Airbnb: The Next Challenge of Regulating the Sharing Economy

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A comfortable Airbnb room in San Antonio. Photo by Gretchen Greer.

Gretchen Greer for the Rivard Report

An Airbnb room in San Antonio.

With success comes regulation and Airbnb, the wildly popular “sharing economy” website that allows users to rent out portions of their home to adventuresome travelers, has had more than its share of success. Recently valued at $13 billion, the company has more than 340 listings in San Antonio alone.

(Read more about local Airbnb operation in Part One of this series: The Rise of Airbnb in San Antonio.)

Airbnb’s success hasn’t escaped the notice of government officials, in Texas and elsewhere. Concerns about health, safety, and taxation have led some cities to begin efforts to regulate residential rentals.

Barcelona, New Orleans, San Francisco, and Malibu have conducted investigations into violations of zoning laws. Amsterdam now collects hotel tax on Airbnbs.

In 2014, New York State attorney general Eric Schneiderman issued a report stating the 72% of Airbnb listings in New York City were violating hotel and zoning laws. In 2013, for reasons either arbitrary or unknown, New York officials fined one Airbnb host $2,400 for violating a 2011 law passed to prevent unregistered hotels operations.

Airbnb led a fervent fight on behalf of the host against the city, arguing that the law was created to prevent people buying up properties for the explicit purpose of illegal short-term rentals, while the host, like majority of Airbnb-ers, was renting out a room in his primary residence. “They are just average New Yorkers trying to make ends meet,” Airbnb said, “not illegal hotels.”

A shared porch at a San Antonio Airbnb. Photo by Gretchen Greer.

A shared porch at a San Antonio Airbnb. Photo by Gretchen Greer.

In February, San Francisco passed the so-called “Airbnb law,” which attempted to impose mandatory licensing and to prevent properties being used as full-time Airbnb rentals. San Francisco, like New York, said Airbnb operations were contributing to housing shortages in the city.

Rental sites that specialize in whole-residence vacation rentals, such as the Austin-based HomeAway and VRBO, were even more dramatically impacted by the regulations than Airbnb.

Officials in San Francisco recently acknowledged that the city’s new law is difficult, if not impossible, to enforce. Unless Airbnb releases information about its users, they said, there is no way to track licensing or usage. “The truth is, the Airbnb law was more about politics than policy,” the San Francisco Chronicle stated in one editorial.

In 2014, Austin introduced an ordinance that requires short-term rental owners to obtain a license from the city. There is a $285 application fee, plus an annual renewal fee, and owners must submit proof of property insurance and payment of the city’s Hotel Occupancy Tax. They also must maintain a Certificate of Occupancy or proof of a certified inspection. The city intends to limit the number of homes that can be rented in a given building or neighborhood, and has placed a cap on licenses for properties not occupied by the owner.

The Airbnb website offers guidance on existing city regulations nationwide, including those in Austin.

Changes are coming to Texas beyond Austin. Cassandra Matej, executive director of the San Antonio Convention and Visitors Bureau, said that the Bureau is, of course, aware of Airbnb.

“We support anything that makes the San Antonio vacation experience safe and unforgettable,” she said, acknowledging that for some of the millions of visitors to the city each year, “that might mean researching alternative lodging, within legal boundaries.”

Accommodations at an Airbnb in San Antonio.

Accommodations at an Airbnb in San Antonio. Photo by Gretchen Greer.

That final clause is a significant one. Legal boundaries may be changing in the near future. Scott Joslove, President and CEO of the Texas Hotel and Lodging Association, said his organization is not concerned with people who rent out rooms in their primary residence, but does oppose those who buy or rent properties specifically for the purpose of leasing them to overnight guests. Austin’s measures should serve as a model ordinance, he said, adding that the Association is working with other major cities to introduce registration, licensing, and occupancy tax to residential rentals.

In February, Councilmember Ron Nirenberg (D8) said “public safety” must be weighed against “letting the free market work,” but health and safety concerns seem little more than a front for the issue of taxation.

To date, Airbnb rentals have not been subject to San Antonio’s 6% Hotel Occupancy Tax. Proposed legislation could change that. House Bill 1792, authored by state Rep. Drew Springer (R-Muenster), seeks to legally define and regulate residential rentals. The bill expands the definition of “commercial lodging establishment,” which already includes hotels, motels, and inns, to encompass residential short-term rental units.

The proposed legislation would “characterize and treat a residential short-term rental unit in the same manner as a hotel for purposes of consumer protection, public health and human safety, taxation, licensing, and zoning.”

That means at least some Airbnb operators in Texas would have to adhere to same regulations as hotels, including requirements for the submission of water samples, regulation of appliances, and sanitation.

A screen shot of an Airbnb search for San Antonio accommodations.

A screen shot of an Airbnb search for San Antonio accommodations.

The bill’s wording is vague, and might exempt individuals who only rent our rooms of their primary residence, where the host is generally present for the duration of the stay. Individuals operating free-standing Airbnb venues, however, would not be exempt.

