A Fair Share From Airbnb
I will be attending a press event today in NYC where Airbnb is announcing a $10mm program to support local efforts that improve the lives of New York State residents.
Airbnb calls this program A Fair Share and it estimates that the $10mm is just 10% of what a home sharing tax in New York State would produce for the city and state governments.
The $10mm in financial support is going to seven organizations. They are:
The New York Immigration Coalition
New York Mortgage Coalition
New York State Rural Housing Coalition, Inc.
Abyssinian Development Corporation
These are all organizations that benefit from city and state tax dollars but need to tap into the generosity of others to deliver their services.
Take CSNYC, where I am leading the $40mm CS4All private sector capital campaign to bring computer science education to every public school building in NYC. CS4All is a ten-year $80mm effort develop over 5,000 public school computer science teachers. Half of that $80mm is coming from the NYC taxpayers. The other half is being raised from private donors. Airbnb’s generous support helps us meet our budget this year and beyond and we are very grateful for it.
But there is a larger point being made here and one that I want to highlight. Airbnb wants to operate legitimately in New York City and New York State. It wants to collect taxes on behalf of hosts of non-hotel accommodations in New York. And it wants to be a positive force for the economy in New York. But its opponents, largely the hotel industry and its employees, are standing in the way of that. This is politics getting in the way of good sense. And that is irritating to me as a citizen of New York City and New York State.
I am thrilled to accept the generosity of Airbnb on behalf of CSNYC and I am also happy to be a participant in helping Airbnb make a larger point about what is right and what should happen here. I hope that A Fair Share helps them do that.
Interesting that you are such a vocal advocate for Airbnb after passing on them so many years ago. As with most posts I see on VC blogs, I usually seek for the underlying motivation. I don’t see it here. While the promise of Airbnb that turned it into a billion dollar company is fascinating, the darker underside (inflated real estate prices, legitimate concerns about bypassing the established hospitality industry that employs so many immigrants) would I think fester with you and your perceived view of things. I’m scratching my head…
About what exactly?
I was trying to be diplomatic in my terms. Let me be a little more direct. Why do you care about a paltry few million dollar charitable contribution based on what appears to be a PR stunt by Airbnb to improve their image and avoid looming taxes and regulation? I mean, the macro effects on housing prices, communities, and poverty in the city are quite a bit more profound than this little pittance they are talking about here. Is this just perception adjustment for you and your firm?
The kids I am trying to help in NYC need it and Airbnb is trying to do the right thing in Albany and being blocked by a corrupt system. I do not have any qualms about this in the least
the first casualty of war is the truth. politics serves that war. is there any other way? ideally yes, but in reality no.
In a democracy, politics is still war but is fought at the ballot box instead of in the streets.There are a lot of anti-Trump people, and too many of them — Antifa, BLM — want to be violent in the streets. So far they are not as violent as the barricades and “the National razor that shaves close” in the French Revolution, but it’s easy to believe they’d like to be.The energy and bitterness of the anti-Trump people is astounding and an anomaly: We DO need an explanation.A biggie point is ABC, CBS, CNN, MSNBC, NBC, NYT, WaPo, and many others and their astoundingly energetic, bitter, 24 x 7 attacks on Trump. E.g., the Boston Globe just organized ~120 news organizations to fight Trump’s fully reasonable, even understated, claim that the “fake news” is an enemy of the people or some such. Of course, the newsies want to suggest that Trump claims that ALL the news is fake and an enemy of the people — Trump never said or implied that but talked about just the “fake news”. Of course, with high irony, this suggestion of the newsies is more fake news; it’s nothing less bad than Nazi J. Goebbels style propaganda, and it IS an enemy of the people.A huge point: The ABC, …, WaPo crowd is so bitterly anti-Trump that they are no doubt totally PISSING OFF nearly all the 65 million US citizens who voted for Trump and the people giving Trump a 50% approval rating.So, ABC, …, WaPo with their bitterly anti-Trump made-up, cooked-up, stirred-up, gang-up, pile-on, fake news, 24 x 7, anti-Trump, Nazi J. Goebbels style propaganda are so pissing off so many people, so destroying their reputations and credibility, that they are shooting their own businesses in the gut.ABC, …, WaPo — that’s a lot of business value being destroyed.WHY???? Why are those businesses willing to destroy themselves just to attack Trump?Since these attacks are destroying all of ABC, …, WaPo, i.e., destroying