Rooms Rentals & Shares

Airbnb Hosts Would Pay Hotel Tax Under City of Berkeley Proposal

May 01, 2014 1:00 pm

Skift Take

Backers of proposals to tax Airbnb have a variety of motivations, from seeking to eliminate competition to leveliing the playing field and boosting city coffers. Like the hotel tax lawsuits across the country that have targeted online travel agencies for a decade, the battle to regulate sharing economy sites is going to be dragged out for a very long time.

— Dennis Schaal

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Denis Balibouse  / Reuters

Brian Chesky, CEO of Airbnb, smiles during a session at the annual meeting of the World Economic Forum in Davos January 23, 2014. The company is increasingly attracting the attention of regulators from New York City to Berkeley, California. Denis Balibouse / Reuters


People who rent out rooms in their homes in Berkeley, California, to travelers using websites such as Airbnb could be hit with the city’s 12 percent hotel tax under a proposal passed by the City Council.

The move comes after Airbnb said it will begin charging users of the website hotel taxes in San Francisco and Portland, Ore., this summer.

The Berkeley proposal was referred to the city manager who could come back to the Council with a law to vote on, but there is no deadline.

The issue was brought to City Councilman Kriss Worthington by the 79-year-old owner of the Brown Shingle bed-and-breakfast, Helen Christensen.

Christensen admits that she does not pay the hotel tax because the City Council exempted bed-and-breakfast owners in residential areas who were in business before Jan. 1, 2003, but she wants users of Airbnb to pay it “to eliminate the competition in Berkeley, that’s what this is all about.”

“There are only six of us bed-and-breakfast owners licensed in the city and everyone else who has a guest room is renting it out on Airbnb, so it’s competition from people who are not legitimate,” Christensen said.

Berkeley has a little over 13,000 hotel rooms in 25 hotels and the city collects about $5.2 million a year in hotel taxes. Airbnb lists over 1,000 rooms and homes for rent in Berkeley on its website and the website Vacation Rental by Owner lists 117 homes on its website.

Worthington said he’s not favoring one kind of accommodation over another, just looking to make sure the industry is regulated and safe.

“The furthest thing from my mind is trying to drive Airbnb or any such company out of business,” Worthington said. “I think we have to welcome innovation, but we also need to think about how to regulate it and make sure things are fair. This is a big company now, and they are conducting business in hundreds of cities all over the place, but they don’t pay any business license fees where they are being used.”

Worthington said he doesn’t expect the city to bring in “mega million amounts” in hotel taxes by charging the tax to people who rent rooms in their homes, but it will bring in some over time if the industry grows.

“This is not just about going after one company,” Worthington said. “If multiple companies start to do this, it could be a sizable chunk of change.”

Airbnb spokesman Nick Papas said the company is working on expanding tax collection in other cities beyond San Francisco and Portland, Ore., but in some places like New York City, the company is prohibited by law from collecting them. The company estimates that if it did charge the hotel taxes in New York City, it would collect $21 million in 2014 alone.

Papas said hotels and Airbnb can live together and that “for us to win, hotels don’t have to lose.”

“We strongly believe we are adding to the tourism pie,” Papas said. “Many people tell us when they are going on a trip, they wouldn’t have stayed in an area as long if Airbnb wasn’t there. So it has ripple effects into the larger economy.”

Greg Mauldin, general manager of the 199-room Hotel Shattuck Plaza, said it’s a “fair question” as to whether or not sites such as Airbnb are hurting hotel business, but he does not know for sure.

“The sharing economy is here to stay, and that’s really what this is part of,” Mauldin said. “Charging the hotel tax is probably a good revenue source for the city, but you can’t just accept the money and expect people will be guaranteed the health and safety aspects that they are at this hotel and others. So if they are going to contribute, then there should be some guidelines in place, like periodic inspections.”

Reach Doug Oakley at 925-234-1699. Follow him on Twitter at www.twitter.com/douglasoakley ___

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