Popular vacation rental site Airbnb has been a boon for industrious homeowners and savvy travelers. People seeking to avoid the hotel experience (and the prices that go with it) can find a place to stay on the site, which allows property owners to list their homes for short-term rent, even if it's their primary residence.
On the surface, this seems like a great addition to the travel industry. It allows the "little guys" to compete with big hotels for a piece of the tourism pie.
So why do three of the world's largest, most-visited cities want to do away with Airbnb and other similar companies?
An unregulated market
Hotels do not like Airbnb for obvious reasons. It's enough of a challenge for them to have to compete with one another; throwing an unregulated short-term rental market into the mix only make things more difficult.
Hotels have been lobbying local governments behind closed doors, but a growing number of municipalities have shown they don't need much prodding to reign in people who list their homes for rent on Airbnb.
Local governments, especially those that oversee urban areas, get a lot of their revenue from hotel taxes. These funds are used for things like redevelopment projects, parks or upgrades to local sports arenas. People who rent out their private homes usually do not pay these extra fees. Theoretically, an entrepreneur could buy a condo for the sole purpose of renting it out on Airbnb and avoid hotel taxes, even though they are providing the same service as a hotel.
Bans in New York City and San Francisco
It's currently illegal for New York City homeowners to rent out their property for fewer than 30 days. Though hotels are against short-term rentals, many people in the general public also dislike the idea.
The homeowners who are renting their property usually have some sort of insurance, but most of the rentals are in condo or apartment buildings with hundreds of other residents. This is especially true in places like New York City.
Some of these buildings' residents have complained about potential safety and noise issues. Condo associations could take matters into their own hands and make it against the rules for their owners to rent out their property to outsiders (who do not have to be screened in any way before reserving a room on Airbnb).
San Francisco has effectively banned Airbnb rentals for similar reasons. The city only lets people rent out their property if they have approval from their homeowners association, if they live in an area zoned for commercial use and if they have proper insurance.
Pricing long-term residents out of the city
Actually, another issue also played a major role in the San Francisco regulations. Property rental prices are already sky-high, and short-term rentals cause monthly rates to increase even more. Property owners can make more from short-staying guests than from long-term leasing, meaning San Francisco residents in some areas have to pay higher prices in order to "compete" with tourists for apartments.
Rental prices have also caused Paris and Berlin to seriously consider bans on Airbnb and its peers. Rents are ridiculous in Paris with some long-time residents being forced out of their neighborhoods because they simply cannot afford to pay month after month.
The situation in Paris is similar to San Francisco, but on a much larger scale. The French capital sees more tourists than anywhere else on Earth. Like San Francisco, travelers pay a premium for a central location and home-like accommodations. By some estimates, there are now 20,000 fewer apartments in Paris than there were five years ago. On the other hand, the City of Lights is the biggest market for Airbnb with more than 40,000 listings. While Airbnb is the largest site of its kind, there are also other players in the market as well. This means that the total number of available tourist rentals in Paris is most likely quite a bit higher than 40,000.
Berlin has taken a more passive-aggressive approach. People who want to list their property on Airbnb legally have to apply with local authorities and cut through a lot of red tape.
An uncertain future
A significant number of Airbnb entrepreneurs have a simple response to the criticism: we have purchased our homes and we pay property taxes. What we do with our living space beyond that is nobody’s business.
Not all cities are against Airbnb. Amsterdam is attempting to create pro-short-term-rental regulations. Homeowners who rent to tourists do pay taxes, including tourist tariffs, but they can legally rent out their primary residence for up to two months of the year without needing special hotel licensing. In England, meanwhile, a proposal to ban tourist rentals failed in parliament.
The demise of Airbnb is probably not imminent. However, cities will most likely be rolling out new rules in an effort to regulate (and tax) the short-term rental industry.
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