a LOT of business value, there HAS to be a LOT of big money and power behind these attacks. The Antifa and BLM ragged protesters in the streets have to be, whether they know it or not, dancing on the ends of strings held by the money and power people; as in the Communist agitation, revolution techniques, the people in the streets have to “convenient idiots” and “dupes”.No doubt the money and power (A) are seeing big money and power losses because of Trump and (B) expect that, if they can dump Trump and return to the days of Obama-Hillary, then they can make back the money and power they are losing.That’s a LOT of highly motivated money and power.So, what are the money and power people upset about with Trump and stand to gain if they can dump Trump and get back to the days of Obama and Hillary, Pelosi, etc.?Okay some guesses:(1) Immigration. A lot of people like the slave labor from ignoring our long standing immigration laws, policies, and procedures.Slavery has for thousands of years been a favorite of big money and power.(2) Regulations. So, have the swamp slime push regulations that block some companies in favor of other companies that otherwise could not compete in the market. Then the blocked companies have to come across with big bucks to defend themselves against the regulations — the old “pay to play” ploy.E.g., (A) ban old Freon, ruin many millions of dollars of old refrigeration equipment, and force people to buy new, higher priced refrigeration working fluid, all just a ripoff. (B) Block fossil fuels and force people to use wind and solar where “electricity rates would necessarily skyrocket” — Obama’s statement, on YouTube. (C) Block incandescent light bulbs, e.g., keep me from buying 150 W bulbs for my office and 200 W bulbs for my garage, and force people to buy much more expensive LED bulbs that put out no more light than a 60 W incandescent. Bummer.(3) Get Federal subsidies for wind and solar energy.It’s a bitter fight, and we can expect to see a lot in October.Net, apparently Obama went a long way bringing Chicago style patronage, kickback, machine politics to DC, and some people made a lot of money from that, kicked back a lot, and don’t want to lose their DC Democrat swamp slime gold mine.But, as in November, 2016, Trump is planning to campaign hard the last 60 days before the election this November. Then, again as in 2016, the Trump Train stands to win. Slowly the anti-Trump people will give up and slink back into the woodwork, dreaming of return of Obama-Hillary Chicago style patronage politics in DC. Won’t happen, folks.Dirt bags in the woodwork have been with us always and are not nearly new. Generally there are a LOT of dirt bags back in the woodwork; they come out like the cockroaches do, when they can get fat.Note that ABC, …, WaPo, Boston Globe are all based in Boston, NYC, and DC, but there are a lot of votes for the Trump Train in the flyover states, votes enough to increase the Trump Train majorities in both Houses of Congress.The US East Coast media can commiserate with each other and their money and power puppet master string pullers about how they are losing out, but losing out they are. In all of history, few losers were more deserving of losing.
Chomsky has been writing about the true nature of the MSM for a very long time, but it hasn’t been widely read or understood. Trump’s presence is revealing this true nature to the masses, if they care to consider it, and if the penny drops it may be his greatest service to democracy.
The kids and their situation more generally are a grand tragedy. But, clearly and bluntly put, nearly all that tragedy was understood and accepted up front, from the discovery of the cotton gin to the current sanctuary cities. The point was and still is slave labor.Quite broadly, NY, NYC, the Democrats, Schumer, Gillibrand, Pelosi, Governor Cuomo, and many more are pushing hard for more slave labor and, thus, accepting upfront the grand tragedy of those kids.My father was from a dairy farming community a little south of Buffalo; Mom was from a struggling but very hard working family in Columbus, OH. Neither wanted anything to do with slavery. But at one time, Dad’s job with the US Navy took him to Memphis. So, from Memphis, I saw a lot of slave labor. I didn’t like it. ASAP I got the heck out. I went back for a while for FedEx, but the slavery was still there and again I got out. When I got married, once we drove quickly through Memphis; I showed my wife around a little; and I’ve never been back. Best I can tell, the slavery is still there.E.g., when I was 15, one evening my girlfriend, 13, invited me to come be with her at the house of her cousin. So, on my bicycle I rode from my house in east Memphis to the cousin’s house in a nice subdivision in essentially mid-town Memphis. With Google maps, the location is easy to see — the NW corner of East Parkway and North Parkway, just east of Rhodes College.Going, I rode in the street, Summer Avenue, an east extension of North Parkway. That riding in the street was dangerous. So, returning, at about 10 PM, I looked for something safer than Summer. Just as a guess, I went one block south