Today's Hard|Forum Post
Today's Hard|Forum Post

Monday April 17, 2017

The Hotel Industry is Fighting a Secret War Against Airbnb

The $1.1 trillion hotel industry has been fighting a secret war against Airbnb by using state and local politicians to outlaw it's usage. In NYC for example, new stiffer fines have been enacted to combat Airbnb hosts that break local housing rules. The Federal Trade Commission was called to investigate the service after senators were alerted to the effect that Airbnb has had on housing costs. 150 million travelers have rented out 3 million Airbnb properties since 2008 in 191 countries and the hotel industry is determined to fight back.

Airbnb now commands a market value of $30 billion. To put this into perspective, Hilton is now worth $19 billion and Marriott is worth $35 billion. Airbnb has made hotels compete on holiday pricing as that is when they typically raise the room price to make maximum profits. To combat this disruption in the the industry, hotels have been going after the Airbnb hosts by accusing them of running hotels in residential areas, not collecting hotel taxes, and avoiding safety rules enacted for the hotel industry. In some areas politicians have even stopped collecting taxes to not legitimize the service.

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I can see both sides of the issue. On one hand if you are effectively renting out your property 365 days a year, then it is a hotel rather than a residence in my opinion. On the other hand, this just seems like the hotel industry is trying to hold onto old business practices like the music industry did when Napster came out. When the hotel industry started lobbying politicians, it really starts to stink of collusion and payoffs. How did they convince politicians to not collect taxes? Even the IRS will collect winning from gambling and illegal activities on your taxes.

All of that has hurt hotel operators. Airbnb has brought hotel pricing down in many places during holidays, conventions and other big events when room rates should be at their highest and the industry generates a significant portion of its profits, said Vijay Dandapani, chief executive of the Hotel Association of New York City, which works with the American Hotel and Lodging Association.

The industry’s plan against Airbnb shows "the hotel cartel is intent on short-sheeting the middle class so they can keep price-gouging consumers," Nick Papas, a spokesman for Airbnb, wrote in an email. "With more than 250 government partnerships over the last year, we have shown our seriousness of purpose when it comes to putting in place fair rules."

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