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American Hotel & Lodging Association Calls on Airbnb to Follow Industry Rules

Sandi Cain
, Senior News Editor
January 21, 2016
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Washington, DC - In a report released January 20, the American Hotel & Lodging Association revealed research results that clearly demonstrate that Airbnb often operates as a commercial endeavor with operators renting out multiple properties on a full-time basis. That is changing the landscape for traditional hotels.  

The study, “From Air Mattresses to Unregulated Business:  An Analysis of the Other Side of Airbnb” was conducted by Penn State University’s School of Hospitality Management in 12 of the nation’s largest metropolitan areas. Based on data from Audrina, which gathers and analyzes information from Airbnb operators as well as identifying those operators, it is the first national look at the increase of commercial activity via Airbnb.

“A growing number of residential properties are being rented out on a full-time, commercial basis (that) are illegal hotels using the Airbnb platform to dodge taxes, flout laws and avoid typical (hotel) standards,” said Katherine Lugar, AH&LA President and CEO. 

The issue with Airbnb isn’t competition, Lugar said. “We welcome new, legal players to the market, but commercial entities must protect all neighborhoods.” Instead, she said, Airbnb has created “an underground market for people to become illegal hotels,” pushing building owners to evict tenants in pursuit of higher returns from short-term rentals. But those changes also create safety concerns if the pseudo hotel does not meet fire, safety and other codes written for the hotel industry, she said.

AH&LA is calling upon commercial operators to play by the same rules as mainstream hotels, conforming to zoning laws, paying the same taxes, and following the same safety guidelines. 

Findings in the Penn State study show that 30% of Airbnb revenue ($378 million in these 12 markets) came from full-time operators that have rentals available 360 days each year. It also found that the number of such full-time operators increased 81% between September 2014 and September 2015 to 2,657. Those full-time operators generated $378.2 million in Airbnb revenue during that period. 

“We focused on professional operators, who are a small percentage but generate a large share of revenue,” said Dr. John O’ Neill, Professor and Director of the Center for Hospitality Real Estate Strategy at Pennsylvania State University.

The Penn State study examined more than 400,000 lines of data with 5,000 variables for hosts that had the most rentals over the longest period of time in the 12 largest U.S. metropolitan statistical areas. Those are: New York, Chicago, Los Angeles, Philadelphia, Miami, Houston, Dallas, Phoenix, San Antonio, San Diego, San Francisco and Washington, DC. In those areas, New York, Los Angeles, Miami and San Francisco alone have more than 2,000 such operators.

Also included in the study were multi-unit operators (individuals or businesses renting out two or more residential properties). These Airbnb operators account for just 17% of the hosts in the 12 metropolitan areas, but represent nearly 40% of the total rental revenue in those markets —more than $500 million, O’Neill said. 

Though current data obtained for the study did not quantify the number of Airbnb units rented by business travelers, O’Neil said Airbnb is “sponsoring and encouraging business travel-ready units” as another growth arena for the company that already has an estimated value of $25 billion.  

O’Neill said the next phase of the study will analyze Airbnb compared to the conventional hotel market “to reflect a fuller picture of this commercial activity.”

Reach Katherine Lugar at (202) 289-3100 or klugar@ahia.com; Dr. John O’Neill at (814) 863-8984 or jwo3@psu.edu

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