of Summer and turned left, went east, on the road there. Only time I’ve been on that road.Curious road: No traffic. No street lights. Potholes in the road. No side walks. Small houses on the south side of the road, but not a single light on anywhere. No people outside. Curious.Soon I got back to NS Holmes street which was also the western boundary of Chickasaw Country Club. Holmes Street: Wide. Smooth, no potholes. Lots of bright street lights.From there I had lots of smooth roads and bright street lights all the way home.Do I have to explain why that one road was so dark?The school I went to, starting in the first grade, was new. I went there grades 1-12. Dad, who was interested in education, bought the house to be in that school district because the school was designed to be the premier college prep school in Memphis. 97% of the students went on to college. The year I graduated, MIT came recruiting, and the whole 9-12 classes were let out to the auditorium (nicely decorated) to hear MIT. The year before me, two guys went to Princeton and ran against some poor third guy for President of the Freshman Class. The College Board scores were high: Of 1-2-3 on the Math SAT, I was #2; #3 went to MIT, and #1 to Purdue. I was sent to one math tournament and one math-physics summer program. I ended up with a good applied math Ph.D.Relatively good high school.So, sure, we had text books. They were in good shape. After four years, the covers were starting to fall off and they were sent to the south Memphis schools which went only half days. Guess who went to the south Memphis schools? The slaves.Lesson: When we are serious about the tragedy, we will start enforcing our long standing laws, policies, and procedures on immigration. Otherwise, we are just slavers.
Arguments for and against AirBnb are legitimate. AirBnB brings competition to the somewhat staid hotel industry and allows people to make a few bucks renting out rooms. The negatives are, as you mentioned, inflated real estate prices and the country becoming a “landlord nation” (Redfin CEO’s words, not mine). In the end, the positives outweigh the negatives…I think.
Leads to lack of community as well, since people don’t have permanent neighbors but rather an array of random tourists for a few days at a time.
Most co-ops and certainly rent stabilized units forbid Airbnb type rentals. Condos less restrictive. Easy enough for residents to inact guidelines per building if transient traffic is perceived as troublesome. Admittedly, sometimes hard to inforce.
NYC hotels have an 87% occupancy rate, though avg. room rates has declined w/ continued hotel build-outs. Airbnb helps keep room rates in check, which is good for tourism. The more folks that come, the more robust they spend. Taxing Airbnb makes sense, my only beef is where/how those monies get allocated. Upgrading the subway is paramount, though taxing Airbnb there would only be a pimple of a solution.
Don’t see a dark underside here. Airbnb at its core is an economic play, opening up new uses for a previously underutilized asset class. I don’t see “inflated real estate prices” as a negative. I see that as the market price moving to reflect the increased value of the asset. In terms of bypassing the hospitality industry and the impact on employment in that sector, we need to recognize also that Airbnb hosts have themselves opened up a new form of employment. On a net basis, have more personal income dollars been created? Again, economics would suggest there likely have been. As someone who has lost a job during a deep industry restructuring (web 1.0 bubble burst), I get that there is real personal pain for those impacted. But that’s the invisible hand doing its thing. It sucks, but I’m not sure I see any good alternatives.
Interesting point. The market moving to make use of a scarce resource more efficiently. That potentially makes a lot of sense.The counterpoint is this however. Airbnb is taking properties that were designed for long term residential use and putting them into the short term rental market. That means space that includes things for long term use (full kitchens, laundry facilities, separate spaces for entertaining, home offices, dens, etc.) are now being allocated to a use that does not really require these things. In the short term, investors (with their size inevitably getting larger) are taking advantage of those extras that short term hotel rooms don’t have to make themselves more attractive and undercut pricing without the regulation and taxes.While this might make sense if the long term resident is allowing that space to be used sparingly during short times when they are not there (the original vision of Airbnb), like many of these ideas, some unintended consequences are taking place. Due to the arbitrage, long term properties are now being used primarily as short term rentals, driving up long-term housing prices.From an invisible hand point of view, does it make sense for a building with say 100 long term apts in it designed for residential living to be used for short term stays or should that building be filled with 300 hotel rooms that have only what the short term renter needs?
