domino to fall.
By  
The line between Airbnb hosts and hoteliers is beginning to blur, whether both parties like it or not. 
 
Starting 1 October, the peer-to-peer booking platform will begin collecting the same 14% tax from visitors who book apartments or rooms in San Francisco as is required of the city’s hotel industry. 
 
“This is the culmination of a long process that began earlier this year when we announced our intent to help collect and remit occupancy taxes in San Francisco,” wrote David Owen, Airbnb’s head of public policy, in a recent blog. “Our community members in San Francisco have told us they want to pay their fair share, and the overwhelming majority have asked us to help. In the past, it’s been difficult for individual hosts to pay taxes that were designed for traditional hotels that operate year round. This has been a complicated issue, and we’re happy to be taking action to help simplify the collection process for hosts, guests and for the city.” 
 
What the eloquent post fails to mention is that Airbnb executives have been hounded relentlessly across the globe for operating outside the confines of established regulatory practices. They’re not collecting the taxes just to be team players. They’re doing so after being pressed into action. 
 
In San Francisco, for instance, the move comes in advance of legislation by Supervisor David Chiu to legalize and regulate Airbnb, which like other short-term rentals are technically illegal in the city—and in most cities, for that matter.
 
The sharing economy is slippery, though, and difficult to regulate. That’s why the San Francisco domino carries so much weight behind it. 
 
This is not the first place Airbnb executives have cried uncle under regulatory pressure. (The City by the Bay follows in the footsteps of Portland, Oregon, in which the booking platform began collecting and remitting occupancy taxes this past summer.) But it’s certainly the more important of the two. 
 
Airbnb was born in San Francisco. Its corporate headquarters is there. It has six years’ worth of history there. It also has a boatload of listings—approximately 4,800, according to the San Francisco Chronicle. 
 
When travel industry insiders think of Airbnb, they often think of San Francisco. That’s why consultant Rick Swig focused on the market when he conducted his analysis of the sharing economy’s impact on hotel demand for HNN. (Spoiler alert: His report suggests hotels are indeed taking a hit.)
 
I’m sure regulators in other Airbnb hotbeds (read: New York City) are watching closely. They’re cubs observing the finer points of the kill as mommy lion takes down a gazelle. 
 
The goal should not be to kill Airbnb, however—regardless of the rabble raised by the platform’s chief opponents. Yes, the site and others like it require further regulation to ensure that 1) guests are kept safe and 2) hosts are paying their fair share to promote the broader destination. (The 14% tax in San Francisco, for example, pays for city services, infrastructure upkeep, programs and cultural arts programs.)
 
And yes, there is some evidence that Airbnb is carving into the demand pie. 
 
But new ideas that promote travel and serve the changing needs of customers always should be welcomed. Competition breeds innovation, which breeds better product offerings and, ultimately, happier guests.
 
Airbnb opponents who are crying foul to push for a level playing field should keep crying until the last tear is shed. It got the job done in San Francisco. 
 
Those who are crying with the hopes this newfound competition will go away would be better off putting their heads in the sand. Airbnb might welcome that approach. Such an obstinate display would distract from providing the type of guest experience that only hoteliers—and not hosts—can provide.   
 
Now on to the usual goodies …
 
What’s making me happy this week?
We’ve written about online review blackmail before. That is, a guest threatens to leave a bad review on TripAdvisor or Yelp if hoteliers refuse to provide a discount, comp or something extra, often when such service recovery is unwarranted. 
 
One restaurateur in the San Francisco area is alleging Yelp engages in similar practices. 
 
“(Italian restaurant) Botto Bistro co-owner Davide Cerretini claims that at one time he was getting as many as 15-20 calls a week from Yelp asking them to advertise. Eventually they did, spending approximately $270 for a six-month time period—but once the restaurant stopped, the positive reviews turned negative and a positive review even vanished,” according to an account on Uproxx
 
Alleged review blackmail doesn’t make me happy. What does is the restaurateur’s irreverent response. 
 
Cerretini is now striving to undermine the credibility of Yelp by becoming the site’s worst-reviewed restaurant. He’s offering customers a 25% discount in exchange for one-star reviews.
 
I don’t condone the tactic, but it’s made for some rather hilarious content. A choice sampling: 
 
“I wish there was a zero star option. I’d give that to them. My food arrived before I wanted it to come. It was too hot to eat. It brought back all kinds of terrible memories of eating in Italy. Don’t go. You won’t regret not dining there.” 
 
“Dreadful. Too many happy people inside. And despite what I was expecting, not a single Bahn Mi on the menu.” 
 
“I might as well of been in Italy! YUCK! Uno star for you Botto!”
 
“I’ve never eaten here and I hate it already. I’m planning to bring my entire family this weekend so that we can experience this loathsome hovel in person and properly register our disdain.” 
 
You get the idea. 
 
Stat of the week
5.4%: Average-daily-rate growth rate during August, which was the highest of this recovery cycle (and the highest since January 2008’s 6.3%), according to an analysis done by Jan Freitag, senior VP of strategic development for STR. 
 
What also makes the increase notable is that during the prior four years, absolute ADR always decreased from July to August. This year, August ADR is 62 cents higher than July ADR. The last time this happened was during 2008 (and 2007)—and before that in the mid and late 1990s. 
 
Quote of the week
“Outsourcing management to brands is like outsourcing the cheese to the mice. They give no reason for waking up early and going to bed late.”
Anders Nissen, CEO of Pandox AB, during an animated panel at the Hotel Investment Conference Europe, also known as Hot.E. 
 
Agree with him or not, Nissen has become one of the most quotable hoteliers in the industry. (That he’s driven such strong performance in the Pandox portfolio only gives him more credibility.) 
 
Reader comment of the week
“Keep saying it long enough and it will come true. Joel has been saying this for 5 years (or more), so eventually he has to be right. But honestly, it is good to see HNN have the guts to post something that isn’t the usual rah-rah stuff you see in most hotel trade rags.”
Reader “Anonymous” in response to a particularly dour outlook from one Dr. Doom, also known as HNN columnist Joel Ross.
 
Stick to one viewpoint and you’ll never see the whole picture. That’s why we’re striving for a variety of voices, Anonymous. Joel has emerged as an invaluable counterpoint to balance the often one-sided rhetoric in our industry. We’re a better news outlet because of his and our many other contributors’ opinions.
 
Email Patrick Mayock or find him on Twitter.
 
The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.
 

No Comments

  • df September 27, 2014 5:59 AM

    Wow, this is a poorly researched opinion piece!!! Airbnb's national strategy is to offer to have customers pay hospitality taxes in order to escape more stringent regulations, while also legitimizing the business. In Portland, in exchange for the City allowing airbnb to pay taxes, airbnb agreed to open a large office and hire over 200 people. A big economic development coup for the company. And calling NYC a "cub" is ill-informed. NYC is airbnb's largest market in terms of hosts, but more importantly, in terms of revenue.

  • carmelita September 27, 2014 4:57 PM

    DF seems to be amiss in why Portland allowed this "exchange" to happen, with allowing AirBNB to pay taxes, for a back-slapping 200ppl. hire/lg. office...there's FAR more then this shallow reason...they had to pay...no choice, like SF, NYC soon and the rest...but to think there was some collusion with paying taxes and then hiring a mere few hundred employees considering the breadth of the Portland economy, is so presumptious!

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