KEY MESSAGES

Hotel industry welcomes competition on a level and legal playing field.

• Competition thrives when everyone plays by the same set of rules.
• Home sharing has been around for decades, and we have always supported the rights of property owners to occasionally rent their homes to earn extra income.
• However, we have seen in cities across the country that the real face of short-term rentals like Airbnb are not occasional renters but unregulated commercial operators running multi-unit, full time lodging businesses, with a significant portion of Airbnb’s revenue in major U.S. cities driven by commercial activity.
• Commercial operators using sites like Airbnb gain an unfair and significant competitive advantage by running multi-unit, full-time lodging businesses without oversight and not complying with long established public health and safety rules or paying required taxes.

NEW CBRE REPORT: "Hosts with Multiple Units - A Key Driver to Airbnb Growth"

Commercial landlords are using platforms like Airbnb to rent out multiple residential properties year-round, just like a hotel, while avoiding regulation and taxes.

• New analysis released by CBRE Hotels' Americas Research, a leading real estate research company, adds to the overwhelming weight of evidence showing that short-term rental companies – and specifically Airbnb – are providing a platform for commercial operators to run illegitimate, unregulated and often illegal hotels in communities across the country.
• The report adds to the overwhelming evidence that a significant and rapidly growing portion of Airbnb’s revenue in the U.S. is generated by operators who rent out more than one residential property to short-term visitors.
• That’s not homesharing, that’s a business – and its Airbnb’s big con. 
• True home-sharing, where the owner is present during the guest’s stay, accounts for less than 20% of Airbnb’s business. 81% of Airbnb’s revenue nationwide – $4.6 billion – comes from whole-unit rentals where the owner is not present.
• Furthermore, $1.8 billion – 32% of Airbnb’s total revenue -- is not being generated by middle class folks but by multi-unit operators who rent out two or more entire home units. And even more troubling, this is the fastest growing segment of Airbnb’s business: The revenue derived from these multi-unit hosts in the 13 markets rose 89% year-over-year.
• The share of Airbnb revenue from multi-unit hosts increased in each of the 13 markets studied, except for in San Francisco and New York City, markets where local policy makers have taken bold steps to protect communities and curb illegal operators. This indicates that regulation of commercial operators could have a significant impact on Airbnb’s bottom line earnings potential.
• This report echoes a growing body of research that shows commercial operators are increasingly using Airbnb to rent out multiple residential properties year-round, just like a hotel, while avoiding commonsense zoning rules, taxes and other community safety regulations.

Illegal hotels pose serious safety concerns for guests and communities.

Core CBRE Statistics: 13 Key Markets

• The markets with the highest share of total revenue derived from multi-unit hosts are Miami (57.9%), Oahu (53.5%), and New Orleans (42.3%).
• In two of the cities studied, the majority of Airbnb’s whole-unit revenue is derived from operators listing more than one unit.
• In Miami, 65% of Airbnb’s revenue from whole-unit rentals (more than $110 million) comes from multi-unit operators.
• On the island of Oahu, 63% of Airbnb’s revenue from whole-unit rentals (more than $52 million) comes from multi-unit operators.
• Illegal hotel operators are a growing problem. In almost every market examined in the report, the percentage of revenue from multi-unit hosts increased from 2015 to 2016.
• Revenue from entire home multi-unit hosts increased at a greater rate than all other Airbnb host types, and now makes up 37% of all revenue generated on Airbnb in the 13 markets studied (over $700 million).
• The revenue derived from these multi-unit hosts rose 89% year-over-year while the number of these multi-unit hosts grew by 58% over the same period.
• The two notable exceptions to this troubling trend were New York City and San Francisco, where policymakers have enacted regulations that work for their communities to ensure short-term rentals represent true home sharing.
• These measures include implementing strict limits on the number of days a short-term rental can be rented and ensuring the unit is a host’s primary residence. 
• In a further sign of this troubling growth pattern, each of the 13 cities studied saw an increase in the total number of units managed by multi-unit hosts.
• In Nashville, Seattle, Oahu, and New Orleans, the growth of the number of units managed by multi-unit operators more than doubled -- and Nashville saw an increase of more than 160%.

Study after study – and story after story – have proved that Airbnb is deceiving the public when it comes to its primary revenue earners on the platform.

