You’ve got to keep ‘em regulated.
This seems to be the hotel industry’s sentiment toward Airbnb, as revealed in documents obtained by the New York Times this week.
Jasper is joined by Glenn Carter, Hostfully Marketing Specialist, to chat about the American Hotel and Lodging Association’s formal plan to rein in Airbnb, as well as a new UBS report suggesting that regulations have slowed the growth of Airbnb in some of the company’s most popular markets.
They also cover the lawsuit Airbnb is bringing against the city of Miami for targeting hosts who spoke at a city commission meeting, and corporate travel policies around homesharing. Listen in to find out what amenities attract business travelers and how corporations can benefit from allowing for the use of platforms like Airbnb when employees travel for work.
Article #1: Inside the Hotel Industry’s Plan to Combat Airbnb
- American Hotel and Lodging Association’s action plan to combat Airbnb revealed
- Took credit for Federal Trade Commission’s housing cost investigation and steep fines in NY
- Hotel industry argues that Airbnb drives up housing costs and hurts the middle class
- The numbers disprove that claim as majority of hosts have only one listing
- No proof of causal relationship between rising home prices and Airbnb
Article #2: Corporate Travel Still Doesn’t Get Homesharing Despite Business Traveler Use
- A mere 17% of corporate travel policies allow business travelers to stay at homesharing properties
- Some business travelers unaware of company policy, utilize homesharing regardless
- Airbnb caters to business travelers with select amenities
- Flexibility and affordability likely to attract more business travelers to Airbnb moving forward
Article #3: Airbnb Sues Miami After City Targets Speakers at Recent Meeting
- City of Miami targeted five Airbnb hosts who spoke at city commission meeting
- Airbnb filed lawsuit against city for violation of First Amendment rights
- Airbnb argues that hosts had the right to speak without fear of retribution
- Airbnb has shown willingness to cooperate with other cities
- Strange that Miami would instigate conflict and bring about negative PR
Article #4: Regulation is Slowing Growth in Some of Airbnb’s Most Popular Markets
- UBS report suggests that regulations have had a negative impact on Airbnb’s business
- Listings in Airbnb’s seven largest markets still grew 40% year over year
- Declines noted in NYC and Barcelona, where strict legislation has been enacted
- Airbnb looking to grow in other hospitality niches until revenue from homesharing accounts for less than half of the company’s total
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Complete Transcript for Get Paid for Your Pad Episode 146
Welcome to Get Paid For Your Pad, the definitive show on Airbnb hosting, featuring the best advice on how to maximize profits from your Airbnb listing, as well as real-life experiences from Airbnb hosts all over the world. Welcome.
Jasper: Before learning about Aviva IQ, I used to spend so much time managing my guest communications manually. Now, with Aviva IQ’s easy-to-use automated service, my workload has reduced by 80%. Did I mention it’s free? Automate your Airbnb messages now at www.avivaiq.com.
Welcome back, everybody, another episode of Get Paid For Your Pad. Today, I am co-hosting the show with Glenn Carter, and you might have heard his name before because he was actually on the podcast before, in episode 83, where we talked about real estate investing using Airbnb. And Glenn is now a Marketing Specialist working for Hostfully, and that’s why I get to co-host this show with him.
So, Glenn, how’s it going?
Glenn: It’s going good, Jasper. Thanks for having me back, and in my new role with Hostfully, excited to be here.
Jasper: Yeah, I’m looking forward to it. I know you have a lot of expertise in the sharing economy, and also, Airbnb, so I’m definitely excited to get your thoughts on all the different news items that have gone out in this week, and there’s been quite a few, actually.
But, where are you located?
Glenn: I’m in Montreal.
Jasper: You’re in Montreal. Ah, you’re a Canadian.
Glenn: Yes, sir. It’s just starting to warm up, so I’m much happier than I was two months ago.
Jasper: Okay, yeah, I see. I’m in Holland right now. It’s a little chilly still, but it’s also getting a lot better.
I’m a little shaky because I took my little cousins to a roller coaster park. It opened at 10:00 in the morning; we were there at 9:45. It closed at 6:00; we left at five to 6:00. And it was really, really quiet, which meant that we were able to take so many rides. You know, we didn’t even have to get up. There were so few people that we could just sit and take another ride, so we did like six, seven rides in a row, and, oh my God, it was pretty crazy.