Sharon Sander, a local Airbnb host, opposes any new regulation. She feels that it’s her right to do what she wants to with her own house as long as she pays her taxes on the property and income she earns.

A 2012 case study conducted by HR&A Advisors measured the financial effect of “collaborative consumption” in San Francisco. The study’s authors found that travelers using Airbnb were more likely to spend money on local neighborhoods and independent businesses. “I like knowing my space is getting used by people who are genuinely interested in the city,” one host said.

The Garcias, who live on San Antonio’s Eastside, said their neighbors appreciated the Airbnb presence, and felt that it was contributing to the positive transition of the area. Another local host said his neighborhood, within walking distance of Southtown and the River Walk, is what guests find so appealing. Sander said having people coming and going at unexpected hours has reduced crime on her street. The Diazes, who I wrote about in part one of this series, said they are investing in the future of another transitioning neighborhood.

I spent one night at a highly rated converted garage apartment in Lavaca where my Airbnb host said the Southtown area attracts a very different demographic than the tourists and conventioneers who are the backbone of the downtown hotel industry. She believes Airbnb is adding to the city’s economy.

“If there was no Airbnb, visitors who currently use it wouldn’t turn to hotels—they simply wouldn’t come,” she said.

One of the best aspects of hosting is changing travelers’ minds about San Antonio by introducing them to a different side of the city. “I’m overwhelmed with how surprised people are by how wonderful San Antonio is. It’s refreshed my own view of the city.”

With just over 0.0002% of the San Antonio population hosting via Airbnb, the phenomenon is hardly widespread. But these sharing economies are fundamentally altering the way we move, travel, and interact with the world. That change, for some, represents a threat to the status quo, and public officials do worry that innovation also can bring public safety challenges and questions of regulatory fairness that must be addressed, however unpopular with some.

What can’t be argued is that Airbnb is enabling and encouraging local, personal, and authentic experiences that have a positive cultural and economic impact on the city, and show visitors a different side of San Antonio. Airbnb helps visitors live more like locals. The trick will be making sure that any efforts to regulate Airbnb do no drive it out of the market or give the city the kind of black eye that came with the rideshare debacle.

Related Stories:

The Rise of Airbnb in San Antonio

Rideshare Revisions Pass: Uber Leaving Town, Lyft on ‘Pause’

Uber Rejects Proposed Rideshare Revisions

Commentary: Rideshare Should Get On Board with Existing Rules

10 thoughts on “Airbnb: The Next Challenge of Regulating the Sharing Economy

  1. The individual also has the option of maintaining a very diverse and large circle of friends with homes across the globe. It’s better If you have a military background.

  2. None of the things in this article point to the extinction of Airbnb – I’ve paid the hotel occupancy tax in other states through Airbnb, and as long as Airbnb helps owners through the legal requirements, things should be ok.The only time we should worry is if Airbnb gets so big it makes hotel chains worry. Then, we could have another Uber/Lyft situation here.

  3. Your article erroneously states that San Antonio Airbnb rentals are not subject to the 6% hotel tax. In fact, while not subject to formal licensing at present, any room rental that charges more than $15/night is subject not only to the 6% state tax, but all of the other city taxes that total 16.75%. Hosts that fail to charge this are putting themselves at risk. The city website lists all of the applicable taxes here: http://sanantonio.gov/Finance/bfi/TaxRateSummary.aspx and includes a link to the state website which contains the following statement: “Persons leasing their houses, or rooms in their house, must collect the tax from their customers in the same way a hotel or motel collects the tax from its guests. Property management companies, online travel companies and other third-party rental companies may also be responsible for collecting the tax.”

  4. The only black eye this city got during the TNC negotiations was the one created by the TNC’s hype machine and hand delivered to us by social media and sites just like this one. Sadly, it seems this site is gearing up to yet again be the proxy for people and businesses who are under the false impression that the rules don’t apply to them.

    And again Robert Rivard, you said this site favors equal treatment for all for-hire car services in San Antonio and now that Uber has a much sweeter deal than the Taxi companies and is still leaving, you are noticeably silent on this issue.

    Where is this call for equal treatment under the law? I’m guessing by the tone you are setting here with these pro-AirBnB pieces that you don’t want the city to regulate them the same way they regulate hotels, so i guess that whole equal treatment stance was just lip service, am I right?

    • Nomrah

      I disagree with the premises of your comment. The sharing economy is newsworthy, and we provided interested readers with the different approaches different cities have taken to balancing regulation with innovation when it comes to rideshare, and we covered the issue here form start to finish. We invited all sides to post their own authored pieces for and against rideshare. We also documented the widely held view in San Antonio that the taxi industry has traditionally delivered poor and inadequate service and that we remain one of the largest cities in the nation with inadequate transportation alternatives, including the ability to safely commute by bike or on foot. That remains the case.

