Airbnb frequently comes under fire from hoteliers for operating its rooms like guestrooms, but without the government regulations attached to a hotel guestroom. However, a recent statement from the company that it is willing to pay its "fair share" of taxes on roomnights is being met with equal parts satisfaction and skepticism.
Bob Habeeb, president and CEO of First Hospitality Group, called Airbnb's agreement to pay hotel taxes an "inevitable first step" for the company as governments begin to realize how large the home-sharing giant has grown. However, he said that the statement can also be interpreted as a diversionary tactic to appease local governments in the short term.
"[Airbnb] avoiding taxes was the first shoe to fall," Habeeb told Hotel Management. "They realize they are under the eye of local governments, and they want to take that gaze away."
Others aren't as quick to believe Airbnb's statements. Rod Clough, senior managing director at HVS, told Hotel Management that Airbnb has claimed multiple times in the past that they are willing to pay taxes, and are already paying them in some jurisdictions. The only factor keeping the company from consistently paying taxes on room nights is legislature outside of the state or county level.
And taxes are just the beginning. Hotels are subject to regulations regarding the Americas with Disabilities Act, fire safety and liability. Airbnb is able to offer the low rates it does due in part to its lack of oversight in these areas.
"What if hotels only paid sales tax, and were released from all other restrictions? It's a very complex argument," Habeeb said. "Local governments are asking if Airbnb rooms should be taxed as real estate or re-appraised as commercial entities."
This legislation could take some time to gestate. Airbnb, which first came into being as AirBedandBreakfast.com in August 2008, originally targeted travelers willing to sleep on air mattresses and couches when hotel rooms were scarce. The site has since blossomed into a service allowing travelers to book rooms, apartments and in some cases entire houses.
"Airbnb is relatively new in the grand scheme of things," Clough said. "Hotels, restaurants and bars have been around since the beginning of time, which is why they are so heavily regulated. With regard to Airbnb, what we didn't expect was for people who owned many, many units to sell them as hotel rooms rather than renting them out. Legislation is coming, it just takes time to form."
"I don't think the government fully understand the sharing economy and its implications," Habeeb said. "Our industry is in the epicycle right now. Hotels will pay more attention to this company during the down cycle, when the fight for every room night begins."
Airbnb also recently announced a plan to offer variable pricing for its rented rooms. It's a decision that will allow Airbnb to yield greater returns, but according to Habeeb, the offering makes comparing Airbnb rooms to hotel guestrooms easier than ever before.
"It's another nail in the coffin for the argument that they aren't just another hotel," Habeeb said. "They do everything hotels do, aside from posting signage outside."