Glenn: Your cousins must have been in heaven.
Jasper: Yeah. I mean, they were all saying that they loved it, and I think they were trying to be strong and not show that they were maybe getting a little shaky, too, but yeah, I’m definitely a little shaken. I feel like my kidney is probably on the right side of my body. Maybe my stomach is somewhere down below.
Glenn: Well, we’ll try to keep a low profile during the podcast today.
Jasper: Absolutely. But, there’s a lot of cool stuff, interesting stuff to talk about. So, let’s start with an article that came out in The New York Times, and I think The New York Times has gotten hold of some documentation about how the hotel industry has been planning to combat Airbnb. What are your thoughts?
Glenn: Yeah, this is a really interesting article because it’s sort of an inside take on one of the biggest hotel lobbying organizations in the world. For people who aren’t aware, it’s the American Hotel & Lodging Association. It’s an internal document from last year, and it sort of lays out the plans for combating home-sharing and Airbnb, and their action plan. And, specifically, what they want to do, they’re going to launch a new ad campaign, which they call My Neighborhood, that’s sort of going to tap into people’s anxieties about the negative impact of short-term rentals. And it’s just painting short-term rentals as only owned by landlords and commercial operators, and it’s not really for the middle class, it’s just the rich getting richer.
And it’s really interesting, just to hear their take on it, and you know, important to keep in mind that this is a lobbying group that provides millions of dollars a year, lobbying against platforms like Airbnb. And just the argument that it’s not good for the middle class is completely ridiculous to me because when you look at the actual numbers, it’s an overwhelming majority are single property owners on Airbnb. So, the numbers don’t back it up, and generally speaking, the sharing economy is great for the middle class because it allows people to make money from things that they already own.
So, I don’t know. What were your thoughts, Jasper?
Jasper: I totally agree. I mean, I remember interviewing a host pretty early on, I think episode 45 or something, who was pretty close to being in tears on the podcast, actually, as he was talking about how the bank had already sent him a foreclosure notice on his home, and as sort of a last-minute last resort measure, he tried Airbnb and it saved his home. And I think Airbnb has had a very big impact on a lot of people’s lives, mine included.
And, yeah, of course, there are organizations that have lots of listings, who basically just use Airbnb as another channel to get more bookings for their properties, but I agree, I mean, the majority of hosts have one listing, and there’s also a lot of people who are renting out a spare room on Airbnb, and for those people, it’s a very empowering thing, as well.
Glenn: Yeah, absolutely, and it’s not a playground for creating slumlords. I mean, this is ridiculous. It’s, like you mentioned, the vacation rental companies that already have vacation rentals are just simply using Airbnb as another marketing tool. You know, it’s not creating these slumlords that the AHLA is articulating in this document.
So, it’ll be interesting to see, once they actually release the campaign, now that it’s been released to The New York Times. And they’re going to, I’m sure, they’re going to get some pushback on this because the argument, to me, simply doesn’t add up. And I guess time will tell.
Jasper: Yeah. And, you know, last year, there were two big setbacks, kind of, for Airbnb, right. There was the Federal Trade Commission that targeted Airbnb. Three senators asked for an investigation into how companies like Airbnb affect soaring housing costs. And then, also, in New York, the famous bill was signed, imposing steep fines on Airbnb hosts who break local housing rules. And then, the article says that this documentation that they obtained kind of proves that the hotel industry was kind of aiming for these measures, right. They were taking credit for it.
Glenn: Yeah, absolutely. Well, and the funny thing to me is this whole soaring housing costs argument. I’ve spoken to hundreds of Airbnb hosts, Jasper, and you have too, and you know, one of their best tools against soaring housing costs is a platform like Airbnb that helps them minimize those extra costs. I mean, in Canada, we have huge housing bubbles growing in Toronto and Vancouver, and families just simply can’t afford to live in these cities, and with Airbnb, that gives them an extra little tool that, you know what, if they wanted to earn a couple extra hundred bucks a month to help offset those expensive costs, they can and they are.
And so, I think that whole ‘Airbnb causing housing markets to increase’, I think, is a flawed one. It’s sort of, I think, we need to consider what’s coming first – is it the expensive housing market or is it Airbnb?
