Is the Boston-Airbnb settlement, which calls for short-term regulatory platforms to comply with a city ordinance, a model for future agreements? Too soon to tell but what's clear is that the alternative accommodations industry will one day transition from outliers to regulated entities.
New Airbnb settlements with Boston and Miami Beach legitimize alternative accommodations in those cities, but also give the homesharing giant new leverage over competitors.
Airbnb settled with the two cities to provide hosts’ information and to delist those who aren’t registered, and the Boston agreement also notably requires “fairness across platforms.”
This entails efforts to level the playing field — not so much among short-term rental platforms and hotels necessarily but, in this instance, between Airbnb, Booking Holdings, Expedia/Vrbo, TripAdvisor, and others. Google, which is in the initial phases of becoming a short-term rental platform, may also find itself subject to toeing the regulatory line.
The Airbnb-Boston pact (see settlement agreement embedded below) enables the two parties, “upon request from Airbnb,” to confer about compliance with the city’s ordinance when any “platform operating as a booking agent” doesn’t have an agreement with the city.
The information that Airbnb would provide to the city “shall include non-confidential information concerning any fines or other enforcement action against said platform,” meaning Airbnb’s competitors, according to the agreement.
Airbnb is generally the most-high-profile short-term rental platform in the world, and when critics, including hotels, neighbors, and regulators think of clamping down on short-term rentals, Airbnb often gets most of the heat while companies such as Booking.com, which has a huge short-term rental business, Expedia/Vrbo, and TripAdvisor tend to slip through the cracks and attract less scrutiny.
But that will be changing as regulators around the world adapt to the disruptive force – including the positives and negatives — of alternative accommodations.
Fairness Provision Gives Airbnb Matching Rights
The Boston-Airbnb pact contains a Fairness Across Platforms provision that states that on the heels of the settlement, the city will begin talks with Airbnb’s rivals to conclude their own agreements with the Massachusetts municipality.
Among the other elements of the fairness provision, Airbnb will get a copy of its rivals’ agreements with Boston, and will inform the city if any parts of those pacts are more favorable than the settlement that Airbnb negotiated. The settlement gives Airbnb certain matching rights. The existence of the fairness provision in the Boston-Airbnb settlement was first reported in a Wired story.
Philip Minardi, head of public affairs, Americas, for Expedia Group, said the company believes in sensible regulation for all parts of the travel ecosystem, including short-term rentals. He pointed to Expedia partnerships already in place with Seattle, Washington, and Louisville, Kentucky, for example.
“We are — and have been — complying with the Miami Beach law since it took effect earlier this year,” Minardi said. “In Boston, Expedia Group has attempted to engage with city officials in an effort to reach a workable, long-term solution, and looks forward to discussions with the city.”
Minardi added: “We look forward to continued discussions with governments to advance comprehensive policies that support healthy local tourism.”
Booking Holdings did not immediately comment on Airbnb’s settlements and the fairness provisions in the Boston-Airbnb pact.
“TripAdvisor has been and remains in regular communication with relevant regulators,” the company said. “We are taking steps to understand how any updates to these regulations will impact our business and homeowners.”
About the Boston settlement, Airbnb told Skift: “Our goal has always been to work with the City to find a path forward for home-sharing in Boston. With this settlement agreement, that is what we have collectively achieved, establishing an effective regulatory framework for compliance. We are proud that we have forged this comprehensive solution with the City and look forward to working with our community to make them aware of their role within this new framework.”
Andrew Kitchell, founder and CEO of Lyric, which saw Airbnb recently leading a $160 million fundraising round for the company, concurred that there should be regulatory fairness in that different companies should have to abide by similar rules.
However, said Kitchell, whose company operates serviced apartments and has hotel licenses in places such as New York City, municipalities should find room to distinguish between hosts who offer a single apartment, and operators who may have dozens or more units.
Boston Doesn’t Limit Rental Days
Under the Boston settlement, which was reached August 29, the city does not limit the number of days a vacation or apartment rental operator can offer their listing as long as it’s for their primary residence or they are present during the stay. Non-compliance subjects the operator and platform to fines of $100 to $300 per day for each violation.
There are registration requirements for the host and display mandates for Airbnb listings. Resolving an area of great contention, Airbnb agreed to provide the city with a confidential monthly report including listing and host identifications, the host’s registration number, whether the listing is for an entire unit or a room, and the zip code.
Beginning this week, Airbnb was to change the host signup process for Boston listings by prompting hosts to register with the city and providing a link to do so. A host registration campaign was slated to begin, as well.
If hosts do not register, Airbnb will deactivate their listings starting December 1, the settlement states.
Paying Miami Beach to Educate Residents
The Miami Beach settlement (embedded below) has certain similarities with Boston’s in terms of registration requirements; hosts must get a city business tax receipt, and display a tax receipt number, and a resort tax registration certificate on listings. New listings have one month to comply, and existing listings have three months as Airbnb educates hosts and communicate the changes.
But the Miami Beach settlement does not appear to have the “fairness” provision that’s in the Airbnb-Boston pact. The Miami Beach-Airbnb settlement merely states: “The City shall not agree to any other hosting platform being entitled to the benefits of this agreement without that hosting platform agreeing to its terms.”
Under the Miami Beach pact, Airbnb is required to pay the city $380,000 toward the municipality’s effort to inform residents about its new home-sharing rules.
What It All Means
It is going to take several years of struggles, but the Boston and Miami Beach settlements with Airbnb point to the near-inevitability of the short-term rental industry, including platforms well-known and those with lower profiles, being subject to regulation.
Even the stalwarts of the hotel industry are adapting in various ways, including running their own alternative accommodations businesses.
As one local Marriott executive said recently, according to a San Francisco Business Times story, “As a company, we are trying to figure out how to work with them (Airbnb) because they’re a future we can’t escape. They are doing to hotels what Amazon has done to retailers, absolutely.”
Note: This story was updated to include a comment from TripAdvisor.
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Photo Credit: Airbnb has reached settlements with Boston and Miami Beach. Pictured is a Miami Airbnb experience with Cristina Garcia of Electro Funk Lords. Airbnb