It’s public officials, not public opinion, which might rein in the runaway train that is the sharing-economy industry, led by sites such as Airbnb.
Just a year ago, it seemed as though Airbnb and its cohorts in the sharing economy sector were headed for an inevitable takeover of the accommodations industry.
While that might be an exaggeration, it’s a fact that most commentators, including me, saw a clear path for the sharing economy to put a serious dent in the long-term profitability of hotel owners.
Today, that seems to be changing, and Airbnb—which I use as a proxy for all sharing economy accommodations sites—might have reached a tipping point in which public opinion and—more importantly—government officials begin to turn their back on this so-called miracle of the new economy.
Legislators in a number of states and cities are finally getting a handle on laws to curb, limit and regulate the sharing economy. Media stories, including a number planted by the American Hotel & Lodging Association, are beginning to paint Airbnb and others as kind of creepy instead of a ray of sunshine for consumers.
Since the day Airbnb became a household name in the United States and elsewhere, a coalition has been forming to—on the extreme—put these companies out of business or, more rationally, make the sharing economy play by the same rules and financial obligations under which the hotel industry must operate.
The AH&LA has led the way in producing data to show the wide reach of Airbnb and its hosts and the effect they’re having on the hotel industry and consumers. The group’s argument, as displayed in its research, shows that contrary to Airbnb’s assertions, the site is being exploited by full-time hosts who in effect operate illegal hotels. It’s this argument—that Airbnb has become an industry, not a proletariat outlet for middle-class Americans looking to make some extra money—that has turned the heads of many government officials.
And perhaps with some poetic justice, the tide is turning first in San Francisco—the birthplace of Airbnb—and New York—the poster child for the excesses of the sharing economy.
Officials in these two markets are approaching the issue from different viewpoints but with the common goal to rein in the perceived and actual excesses of the Airbnb model. Last month, New York state lawmakers passed legislation that would make it illegal to advertise short-term rentals on Airbnb and other similar sites. If enacted and subsequently enforced, the measure would cut off Airbnb’s ability to market its product in one of its biggest markets.
The key is enforcement. State law in New York already bans renting apartments in buildings with three or more units for fewer than 30 days, but a scan of Airbnb listings shows how that law is flouted on a daily basis.
In San Francisco, the Board of Supervisors enacted new regulations that fine Airbnb—not its hosts—for listings not registered with the city. Airbnb has sued, claiming the registration process is onerous: The documentation must be submitted in person, not online, and costs $50 per listing.
Other U.S. cities and states have become more aggressive in implementing laws and regulations covering the sharing economy. Seattle, New Orleans, Boston, the Florida Keys, Chicago, and Los Angeles are among the jurisdictions beginning to restrict the sharing economy.
While Airbnb and its competitors are facing greater scrutiny, it’s much too early to count them out. In recent months, Airbnb has launched new initiatives to appeal to business travelers and meeting planners. And it’s seeking additional funding that, if successful, would value the company at around $30 billion.
Airbnb, its competitors and other new forms of disruptive technology are a permanent part of the hotel competitive landscape. Hoteliers must accept that fact, but they need to continue to speak out about the inequities in the legal system as it relates to the sharing economy and support elected officials who will take action on this matter.
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