Airbnb introduces property holders to those wanting a short-length apartment or room rental. Taking a 3 percent cut of rental contracts, Airbnb’s business model is basic but popular. An analysis company, 7Park, recently found that Airbnb’s global inventory grew from 3,000 units in February 2009 to 2.3 million units — houses, condos, apartments — in 2016, and that Airbnb has 45 percent year-on-year total growth.
In many ways, Airbnb is the Uber or Lyft of vacations. Just as ride-sharing firms introduce drivers to riders, Airbnb introduces accommodation owners to accommodation needers. Unfortunately, like ride sharing firms, Airbnb has a problem: crazed regulators.
Take the Big Apple. Please. Joining similar regulation efforts in San Francisco, New York Governor Andrew Cuomo last week threw a curveball at Airbnb. Those who use Airbnb to rent out their properties now face major fines. As AMNY notes, Cuomo intends to enforce previously ignored laws that “ban most apartment dwellers from renting out their units for less than 30 days if they are not present.”
Until now, Airbnb had operated by trusting the government to turn a blind eye to their business model. And that expectation was well justified. Airbnb allows users to make a little extra money renting their spare room or apartment to those on a budget. Both sides win. So why are authorities from New York to San Francisco cracking down on Airbnb?
Well, in the United States at least, the answer is simple: hotel lobbyists.
UNFORTUNATELY, LIKE RIDE SHARING FIRMS, AIRBNB HAS A PROBLEM: CRAZED REGULATORS
It’s easy to understand why big hotels are so upset. Visit Airbnb’s website and select a location you might wish to visit. You’ll see a mapped array of rental options of varying form, quality and location. But you’ll also see greater affordability than hotels in the same area. Put simply, the vast majority of Airbnb rentals are far cheaper than hotel rooms nearby. And that makes hotels very upset.
Relying on a monopoly-model of short-term renter service provision, hotels hate the new competition. They believe that were Airbnb to disappear, its renters would stay in their hotels. There is arrogance to this assumption. 7Park’s analysis shows “Airbnb customers are generally taking trips they otherwise wouldn’t take.” I strongly believe most Airbnb users would agree with that assessment. Regardless, Airbnb is actively willing to pay hotel taxes where it operates. That the politicians reject these offers proves that Airbnb’s competition is their special interests fear most.
But this isn’t simply an issue of business models. It’s a concern of morality.
Allowing individuals the opportunity to visit a place on an affordable budget, Airbnb assists the American right to pursue of happiness. This is equally true of those who rent out their space in their benefit of rental fees. Yet the moral extension here is where Airbnb’s benefits are felt most strongly. The answer is lower-income individuals.
Why? Simple. Because most wealthy homeowners would rather not have strangers stay in their home. It is those who need cash who rent to strangers.
At the same time, most wealthy visitors would rather stay at a reliable hotel than in a stranger’s accommodation. Tight budgets motivate those who seek affordable accommodation. Put another way, few millionaires stay in spare rooms and few students stay in five star hotels.
AIRBNB’S BENEFITS ARE FELT MOST STRONGLY BY THOSE WITH LOWER INCOMES. THUS, CUOMO’S DECISION DIRECTLY HURTS THE POOR
Regulators challenge these arguments by claiming Airbnb’s core problem is in restricting local access to affordable housing. According to regulators’ assumptions, if tourists are in an apartment, that apartment is excluded from the longer-term housing rental chain. But this assumption requires an arrogant and frankly socialistic premise. It falsely implies that expanded supply of housing is the responsibility of private individuals.
That’s wrong. Politicians are responsible for enabling — via sensible planning laws — housing construction. And ironically, it is liberal states such as New York and California, rather than conservative Texas, which most obstruct construction. Moreover, those who own a property – or a room – should expect a natural right to lawfully use it! They work and pay for that right, and they deserve its flowing opportunities!
Nevertheless, Airbnb also has economic arguments in its favor. By expanding the supply of visitors, Airbnb facilitates more people spending more money in more areas. That spending benefits local businesses and local government tax receipts.
In turn, we should watch for impacts flowing from Barcelona, Spain’s massive crackdown on Airbnb. Barcelona makes up the significant part of Catalonia’s population, and Catalonia’s unemployment rate is 16 percent. Barcelona Mayor Ada Colau’s regulations will take money out of Barcelonan renter pockets and risk millions of dollars in tourism revenue and jobs.
All of this explains why Airbnb’s battle should so concern conservatives. The Left is at war with the sharing economy because the sharing economy empowers individuals rather than a regulatory dominion. And as with Uber and Lyft, Airbnb’s fate will help decide the outcome of this fight. The case is clear: individuals have the choice to stay in hotels if they so desire. But for the interests of the little people against special interests, the right of individuals to earn money, and the interest of expanded opportunity for all, conservatives should support Airbnb.