• Despite Airbnb’s efforts to wear a white hat, let’s not forget what we’re dealing with:
• Airbnb purged their data in New York City before releasing it publicly – and then dumped $10 million into a super PAC to force its agenda on New Yorkers;
•  Airbnb sued the city of San Francisco over a law that it at first supported;
• And in Chicago, Airbnb threw millions of dollars at a brass knuckle lobbying effort to bully lawmakers who opposed them.
• And in one of its most offensive efforts, Airbnb is using its Silicon Valley billions to pressure states where they operate into preempting the ability of cities and communities to protect themselves from illegal hotels. 
• Airbnb likes to paint a pretty picture of its operations, but what it does is a different story:
• Airbnb’s CEO, Brian Chesky said that the company only wants people “to share homes that they live in.” 
• Airbnb’s chief lobbyist, Chris Lehane, told reporters that “Illegal hotels are bad – we don’t want them on our platform.” 
• But the data shows what’s really going on:
• CBRE’s new analysis builds on the findings of similar reports that have concluded Airbnb is – at best – misrepresenting which users make the largest share of money on Airbnb.
•  Airbnb has largely refused to take even the most basic of steps to stop illegal hotel operators because these bad actors drive a large and growing portion of its revenue.
• Indeed, Airbnb has taken steps to grow this commercial activity rather than operate within the boundaries of the law.

Unregulated hotels operated in residential properties are disruptive to communities and pose serious safety concerns for guests, communities, and neighborhoods.

• Guests: Guests have no way of verifying whether these properties are compliant with basic health and safety standards, like smoke and carbon monoxide detectors, fire escapes and wheelchair ramps.
• Neighbors: Because most short-term rental properties are not required to register with local authorities, residents who live near illegal hotels have no way of knowing who is listing the property, much less renting it, and face chronic problems like excessive noise, unruly behavior, and a revolving door of strangers next door.
• Communities: By flouting zoning laws, these unregulated businesses are disrupting communities and changing the long-standing residential feel of neighborhoods. And by reducing the supply of homes and driving up rents in already expensive real estate markets, commercial operators make it harder for working families to stay in their homes.

 

Commercial operators listing residential properties on sites like Airbnb just like a hotel should have to play by the same rules as every other lodging business.

• The lodging industry welcomes new entrants to the marketplace but believes they should follow appropriate rules to protect the safety and security of guests and support their communities.
•  Airbnb should not enable commercial operators to run illegal hotels out of residential homes.
• No other company in America gets to decide what rules and regulations they want to follow or what taxes they must pay.

The hotel and lodging industry thrives on a level and legal playing field and welcomes competition from the “sharing” economy.

• Competition in the lodging sector thrives when everyone plays by the same set of rules designed to ensure the safety of our guests and our communities.
• We support the rights of property owners to occasionally rent their homes to earn extra income.
• But we share the concerns local residents have expressed about the growing number of commercial operators who are using sites like Airbnb to run multi-unit, full-time lodging businesses without any oversight.

State and local governments should double down on their efforts to protect their communities by closing illegal hotel loopholes.

• Today we are calling on Airbnb to finally come clean about its operations, tell the truth to the communities where it operates and crack down on the illegal hotels that it facilitates.
•  Airbnb could take simple steps to crack down on illegal hotel operators by:
  • Preventing properties that are prohibited from operating in a community from posting on its site.
  • Providing full transparency to state and local authorities about which hosts are operating multiple and/or full-time units for rent.
  • State and local governments should act to ensure that:
  • Commercial operators register their rental property and obtain a business license and other applicable rental permits.
  • Revenue is transparent and all taxes and fees are paid, just like every other company is required to do.
  • Zoning laws are followed.
  • Basic health, safety and cleanliness standards are met.
  • Appropriate levels of insurance are in place to protect homeowners, guests and communities.

 

SOURCE:

• CBRE Hotels' Americas Research Report. Jamie Lane. 2017. "Hosts with Multiple Units - A Key Driver to Airbnb Growth."

ISSUE BACKGROUND

Across the country, there is a growing concern that some short-term rental companies, such as Airbnb, HomeAway and Flipkey, are enabling the proliferation of “illegal hotels,” where commercial operators list multiple units in the same metropolitan area or list units for extended periods of time without adhering to commonsense regulations or tax obligations. In many major urban areas and vacation destinations, these commercial operators or investors are buying rental properties with no intention of living there, but solely for the purpose of renting them out to short-term visitors, just like a hotel.

This unregulated commercial activity often compromises consumer safety, undermines job growth, increases housing costs while limiting affordable housing options, and endangers the character and security of residential neighborhoods.