Sara Bowers is among the 100 million people around the world who use Airbnb to find lodging when she travels. But she says using the home-sharing app makes her feel like one of a kind.
“You can choose exactly where you want to stay, whose home you want to stay in and what sort of amenities are offered,” Bowers told Watchdog.org. “I also really like, when I’m traveling, the use of a full kitchen as well as laundry facilities, and you don’t always see that in a hotel.”
The 30-year-old professional caregiver from Eugene, Oregon, said Airbnb has enabled stays in Portland, Vancouver, and San Francisco on her terms, without the logistical constraints of hotels.
According to Braden Boucek, director of the Beacon Legal Foundation, which recently won an Airbnb lawsuit in Nashville, Tennessee, this desire for autonomy by young people like Bowers is a driving force in the new economy.
“This is how they travel. This is just the complete norm for them.” Boucek explained. “Young people want to know their hosts. They want recommendations of local shops. And it’s just different from going to a hotel and eating at Applebee’s. That’s their expectation.”
But their expectation is being met with enough hostility to set off regulatory warfare in cities across the country and around the world.
Hotel owners are crying foul over lost business and the potential for a black market of unsafe rentals. City leaders say Airbnb skirts taxes and steals valuable living space where housing is scarce and expensive. And neighborhood groups fear revolving waves of noise and strangers.
Local governments didn’t have much regulatory framework in place prior to this business innovation’s onset. Their haste to catch up has led not only to quick-fix regulations aimed at curbing and controlling short-term rentals, but also to overreach that has landed in courts.
The Beacon Legal Foundation challenged Nashville’s strict permitting regulations, passed in 2014, in what it calls a first of its kind lawsuit. The suit was on behalf of a couple looking to move to Chicago while also maintaining their short-term rental housing in Nashville.
“We took this case on because Nashville was rushing into this regulation out of a fear of new technology and new economy,” Boucek said. “And it wasn’t clear they were thinking about these things very hard.”
A judge agreed, and citing its vagueness, ruled the law unconstitutional on Oct. 21.
Different cities have different rules, however, and for its part, Airbnb seems be bending over backwards to accommodate all of them. Its website lists the regulations of 50 cities, including the taxes, permits, and restrictions on short-term rentals, and posts news updates about changes to these rules.
There is a lot with which to keep up. Some places have welcomed Airbnb by relaxing rules. Most recently, the New Orleans City Council approved measures to legalize short-term rentals and spelled out specific listing and occupancy requirements. Other locations, however, are ramping up legal wrangling to do the opposite. One major complaint is over multiple listings by a single host, which could set the stage for an illegal hotel.
This has been a big sticking point in San Francisco, whose listing requirements are the subject of a lawsuit brought by Airbnb. The company is fighting the same battle in New York, filing a federal lawsuit on Oct. 21, hours after Gov. Andrew Cuomo signed a new law that fines hosts up to $7,500 for listing their property on rental platforms such as Airbnb. The company is suing over “significant immediate burdens and irreparable harm” caused by the law’s breach of internet freedom.
A number of cities and community groups also want the Federal Trade Commission to get involved. An Oct. 13 letter to the agency asks the FTC to collect Airbnb listing and revenue data so it can better regulate short-term rentals. In July, U.S. senators Dianne Feinstein, D-Calif., Brian Schatz, D-Hawaii, and Elizabeth Warren, D-Mass., requested that the FTC study how companies like Airbnb use online services to “profit from short-term rentals, taking housing inventory off the market and driving up the cost of rent.”
That any company has to fight this hard just for an opportunity to do business rankles Boucek. “It’s like, ‘you’re telling me the government is now hostile to the economic prosperity of its own citizens.’ I’m not real crazy about that rationale.”
Boucek predicts that a solution may naturally evolve from the same group that is growing up with this new, app-centered economy — people like Sara Bowers, who see value in balancing the new economic needs of the younger generation with the needs of older, concerned residents and creating policy accordingly.
“There are a lot of people hostile to the Airbnb business model — any sharing economy-type stuff because ‘it doesn’t provide benefits’ or ‘ there’s no 401K,’” Boucek observed. “Well, when you talk to young people, they’ve never had that. They’re never going to have that. That old economy is just not their reality.”
Matthew Mitchell, director of the Study on American Capitalism Project at the Mercatus Center, said 70 percent of sharing economy workers are between 18 and 34 years old, compared with about one-third of the entire U.S. workforce.
Indeed, Airbnb co-founders Brian Chesky and Joe Gebbia were in their twenties when they started the company from their San Francisco apartment in 2007. Travis Kalanick and Garrett Camp were in their early thirties when they founded Uber in 2009, further spurring the new sharing economy.
Mitchell says new business models typically lose to government bureaucracy because incumbent firms know the regulations and regulators, and are highly organized to defend the regulatory status quo. Newcomers, on the other hand, don’t know the process and consumers aren’t organized enough to apply enough pressure to deregulate. But the sharing economy newcomers are an exception.
“The newcomers have been willing to just go into places where it was unclear whether they were allowed to operate, they set up shop and they signed up happy consumers and suppliers,” Mitchell said. “In many places, those have been pretty formidable forces because by the time the regulators got around to shutting them down or closing them down, tens of thousands of angry users have been able to apply pressure to push back on the regulators.”
“My prediction is probably over the long run, the new sharing economy business model will win out,” Mitchell added. “That is an exception to the rule and not normal, but that’s what I think would happen if I were to use a crystal ball.”