Taking your argument to its logical conclusion, we should simply end zoning altogether (perhaps with some exceptions for public health, e.g. a chemical plant next to a house). After all, if you can make an extra dollar opening an short-term rental in what was once a long-term rental, or a luxury condo in what was once a homeless shelter, or a coffee shop in what was once a day-care center, then by your logic that is the correct move. The invisible hand, and all that.The big issue with this logic is that neighborhood composition and stability, within limits, support so many other elements of a local economy. Zoning is sort of a backbone for the stability of a local economy, for efficient usage and distribution of public goods, and ultimately for economic growth.Stated differently, an urban land economy is an artificial one, created by zoning. It’s not really a place where the invisible hand runs unfettered. So to assume that Airbnb displacing long-term rentals is a natural economic outcome is to misunderstand the framework that sets the relative value of any given land use.
Houston proudly has no zoning. Now what that means is I can set up a chroming plant (very toxic) or a strip club right next to your house.As I have said zoning is one of those tragedy of the commons type things. Unfettered I can hurt you to the benefit of me. That does need regulations.For instance I walk my 150lb Akita every morning and night. There are strict regulations to pick up after him. Now I don’t like picking up dog poo anymore than anybody else (the town provides bags and public trash cans) but there has to be a regulation otherwise I could just leave it in your yard ($250 fine for first offense) I benefit, you lose.
The lack of zoning in Houston was one of the coolest aspects of my trip out there when I was in city planning school a few years back. But as you know, being a Houston resident, there are many workarounds like deed restrictions, master-planned communities, covenant-controlled communities, and so on. Turns out the people have decided that even in the absence of zoning, they’d like not to live in a capitalist free-for-all!Also – I love Akitas! We dog-sat for one last year – one of my favorite dogs, and a total show when I brought him through Central Park. I wish I could convince myself to buy one, but I’m not sure it would enjoy apartment life…
Fred, there are many that feel (and quote numbers to suggest) that Airbnb is making NYC housing less affordable for those that have no intention of sharing their home. Is it your position that this is not correct, or that the $10M goes a long way in fixing that?
The legislation that is in committee in Albany that would allow Airbnb to collect these taxes would also address many of the worst impacts of Airbnb on the housing market. The hotel industry doesn’t care about that either. They want Airbnb out of the market entirely and that is not going to happen
But how exactly do taxes reduce rent increases?
“The hotel industry doesn’t care about that either” ? Cmon Fred respect your readers.Half the indictments on Paul Mananfort were mortgage Fraud, for taking out a mortgage to Airbnb a condo in NY and not disclosing that on the loan application. This is a fraud carried by 10% of the population paid for by the other 90%.
.This is exactly the wrong place to decide this issue.Zoning is local. There is no reason for the state to be legislating on this matter.Once the local issue is decided the existing city, county, state tax regimen kicks in.Why should a legislator from Buffalo be deciding an issue for Brooklyn?JLM http://www.themusingsofthebigredca...
They want Airbnb out of the market entirely and that is not going to happenA negotiating ploy obviously and they know it’s not going to happen but you have to have something to give up in order to make the opposing side give you something in the end.  My point is this isn’t the gun lobby or even close despite what you read. Lucky you have never gone through divorce and seen this in action.
Still got that box of cereal on your shelf? Great initiative here by airbnb, think corporations acting in the best interests of communities is a trend I’d love to see continue and grow.
Yes we do
It happens all the time. In my home town of Detroit, many corporations (http://fortune.com/2017/09/… are taking a risk and moving people and money downtown. It is working. It just doesn’t get reported very much by the national media.
The hotel industry employs millions. it’s an an industry that with time one can advance from a night desk clerk to a Vice President. This is the type of capitalism that has worked for so many for so long. Capitalism works! The ignorance is so many for not understanding the history it’s success is sad.
Even though this is in the right spirit, isn’t this still using corporate profits to lobby for political change? I love the idea of corporations donating money to the local community. But there is still an agenda at work beyond just love of community. I would hope AirBnB would do something similar in every city they operate.
yes, and AirBnB is probably trying to ‘take’ NYC and then hope that other cities capitulate.
The importance of upholding the rule of law trumps any effort by a company to do good.
Are you suggesting that Corporate companies will pay less taxes and in exchange they will support their preferred organization ? Next, I will not pay taxes either and will donate my taxes to my preferred charity. If so, how do you suggest to fund governments ?
