Illegal hotels? Some hosts are renting out 10 or more properties at a time, and multi-unit rentals are Airbnb’s fastest-growing segment.
A new report, described by the Wall Street Journal as a “stinging analysis” for the short-term renting giant Airbnb, reveals a growing trend away from home sharing and toward full-time commercial lodging businesses.
The report, authored by the real estate investment company CBRE, found that the fastest-growing segment of Airbnb’s business comes from “multi-unit hosts,” or individuals renting out multiple properties. The report focuses on 13 U.S. markets, including Austin, Texas; Boston, Massachusetts; Nashville, Tennessee; Portland, Oregon; and Washington, D.C.:
Revenue for entire-home multi-unit hosts increased at a greater rate than all other Airbnb host types. These hosts now makes up 32% of all revenue generated on Airbnb in U.S. (over $1.8 billion) and 30% in the 13 markets (over $700 million) that are highlighted in this analysis. The revenue derived from these multi-unit hosts in the 13 markets rose 89% year-over-year.
Why does this matter? Based on the evidence in this report, it appears Airbnb’s growth is based on a shift toward a commercial lodging model. But unlike a hotel, for example, Airbnb is not subject to the same local, state, and federal regulations and taxes.
With 81 percent of all Airbnb revenue in the U.S. coming from whole-unit rentals in which the owners are not present, some are questioning whether that $4.6 billion in Airbnb revenue should be subject to the same rules as their traditional counterparts. Hosts renting 10 or more properties comprised a quarter of all multi-unit host revenue in the study’s 13 markets.
Currently, states and municipalities around the country are working to develop taxation and regulatory regimes that would bring Airbnb in line with other lodging establishments, including ensuring health and safety protections and rules against discrimination. A Harvard Business School study last year suggested the Airbnb platform enables racial discrimination.
A recent house fire in a Somerville, Massachusetts building that hosted Airbnb guests resulted in people jumping from second-story windows to escape the flames.
In Miami, one of the 13 markets studied, daily and weekly rentals are illegal, but that policy is only enforced on a complaint-based basis and is easily avoidable. “It’s not unusual for guests to refuse to come to the door,” the Miami Herald reported one enforcement official saying.
That ability to skirt regulatory officials at the local level has prompted the hotel industry to argue Airbnb is not competing on a “level playing field.”
“Once upon a time Airbnb might have simply been a home-sharing company, but this analysis shows that’s just a fairy tale now,” said one official from the American Hotel & Lodging Association.
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