Jasper: Yeah, I think so, too. I mean, house prices were soaring in the early 21st century, as well, when Airbnb didn’t even exist. House prices have always been going up, and in the big cities, as more people migrate to the big cities, I think. And, I mean, I have yet to find a scientific study that actually proves that there’s a causal relationship between the housing prices going up and Airbnb. I think it’s one of those things where people, they confuse correlation with causation, and so they see two things that exist at the same time.
I remember learning about this correlation when I was studying a long time ago, and one of the examples that the teacher used was, he said, “You know, just because there’s cactuses and kangaroos in Australia doesn’t mean that the kangaroos are there because of the cactuses.” I thought that was a funny one.
Glenn: I love that.
Jasper: Awesome. Let’s move on to a different article because it was actually interesting to see these articles come out at the same time, because there was another article on Skift that talks about how corporate travel still doesn’t get home-sharing despite business traveler use. So, Airbnb has really tried to lure in more business travelers, to appeal more to business travelers, I should say, by having certain hosts have certain amenities, like a self check-in option, a laptop-friendly workspace, and a few other things.
And, you know, in order to get that little suitcase icon on your Airbnb listing, you have to have all these things, but this article argues that this hasn’t really attracted that many business travelers yet. What do you think?
Glenn: Yeah, I think the title’s a bit misleading. I mean, when you read it, it’s a great survey, Global Business Travel Association. Essentially, the headline is that only 17% of travel policies allow business travelers to stay in home-sharing properties. Now, that’s interesting in and of itself, but there’s two major things here. One is that it doesn’t define what a home-sharing property is, and secondly, it doesn’t account for business travelers who stay in home-sharing properties despite their company not having a home-sharing policy.
I remember reading an article earlier this year, that it was something like 40% of business travelers have used some form of home-sharing. So, I think there’s a bit of a disconnect. You know, even if corporate policies haven’t yet caught up to home-sharing, business travelers are certainly using them, and will increasingly do so in the future.
Jasper: Yeah, and I have no idea what these policies look like. I’ve never really traveled for a corporation. But, I mean, what does it say? You’re only allowed to stay in a hotel or something?
Glenn: Yeah, well, I think, from my understanding, is that most corporate travel policies will tell you what accommodations are acceptable. So, whether you’re staying in a private accommodation, which means you’re staying with friends and family, some places offer reimbursement for that, or some corporate policies will only allow you to stay in certain chains, or they outline where you can stay, where is an acceptable place to stay because the business travelers get reimbursed for their costs.
So, more and more, these policies are allowing for home-sharing sites like Airbnb and VRBO, and corporate short-term rentals. So, I think it’s just a matter that these travel policies haven’t caught up yet. I mean, I don’t think businesses are out there saying, “No, you can’t stay in these places,” because, you know, they can be a lot better for their business travelers in terms of flexibility and cost, and all that. So, I think it’s just a matter of, they haven’t caught up yet.
Jasper: Yeah, I think so, too. I mean, these policies were probably written like 10 years ago, you know. And, I mean, it doesn’t really make sense because, first of all, the fact that Airbnb exists gives you more flexibility of where you can stay, so you could be staying closer to where you actually need to be. For example, in my neighborhood in Amsterdam, there are no hotels, so if you need to be in my neighborhood, then Airbnb’s pretty much the only option. And, secondly, Airbnb’s typically cheaper than a hotel, right. So, why wouldn’t companies want to save money?
Glenn: Yeah, exactly. And I think, actually, the opposite might be true, at least with younger companies and smaller companies I know. I’ve interacted with a lot of them, and they would prefer, and in their policy, they state this, that they would prefer their business travelers use Airbnb or a home-sharing alternative than to the hotel, simply because it’s more flexible and it’s more cost-effective.
Jasper: Now, that makes a lot of sense to me. So, I agree with you, there’s probably more business travelers that are actually staying at an Airbnb and other home-sharing platforms, simply because, like you said, not all business travelers, you know, maybe they’re not even aware of the policies. I mean, I remember when I was working for a corporation, I didn’t even know what the business traveler policy was, to be honest, and so, a lot of them might be doing it anyway.
And it’s hard to imagine that you go on a trip for work, and then you come back and you hand in the receipt, and then the HR person says, “Oh, hold on a second, you stayed at an Airbnb. Now you have to pay for it yourself. We’re not going to reimburse you.” I mean, I would be shocked if that actually happens.
