Last year, Airbnb underwent a rough regulatory patch.
The short-term rental company became a Federal Trade Commission target after three senators asked for an investigation into how companies like Airbnb affect soaring housing costs. In October, Governor Andrew Cuomo of New York signed a bill imposing steep fines on Airbnb hosts who break local housing rules.
Airbnb in Tokyo
Angus Grigg visited Tokyo’s glamorous Ginza district with the help of his Airbnb host.
The two actions appeared unrelated. But one group quietly took credit for both: the hotel industry.
In a presentation in November, the American Hotel and Lodging Association, a trade group that counts Marriott International, Hilton Worldwide and Hyatt Hotels as members, said the federal investigation and the New York bill were “notable accomplishments”.
Marriott International, Hilton Worldwide and Hyatt Hotels are members of the American Hotel and Lodging Association. Photo: Bloomberg
Both were partly the result of a previously unreported plan that the hotel association started in early 2016 to thwart Airbnb. The plan was laid out in two separate documents that the organisation presented to its board in November and January. In the documents, which The New York Times obtained, the group sketched out the progress it had already made against Airbnb, and described how it planned to rein in the start-up in the future.
The plan was a “multipronged, national campaign approach at the local, state and federal level”, according to the minutes of the association’s November board meeting.
The documents provide an inside look at how seriously the US hotel industry is taking Airbnb as a threat – and the extent to which it is prepared to take action against it.
In the past, hotel executives typically played down the privately held company’s effect on the $US1.1 trillion ($1.4 trillion) US hotel industry. As recently as December, a Marriott executive dismissed Airbnb as not “really making headway in the corporate environment, which is really our bread-and-butter business.”
Investors have pegged Airbnb’s value at about $US30 billion. Photo: Getty Images
Yet there is now little mistaking that Airbnb is encroaching on the traditional hotel business. The company, which is based in San Francisco, was founded in 2008 as a way for people to easily list and rent out their spare rooms or their homes online. Since then, about 150 million travellers have stayed in 3 million Airbnb listings in more than 191 countries, according to the company.
Airbnb has raised more than $US3 billion and secured a $US1 billion line of credit, according to the research firm CB Insights. Brian Chesky, Airbnb’s chief executive, has said the company could be ready to go public in a year. Investors have pegged Airbnb’s value at about $US30 billion; in contrast, Hilton’s market capitalisation is $US19 billion and Marriott’s is $US35 billion.
Airbnb co-founder Brian Chesky and Ashton Kutcher, who helped launch it. Photo: Nic Walker
The national hotel association said its push against Airbnb was not about the platform’s financial effect on hotels.
“Airbnb is operating a lodging industry, but it is not playing by the same rules,” Troy Flanagan, the American Hotel and Lodging Association’s vice-president for state and local government affairs, said in an interview.
The main prongs of the association’s plan to constrain Airbnb include lobbying politicians and state attorneys-general to reduce the number of Airbnb hosts, funding studies to show Airbnb is filled with people who are quietly running hotels out of residential buildings and highlighting how hosts do not collect hotel taxes and are not subject to the same safety and security regulations that hotel operators must follow.
The group said it would focus its efforts in key markets, including Los Angeles, San Francisco, Boston, Washington and Miami.
The association also sought help from politicians in Washington. In its documents, the group said it had worked with Senators Brian Schatz of Hawaii, Elizabeth Warren of Massachusetts and Dianne Feinstein of California. The three Democrats sent a letter to the FTC in July “raising concerns about the short-term rental industry”, one of the hotel association documents said.
Feinstein’s office referred requests for comment to Schatz’s office. Schatz’s office and Warren’s office did not respond to requests for comment.
The association also met with legislators and attorneys-general in dozens of other states to discuss how Airbnb hosts often do not comply with rules imposed on hotels, such as anti-discrimination legislation, local tax collection laws, and safety and fire inspection standards. In some markets, the group said, Airbnb is dodging payment of local lodging taxes. In other places, it encouraged officials not to collect taxes from Airbnb hosts so as not to legitimise short-term rentals.
The association claimed legal and regulatory victories last year in Chicago, San Francisco and Los Angeles, as well as in states such as Virginia, Tennessee and Utah, where laws were being passed to restrict Airbnb activity. The organisation also funded research conducted by a professor at Pennsylvania State University to show that many Airbnb hosts were breaking the law.
“We are trying to showcase and bust the myth that Airbnb supports mom and pop and helps them make extra money,” Flanagan, of the American Hotel and Lodging Association, said. “Homesharing is not what this is about.”
This year, the association plans to fund more anti-Airbnb research and roll out a testimonial campaign of people hurt by home sharing, “to provide a counterweight to Airbnb’s strategy of presenting a unified, working-class face”, according to the group’s documents. The campaign will be “a cornerstone of the 2017 communications strategy”, it said.
The New York Times