Home-sharing study outlines unregulated hotel market

Airbnb Illegality

The American Hotel & Lodging Association released the second phase of a study conducted by the Pennsylvania State University School of Hospitality Management that provides an analysis of the commercial activity taking place in Los Angeles on Airbnb.

The study found that only 4.36 percent of operators listed properties for rent more than 360 days per year, similar to a hotel. However, these operators earned $80 million per year, more than 30 percent of Airbnb's revenue for Los Angeles.

Furthermore, 22 percent of operators listed properties for rent for more than half of the year (180 days), accounting for nearly 70 percent of Airbnb's revenue in the city ($180 million). Meanwhile, 84 percent of operators listed properties for rent more than 30 days per year, accounting for $250 million and 98 percent of Airbnb's Los Angeles revenue. If Airbnb operators were required to follow the same tax guidelines as lodging businesses in the city, Airbnb would pay more than $41 million in local taxes.

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“In Los Angeles, a greater percentage of Airbnb’s revenue is tied to hosts who run unregulated – and often illegal – hotel businesses, listing one or more residential units for rent in the same metropolitan area to short-term visitors for a large portion of the year, if not the entire year,” said Dr. John O’Neill, professor and director of the Center for Hospitality Real Estate Strategy at Pennsylvania State University, who directed the research. “The growth of these commercial operators in the Los Angeles area is even more acute because they continue to expand into additional neighborhoods, from Venice Beach all the way to Hollywood Hills.”
 
“Unregulated hotels operated in residential properties are disruptive to communities and pose safety concerns for guests and for neighborhoods,” said AH&LA president and CEO Katherine Lugar. “Airbnb’s unwillingness to be forthcoming with data about how its site is being used demonstrates that its ‘honor system’ for tax policy and enforcement, as they’ve proposed in LA, won’t work. To date, those in the short-term rental space have only given lip service to curbing commercial operators from using their platforms to run illegal hotels, and to insulate neighborhoods and communities from these operators. State and local governments should act to ensure a fair travel marketplace by addressing illegal hotels and commercial operators in LA.”

Phase one of AH&LA's analysis can be found here, and a full report of phase two can be found here.

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