Glenn: Yeah, exactly. And, usually, there’s stipulations about cost, what you can and can’t spend, but yeah, I don’t think there’s a huge push for corporate policies to exclude, on purpose, home-sharing properties.
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All right, let’s talk about Miami. So, a while ago, there was a news article that, I think we discussed it on the podcast, as well, where the City of Miami was suing Airbnb hosts who spoke at… I can’t remember exactly what it was. They spoke at some sort of… Was it a lawsuit?
Glenn: Yeah, it was a Miami City Commission meeting where the city was debating, I think it was a zoning ordinance that would make short-term rentals de facto illegal.
Jasper: Right, and now Airbnb is suing the City of Miami for suing the Airbnb hosts.
Glenn: Yeah, that’s right, and it’s interesting, the lawsuit, because like you mentioned, these hosts went to this City Commission where you’re supposed to be able to debate and discuss. And part of going to the City Commission is giving your name and address, and now the City of Miami is using those names and addresses to send fines to these people. So, as you mentioned, Jasper, there’s a First Amendment rights suit against the city.
And, you know what? I just shake my head at this stuff. I don’t know. This is terrible PR. I mean, these Airbnb hosts, whether your city agrees with it or not, came to the Commission to have a discussion about the things they believe are the benefits of home-sharing platforms, and then you turn around and then slap hefty fines on them. I don’t think this is going to happen to these hosts, but the fines range up to $20,000 in Miami. So, it’s just really bad PR on Miami’s point, but hey, what do I know?
Jasper: Yeah, it kind of reminds me of, I was watching… What’s it called? This Netflix series, Pablo Escobar. What was it called? The Narcos?
Jasper: It reminds of how they had these hearings, and they had people trying to run for President and stuff, and then Escobar would, you know, murder them, basically. It’s a bit more extreme, but in essence, it’s like, “Oh, yeah, if you want to be part of a democracy, then we’re going to punish you.”
Glenn: Yeah. Yeah, I see the comparison, but for the record, we’re definitely not comparing the municipal government to the Narcos in Columbia.
Jasper: Yeah, I guess it’s a slightly different level.
Glenn: Yeah, well, the interesting thing is that Miami, it’s a decent market. There’s 2,300 Airbnb listings there, and Airbnb has shown that they can work with municipal governments, and they have, just in the past year, they’ve signed over, I think it’s 250 governmental partnerships. So, I mean, Airbnb is definitely taking a more cooperative stance.
You know, you can always compare them to what Uber’s doing in their sort of scorched-earth policy when it comes to operating in cities illegally, but Airbnb has definitely shown a willingness to talk and cooperate. So, the fact that Miami did this really confuses me, and I think Airbnb’s absolutely right to fire back with these five hosts on a First Amendment challenge.
Jasper: Yeah, I know. I totally agree. You know, I think it’s always good to see Airbnb really standing behind their hosts and supporting them, so I totally support this thing.
Let’s see, what else do we have? Oh, yeah, there’s another article, it’s also in Skift. Skift is publishing a lot of articles on Airbnb. It’s almost every week, we talk about Skift.
There’s an article about how regulation is slowing growth in some of Airbnb’s most popular markets, and it’s pretty interesting because it says that listings in Airbnb’s seven largest markets grew 40% year-on-year, and nights booked grew 60% year-over-year from December 2016 to February 2017. But then, since February 2017, the growth has really decelerated, and that’s because of a lot of the regulatory actions among Airbnb’s top markets.
And, you know, my market, Amsterdam, is part of that. I think London and Paris, as well, have seen more regulatory action. In Amsterdam, you’re only allowed to rent out 60 days, in London, I think it’s 90, and in Paris, 120. And it’s really only in 2017 that these rules are starting to get enforced by Airbnb itself, actually. And so, I can totally see how that would decrease the growth in those markets.
Glenn: Yeah, it’s a really interesting article because this is flowing from the Miami ban itself and the challenges that not just Airbnb but sharing economy or digital platforms, whatever you want to call them, are having globally because there’s really no frame of reference for this new form of economic consumption. And, yeah, like you mentioned, this was a report from the Swiss bank, UBS, that said that growth is slowing, but you know, the caveat there is that it’s still growth and Airbnb has been growing massively since its inception, basically.