I’m usually with you Fred, and I love AirBnB and Uber for the innovation, disruption and competition they bring to the market. My ONE HUGE problem with AirBNB in cities like NY, SF and LA is that it is taking a scarce, already overpriced and essential resource (shelter) from ordinary and poor residents. It is one thing for a retired couple to rent out their extra bedroom to a visitor, but it is a serious problem when landlords take over apartments and houses with the sole purpose of putting them on AirBnb.I wish you’d invest in a startup that disrupts the current housing real estate market by building high density housing in areas that don’t allow it by using some loopholes or high speed transport so people can live in super suburbs, If you can’t have ordinary people rent or own houses in these cities, they’ll stop being the cities you love.
Right. 70%+ of Airbnb’s biz is renting entire homes/apts/condos and has nothing to do with renting shared rooms.
96% of hosts in NYC are renting out their own home. So the “taking housing off the market” narrative is not really accurate and is being used by Airbnb’s opponents to attempt to kick them out of the market. And the legislation that Airbnb is trying to get passed in Albany contains the one home per host rule.
96% of hosts in NYC are renting out their own home.However to my points elsewhere if I can rent out my home or my apartment and earn extra income on the side that allows me to a) Pay more for that property (driving up the cost) and/or b) Pay more for rent if someone else owns the property.You can’t escape that fact.
LE’s comments throughout this post are spot-on. If this bill passes, I will likely renovate some or many of my new and vacated units into ‘Airbnb’ units with separate vestibule entries, kitchenettes, and en-suite bathrooms, and I will market them to renters who want to make money on Airbnb. They will, in turn, pay much more for these units, as I seek to capture as much of their profit as possible. The market moves fast.
“one home per host rule” – easily circumvented by appropriate legal structures.
How many of those 96% own more than 1 home? I know that isn’t true in SF at least. The issue I have is that Airbnb is further enabling rich people that are buying 2nd, 3rd and 4th investment homes (and can do so in their trusts, LLCs, wives, children, grandparents names to overcome any regulation).They get tax deductions, investment appreciation (from Nimbyism), low property tax locked in for their grandchildren.So who gets shafted by this? Working class folks that see rents go up 50%.I’d be the biggest supporter of AirBnB if housing was more affordable for all.Right now it feels like a startup queen saying “Let them eat cake”
Support Airbnb’s overarching point. Well played.Observation: We have become a society that depends increasingly on the kindness of (mostly a handful of high net worth) strangers.
Fact Check: The federal Gov collected 3.3 trillion in taxes (a record amount).
And the sky is blue. As the economy grows, we should expect the Fed Govt to collect a record amount of taxes in absolute terms.That macro observation has nothing to do with the day-to-day failures of our society to fund the things (e.g., school supplies) required for its continued operation, things that increasingly require private donations to fund the gaps.Setting aside the policy of what we might do about it, is that really so controversial an observation?
Fact check 2: federal taxes have ranged from 15 to 20 % of GDP over the past 50 years, fairly stable. Tax at the low end and you increase spending tax and the high end you decrease spending.As for schools, in the long run it would be better for parents to have more skin in the game and pay for something towards there kids education. What you pay for you value.
The hotel industry’s opposition to Airbnb, while real and self-serving, is a red herring when it comes to NYC’s opposition to the service. The issue that actually mobilizes residents and politicians is the fact – and it does seem to be a fact, at least according to the recent McGill study – that Airbnb makes housing less affordable.This is obvious to me – over the last four years, I’ve acquired a substantial residential portfolio in Williamsburg on behalf of my investors. Were we to convert our portfolio to Airbnb usage, we would likely double our bottom-line income, even accounting for additional management expenses and Airbnb’s cut. Truly the only thing preventing us from doing it is the fact that it is illegal to do so.This is an intractable issue in supply-constrained cities with lots of tourism, and it’s not something a tax can fix. The tax would have to be stupendously high to close the delta between Airbnb profit and standard rental profit, and redistributing the tax dollars to help alleviate the impact on rents across a wide swath of city residents (perhaps by subsidizing new construction? rent credits? who knows…) would be unmanageable and likely bungled by bureaucracy.As someone who stands to make a lot of money if Airbnb is legalized in the city, but who also cares about issues of equity and neighborhood character, I can say that Airbnb needs to find new battles to fight. Performative bribes won’t help.
