The growth of the popular home-sharing website Airbnb over the past few years has engendered opposition in some quarters. Most recently, Louisville, Ky. is the latest city to try and essentially ban the service.
Airbnb allows homeowners to rent out a spare room, a couch or even an entire house on a short-term basis to travelers. Hotels and the rest of the lodging industry don’t like it because, in many cases, Airbnb rentals are priced cheaper than hotel rooms on a per-night basis.
Louisville says that property owners who rent their properties on Airbnb are essentially operating illegal hotels. According to The Courier-Journal, owners who don’t stop renting out their properties on Airbnb could be subject to fines of as much as $500 a day.
Some Louisville property owners renting out space in their homes to travelers through popular online home-sharing sites have been told by metro government they are operating illegal hotels or motels and need to stop immediately or risk significant fines.
Several owners and their attorney want to work with the city to find a solution, and they said they are not opposed to regulations, paying a fee or purchasing a license.
But one host who uses the Airbnb home-sharing site, which lists more than 400 properties for short-term rental in Louisville alone, said there is no flexibility in the city’s letter — they are ordered to “cease immediately.”
In fact, Airbnb rentals don’t actually meet Louisville’s statutory definitions of a hotel. At the same time, there’s nothing in the Louisville municipal code that allows them exist. This has created a legal limbo that has been exploited by Louisville officials in their attempt to kick the service out of the city.
The best situation all around is for officials in Louisville to draft regulations that would allow Airbnb and other similar services to set up shop, while dealing with whatever reasonable tax or consumer protection concerns the city might have. This would provide an affordable option for travelers who, for whatever reason, don’t want to stay in hotels. The regulations should be focused on protecting public safety, public health and protecting against fraud and should not be used punitively to create an unfair competitive advantage for the lodging industry.
Like other sharing economy services, the home-sharing market is largely self-regulating. There are options to users to post reviews of their guest experience. In order to attract more potential customers, property owners also can have people post references. When you download the Airbnb app, you can sort through the reviews, which describe the property, the owner, the neighborhood, the condition of the lodging and user experiences. Just as on sites like Yelp, a negative review can be detrimental to an owner. Just as with any other business, customers will steer away from property owners with bad reputations.
A vibrant market in home-sharing can be a particular asset whenever Louisville hosts a major festival, convention or sporting event, such as the annual Kentucky Derby. Many times during a big event, Louisville hotel rooms sell out. Home-sharing provides an option for those willing to stay in someone’s private home. This would help Louisville attract more tourists by giving the city additional lodging capacity. The additional tourists mean more money for local businesses and, in turn, additional sales-tax revenue for the city. The property owners, as they invest in their properties or otherwise spend their earnings, would also generate more revenue for the city.
It’s also not entirely clear the degree to which Airbnb-like services and the lodging industry are actually in competition. There are many people who aren’t comfortable staying in a stranger’s private home and would opt for a traditional hotel. There are others who actually want the comforts a traditional hotel provide. Finally, there are people who don’t want to stay in a traditional hotel. They like the individuality and charm of private homes, compared to the relatively stale environs of commercial hotels.
I recently utilized Airbnb’s services when I visited D.C. to cover the Conservative Political Action Conference (CPAC). I found a room that only cost $30 a night. Since the trip was for work, I didn’t need a whole lot in terms of accommodations. I simply needed a private room to sleep in and working wi-fi access. There were several options for me at $30 a night, but what sealed the deal was when one owner said he had a dog inside. I’m a dog lover, so that was perfect. I believe I received an excellent value for what was provided and I was able to extend my trip a day longer than I would’ve if I stayed at a traditional hotel.
Having enjoyed Airbnb first-hand, I would not use them on a vacation, in most circumstances. On personal trips, I enjoy being pampered and only a traditional hotel could do that. But on a work trip, I would gladly use them again when I need a place to stay cheaply.
Louisville lawmakers should give their citizens the choice of accommodations and provide a source of income for some property owners. They should draft legislation that legalizes and regulates Airbnb and other house-sharing services. It’s the best idea for the city, from both an economic and tourist standpoint.