April 20 2017
With housesharing, an industry in the sharing economy that allows people to rent out their houses and apartments to strangers using an app or website, travelers gain a unique local living experience and often at much lower costs than traditional hotels. This has led to a notable decrease in traditional hotel business. Airbnb alone has brought hotel pricing down in many cities during holidays, conventions, and other big events when hotels have hiked their room rates to generate big profits.
Not surprisingly, the hotel industry has been up-in-arms and ramped up lobbying efforts to get lawmakers to impose new regulations on this industry and, in some instances, try to shut it down.
We now have insights into just how seriously the hotel industry is taking the threat of Airbnb from the New York Times. The American Hotel and Lodging Association (AHLA), with members like Marriott International, Hilton Worldwide and Hyatt Hotels, has an aggressive campaign underway according to minutes from their board meeting last November.
They touted as successes from 2016: New York imposing stricter fines on Airbnb rentals, Chicago heavily regulating short-term rentals, San Francisco introducing legislation capping the number of days a year residents can list their homes, and in stopping Airbnb exemptions in states such as Tennessee, Utah, Arizona, and Virginia.
The AHLA also took credit for getting progressive senators on board with their agenda. They worked behind the scenes working with Democratic senators Brian Schatz (Hawaii), Elizabeth Warren (Mass.), and Dianne Feinstein (Calif.) to send a letter to the Federal Trade Commission (FTC) last July to raise concerns about Airbnb's affecting housing costs and consumer protection and safety as well as racial discrimination.
In addition, we learn that they funded “independent” academic studies to support the arguments they fed to policymakers on racial discrimination and housing prices in markets with Airbnb.
This year, they plan to be even more aggressive and interestingly, on the federal front with legislation that could include a ban on federal workers using home sharing while on official travel, subjecting home sharing rentals to national fire safety rules, and ensuring better tax compliance.
The cost of fighting innovation has not been small either. The Hill got a hold of board meeting notes from this January that find industry’s political action committee spent almost all of the $1.5 million it raised on congressional candidates in 225 congressional races last year.
Airbnb initially responded with a blog post that hotels are attacking them so that they can keep over charging customers:
Airbnb has long believed that for us to win, no one has to lose. Even as more people share their homes, traditional hotels continue to take in robust or even record profits. Home sharing helps more people travel and that should be good news for everyone.
Some hotel industry officials disagree. We recently learned new information about the hotel industry’s multimillion-dollar efforts to protect their profits by attacking our host community. The internal documents are clear: the hotel industry has a plan to short-sheet the middle class.
The hotel industry is attacking middle class people who share their homes for two simple reasons:
The hotel industry wants to keep price gouging consumers.
Yesterday, Airbnb also fired back at the AHLA with a letter accusing them of hurting middle-class property owners and calling out their flip-flopping on whether home sharing should even be allowed.
This is a battle that will continue to rage in state houses and Washington. As customers we are on the sidelines watching this play out and can only hope that money and manipulation won’t win out over fair and free market competition.
If we believe that the free market delivers the best solutions, then instead of lobbying lawmakers to change the rules for new competition, we should encourage lawmakers to take a fair approach to ensuring that all businesses are operating on a level playing field so that best services win out.