One other point that needs mentioning is if you allow your tenants to do airbnb (and you are not involved at all) then you are able to charge them more rent because that rent is offset by the extra income they either make or they think they will make. And they do all the work and take the risk. (I do this with a commercial property right now).This is actually a common theme in vacation rental properties (unrelated to Airbnb). Someone buys a property that has a little cottage attached. The cottage can be rented out. The property owners think they will make extra income. They will but the extra income will end up paying for a) higher property costs b) a part time job for them managing the people who come and go on the property. Now if they like that fine but my guess is most have no idea of the actual work involved. And as mentioned the property costs more because of that cottage to begin with (which provides no value to them other than when they sell the greater fool of course).Anyone who doesn’t think this is the way the vast majority of (traditional) business people operate in the real world hasn’t spent much time in business and doesn’t understand base psychology of business. Nice speculation on the sidelines though sure of people who have never run a lemonade stand.I will tell the story again of a person who worked for me years ago. He asked if it would be ok if, when his wife started a business on the side, he occasionally took a phone call or went to help her. (He was on salary and the business was a cafe at a school that she had the opportunity to buy and earn a bit of income). Now most employers would probably say ‘no I don’t want you focusing on that and not my work’. I was the opposite. I said ‘sure that’s fine as long as not to much time and you get your work done’. Why? I figured if the family made money from the business then he wouldn’t be hitting me up for raises as much. So it was simply a self serving agreement that ended up being to my benefit in the end. (Did work out exactly that way btw.) Employees moonlight? All depends but not a non-starter and not because you are a nice guy either.
it does have the feel of strategic bribery for political leverage. i assume a well connected and highly paid lobbyist is involved in the campaign. i wonder which one it is?
.Let me say first that I am in favor of people being able to do whatever they want to with their property within the law. Therein lies the rub.Most zoning codes provide for a specific type of housing – as an example, single family housing. AirBnB does not fit that zoning class. Neighbors are entitled to the city enforcing their own zoning code.This is a perfect example of gov’t being asked to pick winners plus a good old fashioned bribe. Old school. I love a bribe.The numbers are very suspect. AirBnB room nights absorbed at the expense of hotel room nights will generate a LOWER rate of hotel room tax because the individual rack rate is lower.If I supplant my $750/night rack rate at the Peninsula with a $500/night AirBnB the tax generated goes DOWN.Further, the commercial hotel is a volume based employer and an income based property tax payer. The AirBnB will pay no more property taxes if they generate a higher level of income because of AirBnB.Long term rental rates will always be lower than short term rates. A hotel is just an apartment building with short term rates.The numbers do not support the proposition, but the bribe is effective.JLMwww.themusingsofthebigredca…
I think that’s a great point and one that I hadn’t thought of (ie less tax revenue on the room). However if I was going to counter it I would run some spreadsheets and posit that the additional visitors to NYC would result in a net increase in tax revenue and jobs. I would argue that because (like the biblethere is probably a simple way to back up the statement and it would seem believable. Then you can come up with your own numbers and we can go back and forth.This part (from the NYT article) is what bothered me. (Actually I don’t care but it did stick out let’s say):It would also allow hosts to legally list rent-stabilized apartments on Airbnb under certain conditions.In what universe does that make sense? People have rent controlled apartments which they stay in (and pass to relatives  how that makes sense is beyond me also) until the bitter end but they are also allowed to generate income from those apartments to offset the low rent they are already paying?Lastly and importantly hats’ off to Fred for getting money for CSNYC. You will note that CSNYC in no way competes with the other ‘pull at the heartstrings’ organizations that are getting money from Airbnb. Honestly Fred that is quite an accomplishment and that is great. (I am not being sarcastic).  I am talking about relatives that never lived there at all. Because once again look at what the other organizations do
.Why are there more visitors just because somebody decides to go AirBnB?JLMwww.themusingsofthebigredca…
Well because in theory the airbnb should be less expensive and therefore there will be more people that will come to NYC than would instead if had to pay hotel prices.An example is when my parents had a place in Miami on the beach (small motel condo they bought in the 70’s). So my sisters would always go there and stay because my parents only used it one month a year. Plus they rented to Canadians when they were not there. I never visited the place. If I go I want a hotel. I don’t want my mom hocking me and asking if I cleaned up after myself. I want a maid and I want a mint on my pillow (well my wife does). Anyway my sister is not me and is cheap. And they don’t mind cleaning up. So they went and stayed at the place a fair amount of times. They wouldn’t have gone if the place wasn’t free. So it’s like that. Miami got a visitor.Now if my parents could have airbnb back then they definitely would have. And those people would have paid much less than a hotel (which they in theory wouldn’t have wanted to pay for). Most likely airbnb would pay enough that the Canadians would be forced out. Then they would compete for the balance of the rental market thereby driving the price up in buildings that didn’t allow airbnb. But they wouldn’t have stayed in hotels.This is the building big developer bought the entire condo and made luxury housing:http://rbacmiami.com/Developer was Dezer a Trump bud who also operates in NYC. He pitched the condo association himself and sucked up to everyone in order to get this thing done.