      Airbnb is another important reflection of how the sharing economy is disrupting the status quo. Once again, different states and cities are taking different approaches to regulation and our site will be a reliable source for interested readers to stay informed. We will present all sides of the debate, but we make no apologies for favoring the way new technologies are giving consumers greater choices. And we expect the city’s leadership to take a thoughtful approach to any regulatory efforts rather than try to shoehorn something new into old regulations meant to address other business models. We respect your right to hold a contrary opinion. –RR

      • Robert,

        The problem I see is that there is an appearance here of unbiased journalism, the reality is more of a one sided promotion. In the case of the TNCs, this site published article after article with a clear bias in favor of the TNCs. (Notice I’m not using the loaded term rideshare, that’s because that term was developed by that industry to give it a positive spin)

        And you did say you were in favor of equal treatment for all for-hire car companies in this city, and have yet to comment on the new regulations which give the TNCs a clear regulatory advantage over all the other for-hire car services. Where is the article critical of Uber for pulling out of San Antonio after getting almost everything they want, including special regulations that give them a clear advantage over the taxis?

        This site came out heavily in favor of the TNCs, pushed their agenda and talking points, and is clearly poised to do the same with AirBnB.

        Now personally I don’t quite understand how anybody can call AirBnB part of the “sharing economy” with a straight face. Just like with the TNCs the term “sharing” is used to obfuscate the truth here. In what bizzaro world has charging people for a service become sharing? If you want to avoid appearing as though you are championing AirBnB here, you might want to consider using the term P2P, which is neutral, but as you just said, you are not making any apologies for supporting AirBnB so why would you see any need to use unbiased terminology?

        You are saying your site will be a reliable source for information yet this very article still contains a glaring mistake “To date, Airbnb rentals have not been subject to San Antonio’s 6% Hotel Occupancy Tax.”. I think it’s pretty clear that you can’t present all sides of a debate while openly favoring one. (see FOX NEWS for more on that subject) Don’t get me wrong, there is certainly a place for HuffPo style opinion and commentary blogs, I just think its a sad fact of internet journalism that the line between editorial and news content has been blurred to the point of non-existence.

        • Nomrah

          You are entitled to your viewpoints, which clearly are in opposition to rideshare and Arbnb. The market, on the other hand, welcomes such innovation. We have written extensively about the revised ordinance, and we hope Uber and Lyft decide to return to San Antonio, but we have never seen these companies as the same as taxi service and we don’t subscribe to the belief they they should be regulated in the same exact manner. The elected officials who do believe they should be regulated in the same fashion have had their viewpoints presented on our website repeatedly. We reject your assertions that our journalism lacks credibility, and the new readership levels we are achieving on an almost monthly basis support that position. March has been our best month in our three years of publishing, with month-over-month readership growth of more than 20%. –RR

          • Actually, I don’t oppose TNCs or AirBnB, and it’s pretty telling that you failed to realize that. I’m in favor of every man getting an equal shake, something seemed to be in favor of that until the TNCs got a sweet deal, at which point your support for equal regulations evaporated. That’s pretty telling as well. It tells me that what you actually care about is pushing a product you like, regardless of how that product affects others (on both sides of the P2P exchange) or what special treatment that product is getting from regulators.

            Notice here how you say ” The elected officials who do believe they should be regulated in the same fashion have had their viewpoints presented on our website repeatedly”, implying that those who pushed for “some” regulation, have in fact pushed for regulation that is identical to the taxi regulations. That’s demonstrably false, and a symptom of the fact that you are pushing an agenda rather than simply the facts surrounding the issue. It’s a perfect representation of what I just said in my earlier comment “you can’t present all sides of a debate while openly favoring one”. You can’t even accurately represent the other side of the debate when attempting to articulate that you represent the other side of the debate.

            That you have a growing fan-base in no way serves to narrow your credibility gap. One look at Fox News’ ratings as well as the readership of Huffington Post should be enough to make you back away from that statement.

            I hope you don’t take my continued hassling as a reflection of ill feelings toward you or your great staff, many of whom are friends and neighbors. Heck, you and I have shared oysters on Hugh’s front lawn and I’m certain we see eye to eye on almost every issue. I’m just a very stubborn person who gets all bent out of shape by agenda driven journalism no matter what side of the debate I’m on. I can’t, in good conscience, criticize an outfit like Fox News without levying the same criticism on those news outlets that align with me politically but use similar tactics to push an agenda.

            Again. I am not against these new innovations, I’m against the idea that innovations are entitled to special regulatory loopholes and that it’s a journalist’s job to push for those loopholes.

  5. I looked into some of the NYC regulations; Drivers have to pay $625 every year to register their vehicles and have them inspected. I don’t see anything like this in the San Antonio regulations. NYC cars need to be 2010 or newer, and San Antonio allows vehicles as old as 8 years. They’re also required to take a defensive driving course in NYC, and I don’t see this in the San Antonio regulations. The required insurance once a trip is accepted in 1 million in Austin, Houston, and San Antonio. I’m having a hard time seeing exactly where San Antonio regulations are too much for Uber to stay. Why are they still in NYC despite what appears to be more regulations?

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