Last week a new report came out on AirBnB’s “home sharing” business, and it questions the view that the company is about sharing that extra room in your house.
The study was commissioned by the American Hotels and Lodging Association, which clearly has an issue with AirBnB in that it sees it as a competitor for hotels that evades the regulations and hotel taxes that hotels are required to abide by. So it’s no surprise that the study results reflect poorly on AirBnB.
But if the statistics in the study are to be believed, AHLA has a point. AirBnB’s business is quickly changing to be dominated by entire-home rentals and by hosts who are managing multiple entire-home rentals.
Nationally, they found that about 64% of AirBnB hosts are renting entire homes, versus 36% renting out that spare room or mother-in-law apartment. Entire-home rentals represent 81.1% of total revenues. 7.1% of hosts are managing multiple homes, representing 32% of revenues.
The study also analyzed thirteen key cities (Austin, Boston, Chicago, Los Angeles, Miami, Nashville, New Orleans, New York, Oahu, Portland OR, San Francisco, Seattle, and Washington DC) and found similar numbers, with variation across the cities (details are in the report).
What’s particularly concerning is that growth of multi-unit hosting is outstripping single-unit and partial-unit hosts.
Why? Because that’s where the money is.
When we drill into the Seattle statistics, we see a similar trend. Of note: revenues for multi-units hosts in Seattle grew by 182% last year.
We can also see that multi-units hosts are growing here as a fraction of all AirBnB hosts, properties, and revenues.
The study feeds two major concerns:
- AirBnB is not really about renting an extra room in your house anymore; it’s about short-term rentals of entire homes. They even admit it on their web site now: “Book unique homes and experience a city like a local.” Certainly some of that is people who travel frequently and want to rent out their primary home while there are out of town, but much of it is taking potential long-term housing off the market. In a city with a major housing affordability issue driven by shortage of housing, this is a big, and growing, problem: 6,812 units last year, and it’s expected to be more in 2017.
- Multi-unit hosts are effectively running hotels, unregulated, in residential neighborhoods, and not paying hotel taxes. 2,144 units in 2016 were managed by multi-unit hosts; that’s almost twice the room count of the Seattle Sheraton downtown, without even attempting to adjust for the number of bedrooms in those entire-room AirBnB rentals. That’s 2,144 units that aren’t subjected to the health and safety regulations (and inspections) that hotels need to obey, they are bringing transients into residential neighborhoods (which could be seen as partly good and partly bad), and it’s a major loss of tax revenues for the city that pay for infrastructure that in part supports tourists, convention attendees, and other short-term visitors to our city.
Some argue that AirBnB supports the creation of small businesses, thus encouraging entrepreneurs and job creation. True, and that’s a good thing, but collectively those small businesses are reducing the city’s long-term housing supply and ignoring the impact that their businesses have on the city. We couldn’t create two new Sheraton tower hotels in the city without mitigating the impact they would have. We need to think about AirBnB the same way — even if we decide that the taxing and regulation scheme should look somewhat different.
Last year Council member Tim Burgess went through a couple of rounds of a proposal for an ordinance to regulate AirBnB rentals, with attempts to carve out exceptions . But nothing has happened publicly with that proposal since last July. I checked in with Burgess earlier this week, and he told me, “We are likely to advance our short-term rental legislation in early April.” So stay tuned.