Airbnb’s smoke and mirrors

Lawmakers, public shouldn't be duped by company's embrace of taxes in short-term rentals

IN HIS NOVEMBER 8 op-ed in CommonWealth (“Time for state to catch up on Airbnb tax”), Airbnb executive Will Burns raises many excellent points about why it is time for the state to act on the taxation and regulation of short-term rental platforms.

It is important, however, that lawmakers and the public see through the smoke and mirrors Airbnb employs in order to appear sympathetic to taxation and regulation while at the same time working behind the scenes to avoid paying their fair share and skirting the health, safety, and civil rights protections traditional lodging establishments respect.

Burns states, “It’s not often that a global company implores lawmakers for an opportunity to pay taxes and to work together on smart regulations.” That’s for sure, and it should raise skepticism about Airbnb’s true motivations, which are less noble.

Let’s get to the nub of the matter: while Airbnb likes to portray itself as a platform to facilitate home-sharing, it is most interested in protecting a fast-growing revenue stream – commercial operators who use Airbnb’s platform to operate lodging businesses. A recent study by industry expert CBRE Hotels’ America Research reveals that Airbnb revenue generated in the Boston area by multi-unit, entire-home hosts increased 137 percent from 2016 to 2017.  Hosts who own 10 or more units earned more than a third of all revenue generated by multi-unit hosts.

Unlike the quaint notion of an average person making a few bucks on the side while opening their home to a visitor every so often, these commercial operators don’t reside in the units they rent. They operate de facto hotels usually in residential neighborhoods while dodging the common sense taxes and regulations that would apply to them if they were properly registered as the lodging establishments they are. It is this type of operator that Airbnb seeks to protect.

And it will go to great lengths to do so, even while touting a desire to work in cooperation with communities to find policies that work for them. For example, when Cambridge set out to regulate Airbnb, the company worked through its corporate lobbyists to stand up a “sham” citizens’ petition that would have derailed the effort with a different proposal that, among other things, wiped out proposed rules that would have limited Airbnb to true home-sharing and eliminated illegal hotels.

It is this sort of sleight of hand behind Airbnb’s support for the short-term rental bill being considered in the Senate. In addition to passing over real regulation, that bill allows for a so-called “voluntary collection agreement.” Airbnb has pushed these shady agreements with jurisdictions around the country because it allows them to remit tax payments through the honor system without any of the transparency required of every other business.

Rep. Aaron Michlewitz’s House bill offers a better approach, requiring Airbnb to pay taxes more like everyone else while making reasonable distinctions between owner-occupied rentals and commercial operators. The House bill also offers better protections for guests and neighbors while providing local communities the option to develop their own rules to safeguard their quality of life.

Burns waxes eloquently about Massachusetts’ tradition of home-sharing, citing How’s Tavern in Sudbury as an example of our rich history of welcoming travelling guests into our homes going back 300 years.

What he does not mention is that today How’s Tavern is incorporated as Longfellow’s Wayside Inn, a properly and legally established bed and breakfast that is required to follow all of the rules and regulations and pay all of the taxes Airbnb seeks to avoid.

Meet the Author
As a modern – indeed, pioneering – $31 billion corporation, Airbnb should brought into compliance with today’s laws, not those of three centuries ago.

Paul Sacco is President and CEO of the Massachusetts Lodging Association.