And these regulations may be having an impact in certain markets, you mentioned New York and Barcelona, where really, it’s gone into the negative, I think, a decline 10% year-over-year in February, but there’s exceptions, though. When you look at the data for other cities where Airbnb’s dealing with regulatory issues, like San Francisco, Berlin, the UBS data suggests that the impact of tougher short-term rental regulations didn’t really have a large impact.
Now, it’ll be much more interesting to see, this time next year, a very similar study, a sort of a longer-term study, because we’re really only at the first inning of this whole regulatory battle. You know, Uber went through it and is still going through it, but Airbnb’s really just starting to go through it. But, I think the bottom line is that the report, when I read the report, I concluded that Airbnb is still a threat to the hotel industry, which I agree with, but maybe this decline in growth speaks to Airbnb’s expansion into other hospitality niches over the past year with the tours, all that kind of stuff. So, maybe there’s something to this.
Jasper: Yeah, absolutely. And, you know, these are just a few markets, right. Even though they’re major markets, I think, in the bigger picture, it’s still that Airbnb’s growing quite rapidly. But, also, it’s interesting because I think one of the reasons that Airbnb is really pushing to try and make some more revenue in non-home-sharing related activities, such as the experiences and the Airbnb trips, I think that that’s the one reason that they’re doing that, is because they’re probably aware that some of these regulations are going to hurt growth in certain markets.
Glenn: Yeah, I think you’re absolutely right. I think that it’s part of that, and it’s the whole IPO discussion, but I think that sort of hits on the whole regulatory issue, like, “Can we expand into other types of travel niches to sort of gain a foothold on the hospitality industry in general, as opposed to simply just rooms and houses?”
Jasper: So, what do you think about that, by the way? Because I’ve spoken to a lot of people about whether Airbnb’s going to be able to actually, you know, what they aim for, I think, is making less than 50% of their revenue from home-sharing in the future. Do you think they’ll be able to do that?
Glenn: You know what? Anything’s possible with Airbnb. I think it’s a really hard pivot to make, especially with all these regulatory battles going on, because it makes their primary business model a lot more susceptible to the whims of governments, and I don’t necessarily think that’s a comfortable place to be in if you’re the Airbnb co-founders or the early investors. That would make me nervous. So, I think that this pivot that you mentioned, I think is helpful for them, even though I know they’ve got a lot of pushback against it, but you know, with anything, it’s, give it a year and see how they do, and I think it’s going to be positive.
Jasper: Awesome. Well, it’ll be exciting to see how things move forward, for sure.
All right, I think that was about it for this week’s news. Of course, if you want to stay updated on the news items, I post them in a Facebook group, Airbnb News, and I also put them in my newsletter that I send out every Monday, that you can sign up for at getpaidforyourpad.com.
And one more quick announcement before we go is, I’ve recorded the audiobook of Get Paid For Your Pad. I don’t know why I didn’t think of that before, but you know, there’s a platform called Audible that, I actually use it a lot. Do you use Audible?
Glenn: Yes, I’m a subscriber and I absolutely love it. I think it’s a fantastic tool for when you’re too busy to sit down and read a physical book. You can just turn it on and listen to it like you would podcasts. It’s fantastic.
Jasper: I know. Yeah, I think so, too. Since I discovered Audible, I haven’t really been reading that many books. A lot of the times, I just download the audiobook and I put it on before I go to sleep. I listen for half an hour and fall asleep, and then I do the same thing the next night. And then, a few weeks later, I’ve finished the audiobook. Or, when I go on a plane, I just put it on, or while I’m at the gym. It’s so easy to listen to audiobooks.
And so, I was thinking, you know, I should have Get Paid For Your Pad on Audible. So, I did the whole recording, and we’re almost done with the editing, so I think it will be maybe a week or two weeks from now that the book should be available. For those who don’t like reading, they’ll be able to download the audiobook.
All right, that’s it for now, unless you have anything else, Glenn?
Glenn: No, I think we covered a lot of ground. Thanks for having me on, Jasper.
Jasper: Awesome. It was a pleasure to co-host the show with you, and of course, you’ll be back in a few weeks.
And for the listeners out there, thanks for listening, and we’ll be back on Monday. Bye for now.