Except that in this case, the Airbnb trend cannot be stopped. It’s underway. So, this is a case of minimizing the tax loss and recouping part of it. So, it’s a net positive.
.There is something called a “mandamus” action which compels a gov’t entity to enforce their existing laws. Somebody will eventually force the local gov’t to enforce their rules.The hotel guys are not going to sit this out.Your argument falls on deaf ears.JLMwww.themusingsofthebigredca…
In particular I love the part (sorry William and Fred and some others) that implies ‘train has left the station … genie out of the bottle’ and so on. Of course the people with the big stick can do all sorts of nasty things if they want to.You know in the end this will come down to a battle of who has the biggest war chest. On one side you have airbnb and their lawyers and brains and developers. On the other side is the hotel industry. Will be an interesting fight.
You left out, “Once the toothpaste is out of the tube, can’t put it back.”!
i wonder if there’s a third way, and an opportunity to outfox both?there’s an art to governing.
So you’re encouraging the continuation of monopolies (hotel chains) that impede on our freedoms to choose under what roofs we’d like to be, when travelling.
Oh, oh, oh, thank you for that information. I very much did NOT suspect that the point of AirBnB was to play fast and loose with laws to break up hotel monopolies!!!!Last I heard, we have laws that let us break up monopolies. IIRC we applied those laws to Standard Oil, DuPont, IBM, AT&T, Microsoft, and more.
Ha! Hotels Monopolies. You’ve got to be kidding me. Time for you to take a Econ 101 class.
Net of it, hotels are lobbying against Airbnb, while Airbnb wants to give revenues to the state. Not sure what part of Economics you are referring to.In Europe, Airbnb hosts already pay/transfer taxes.
.There is nothing even remotely monopolistic about the hotel “industry.” In fact, an industry cannot even be a monopoly.Only a single company can be a monopoly when it attempts to exert control through marketshare on pricing in restraint of competition.When a small group of companies controls pricing and restricts competition that is called an “oligopoly.”You have no “right” to sleep under an unlicensed or unlawful residence”s roof, no different than you have no right to buy spirits from an unlicensed purveyor.JLMwww.themusingsofthebigredca…
Peer to peer commerce wants to be a little more open than top-down, controlled policies of the past. I do get better service and enjoyment from the Airbnb places I decide to stay at, than in many other hotels, even some 5-star ones.
.What is peer-to-peer about AirBnB?It is the identical process as booking a room at the Peninsula.I make a reservation on a website for both of them. For AirBnB, I have to pay upfront.JLMwww.themusingsofthebigredca…
The discovery of hosts and properties is a little more interesting on Airbnb than on Hotels.com. It gives you the feeling of connecting 1:1 with the hosts.
The Airbnb trend can absolutely be stopped at a local or regional level, or at the very least disincentivized to a point where usage is very low. Just NYC’s recent proposal to force Airbnb to disclose its landlord-clients is probably enough to cut off the majority of the supply.Airbnb is a business, like Uber, that is wholly subject to regulatory whim. And because the potential downsides of renting out one’s home are so significant (e.g. theft, property damage, liability for a guest’s injury), it’s not a business that really scales without large intermediaries like Airbnb that can deal with insurance, escrow of payments, emergency customer service, etc.Maybe the trend can’t be stopped in a global sense, but at a local level a couple laws would be enough to make the company insignificant in that locality.
