Should Airbnb Be Illegal?

a map of the world with circuit boards

The sharing economy has brought about lots of changes to the way we think about hotels and taxis.  Most of it has been good.  For example, challenging entrenched special interests in the taxi union space in major markets like New York and DC.  Agreements between regulators and companies like Uber are better than my driver getting hauled out of his car by a cop at Dulles Airport.

The question I posed in the title involves the world of “home sharing”.  Regulators continue to grapple with whether and how home sharing should be legalized.  New York legislators just passed a bill that heavily restricts advertising for rentals of less than 30 days (virtually all of Airbnb and similar companies’ listings).  The fines start at $1,000 and escalate to $7,500 per occurrence.  That’s a pretty steep fine to rent out a room in your house.

Airbnb Illegal

The slippery slope here is that there are plenty of folks not just renting out a room in their home, but rather making a living out of running hotels out of residential buildings.  Before we get to the taxation of that, such practices can be unfair to the people living in that neighborhood/apartment building.  It’s not a foregone conclusion that all renters are bad.  Conversely, the vast majority are probably law-abiding citizens who don’t cause trouble.  But, if I’m living in an apartment building where I know most of my neighbors, I’m not sure I want one of them renting out their unit to someone different every day if my kids live in that building. As far as I know, there’s no firm requirement to background check prospective guests, though my understanding is that an individual host can set guidelines for what they require.  That just makes me nervous in general.

I don’t like Airbnb’s response to the New York legislation:

Earlier today Airbnb published a statement on its political action blog urging state legislators not to move on the bill. “We’ve asked New York leaders to change this law and ensure we can deliver tens of millions of dollars in new tax revenue,” the statement reads. “Sadly, New York is going backwards and is instead considering wrongheaded legislation that would punish middle class families who depend on home sharing to pay the bills and stay in their homes.”

Following the vote, Josh Meltzer, Head of New York Public Policy for Airbnb said, “It’s disappointing — but not surprising — to see politicians in Albany cut a last minute deal with the hotel industry that will put 30,000 New Yorkers at at greater risk of bankruptcy, eviction or foreclosure. Let’s be clear: this is a bad proposal that will make it harder for thousands of New Yorkers to pay the bills.”

New York’s position is likely too stark as well.  The article even calls out that there was an opportunity missed for middle ground.  But, given all the cities that Airbnb serves, I could only find a handful where they actually remit things like hotel taxes on behalf of their hosts (or have announced plans to do so).  I think Airbnb’s position is a stronger one if they actually built their business model around collecting and remitting taxes and fees as opposed to shrugging their shoulders.  It’s easy, and maybe even vogue, to say “not my problem”, but given the current position it’s unclear whether Airbnb is only going to collect taxes in places that force their hands.

And, I’m nowhere near ignorant to believe all Airbnb hosts are being good citizens and reporting all of that extra income to Uncle Sam.

Look, I’m a smaller government sort of guy.  I don’t necessarily want the government over-regulating anything.  But, I do think there are larger issues at play here.  For starters, the average hotel room in NYC costs a lot more than the average taxi ride.  Plus, I do think there are security issues relevant to the privacy of a house or apartment building that are somewhat mitigated by the public setting of a car in a crowded neighborhood.

There’s also more impact to the traveler coming from overseas to NYC and ending up with no hotel room on a cold night versus one who gets ripped off on the price of a single Uber ride.  That’s not to say that there aren’t significant risks for folks with Uber as well, but I think reasonable minds could agree that some form of protection in the home sharing space is a good thing.

What do you think?  Hands off from regulators for Airbnb or is some oversight needed?

The post Should Airbnb Be Illegal? was published first on Pizza in Motion



  1. too many government regulations and TAXES that is why it is soooo $$$to take Taxi’s/rental cars or hotels….so yeah for Airbnb and UBER the unions hate it …too bad!!!

    1. dot, I hear you on the taxes. But, I still think there needs to be some oversight on Airbnb. And, quite frankly, the cost for such should be borne by that industry and/or their customers, as opposed to folks who don’t use that industry.

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