by Roland Leiser
At the 5th annual Hotel and Lodging Legal Summit at Georgetown University’s Law Center on October 28, 2016, hotel industry representatives sparred with an Airbnb spokesman over tax collection requirements and other rules that hotels want applied to short-term rentals.
The debate didn’t add much to what is already known, but it underscored the continuing rift between hotels, which are subject to government regulations and Airbnb-listed properties, which are virtually unregulated.
Named the Legal Challenges of a Landscape Changed by the Short-Term Rental Industry, a panel of industry representatives included Troy Flanagan, vice president-state and local government affairs at the American Hotel & Lodging Association (AH&LA), Mitchell Imanaka, a Hawaii attorney, Harvey Kellman, vice president and assistant general counsel at Marriott International, and Stephen Shur, president of the Travel Technology Association (TTA), which speaks for Airbnb, GDSs and OTAs.
The discussion also focused on moves by state and local governments to set new rules on short-term rentals. Just a week before the panel convened, moderator and attorney Carren B. Shulman reminded the audience that New York State had adopted an amendment to a current law for advertising restrictions on such properties. Marriott’s Kellman termed the state's legislation a “smart move, but it’s getting the government to enforce it.” And Airbnb promptly sued to overturn law. The new law, which bans advertising of rentals of up 30 days if owner is not present, it remains on hold until the litigation is settled.
Short-term vacation rentals are nothing new, Kellman recalled. What is new, explained TTA’s Shur, is the technology that’s applied to the “marketing, promotion and transactions.”
In tourism-rich Asheville, NC, Kellman’s home, owners "saw opportunity to earn extra income” in renting their rooms. But some have bought properties for the “sole purpose of listing them on Airbnb,” Kellman said. As a result, rents “have increased amidst a housing crunch.” In fact, Asheville is reported to have the highest number of Airbnb listings of any city in the state. As an example, he said his home could rent for $300 a night.
As moderator Shulman noted, “whole buildings have been listed and advertised on Airbnb.” Meanwhile in San Francisco, which limits the number of rentals offered by one person, Kellman said that families can skirt the law by registering units under different names of each family member.
AH&LA’s Flanagan raised previously criticism of short-term rentals because they aren’t required to buy commercial insurance, comply with the Americans With Disabilities Act, be subject to health inspections, or anti-discrimination laws or pay occupancy taxes.
Some contentious debate focused on Kellman’s statement that the hotels “aren’t afraid of competition” from Airbnb. Although the on-line travel agencies (OTAs) have had a “disruptive impact” on the lodging industry, “it made us stronger.” But Airbnb represents a “whole new level of disruption.” As a result of Uber (ride-sharing), Shur countered, taxi owners “had to innovate and develop their own apps” to gain customers.
To battle Airbnb, which allegedly threatens hotel business, Shur said that the AH&LA has set up “coalitions, front groups and political action committees.”
As for occupancy taxes, he conceded that owners should be required to pay them, but there are 40,000 municipalities, however, and "we can't understand all their tax complexities." It’s up to them [the cities] to pass relevant laws. “Airbnb is not an entity to collect taxes from homeowners, ” he asserted. Still, Kellman wasn’t buying the argument. The “merchant model could serve as an example” in which retailers collect sales taxes on behalf of government jurisdictions.
Defending the Airbnb model, TTA’s Shur contended that “hotel regulations don’t apply to short-term rentals. The shared economy is here and growing.” In short, Shur said, “don’t apply hotel laws to private residences.”