.Agreeing more with you than your own Momma.JLMwww.themusingsofthebigredca…
(1) AirBnB. They are playing “fast and loose” with many local laws about zoning and running a hotel.(2) Uber. They are playing fast and loose with many local laws about operation of taxi services and forbidding “ride sharing”.(3) Crypto. They are playing fast and loose with many national laws on creation of currencies, money transfers, selling securities to the public, etc.(4) Immigration. The Democrats are at it again; they were long the party of slavery and now are back at it. The Democrat, Obama, Hillary, Pelosi fast and loose play with our long standing laws, policies, and procedures on immigration are deliberate efforts at bringing back slave labor and dependent voters.Yes, there are ways to play fast and loose with laws — a little money here, a little money there, sometimes the money was in cash in a stuffed standard business envelope, maybe a no show job for a relative, etc. Various Mafia, etc. organizations long did such things in Boston, NYC, Chicago, and likely more. Also for shakedowns, drugs, putting a competitor out of business, kickbacks, union organizing, murder, etc. The many gangster movies are not all just fantasy fiction. Apparently Mexico makes so much money selling drugs into the US that the government and the drug cartels have a “Mexican standoff”.Lesson: There are lots of ways to have crooked stuff, to play fast and loose with the laws, etc., all of which lead to rot in a society. Decent people don’t want that stuff. One response was in a movie, about NYC, “Decent people shouldn’t live here.”. Maybe people worth over $100 million can find NYC a nice place to live, but even in NYC only a tiny fraction of the people have that much money, and for the rest this fast and loose stuff is really bad for them and their efforts to live decent lives.This fast and loose stuff is no good for wives, sisters, daughters, cities, or countries, or anyone or anywhere.I do what I can to stop this fast and loose stuff.
i don’t know the math for sure, but i’m sure airbnb proponents will counter that airbnb’s lower prices will generate more aggregate demand (demand is highly elastic), which potentially means more aggregate tax revenue. same principle for property taxes, airbnb drives up property values which in turn drives up property taxes. even employment, airbnb generates more tourism, and thus more tourist capital…..
.Seems at best a zero sum game.If demand increases because price decreases – not sure how elastic demand is at these prices – it has to increase substantially just to close the gap with lost hotel business.In every instance in which I have rented an AirBnB it has supplanted a hotel room.In every instance, the location of the AirBnB has been in a less advantageous location. Great hotel locations are not the same as great residential locations.Commercial property can be appraised using an income approach while residential cannot. Residential property is appraised on a comparable sales approach. The impact of incremental income will be a pinprick and very sparsely distributed.So I don’t buy the property value increase argument.I think where someone stays is a secondary driver of a decision to go, as an example, to NYC. I go the weekend of 10-12 Nov every year (wife”s birthday, Veterans Day Parade). I am not influenced by accomodations.Having said that, affordable accomodations can only be good for any business or tourist destination.JLMwww.themusingsofthebigredca…
i think the new demand airbnb generates appears in select demographics/use cases. i have young kids, when we go on vacation it is either airbnb/vrbo or 4 of us stuffed into a hotel room. as the latter by definition is not a vacation, we always go with the former. same with our peers. when i was slumming it as an entrepreneur, airbnb was great because i could rent out a couch or something otherwise undesirable, rather than a hotel room that would be exponentially more expensive.airbnb is residential property in name only. once you get a taste of that airbnb income, it will naturally drive up the price at which you are willing to part with the property, and thus increases the listing prices, and by extension, the final sales price.at least htat is the theory. i find it mildly persuasive, but for stuff like this, i think a deeper dive with real, unbiased numbers is needed to make the conversation more scientific.
.Fair play. Cannot disagree with that..JLMwww.themusingsofthebigredca…
If you are on the AirBnb Board of Directors do you chalk this up as a “marketing expense”? It increases their burn, and decreased the cash available to shareholders. OTOH is it worth it long term to use this sort of “marketing expense” to penetrate a new market over and over again?
.”If you can make it here, you can make it anywhere, New York, New York?”JLMwww.themusingsofthebigredca…
“…the generosity of Airbnb” is yet another half-truth which Fred likes to proffer to readers of this blog.Here’s a more accurate and unbiased assertion, “…the donation from Airbnb which is apparently part of Airbnb’s ongoing public relations campaign in Airbnb’s struggle with entrenched hotels, motels, etc in and around New York City.”I am not advocating for one side or the other. But I dislike Fred’s blatant attempts to unfairly manipulate readers of this blog by asserting half-truths. More and more Fred reminds me of a typical used car salesman. I can easily imagine Fred with a lugubrious smile and an outstretched hand ushering in a potential customer with the words, “Welcome to Fast Freddie’s used car lot!!!Come on in! How may I help you today!”
You stated it correctly – Politics! Airbnb wins the log-game – they have plenty of liquidity in their platform.
The meaningful opposition to Airbnb isn’t the hotel industry—it’s tenants in NYC who see housing stock diminish and rents rise due to AirBnb. It accelerates gentrification and displacement. (Realtors for luxury towers sometimes even encourage people to take leases for apartments they can’t afford, suggesting they use AirBnb for the extra bedroom.)