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Airbnb Scams L.A. Out Of $41 Million Each Year, Study Says
A new study says that the city of Los Angeles is missing out on $41 million in revenue the city could be collecting it regulated Airbnb rentals like hotels and other hospitality institutions, according to the L.A. Times.
Unlike hotels, Airbnb hosts in Los Angeles are exempt from room taxes, tourism fees, and assessment fees. These fees were developed for hotels because of the hospitality industry's integral relationship to promoting tourism throughout Southern California.
The study was compiled by a Penn State professor, and also just happens to have been financed by the American Hotel and Lodging Association, the country's premier hospitality trade group.
Aside from the raw loss of revenue, the study hints at other more subtle effects. For example, even though more tourists are visiting L.A, the city's tourist resources budget—sourced from tourist fees levied on hotels—isn't adjusted to account for the great number of people presumably staying in Airbnb lodging.
This newest study is just one of many that have cropped up recently on Airbnb, evaluating the home-sharing company's effects on the hospitality and rental economy.
Earlier this month, a study from CBRE Hotels cited Airbnb as the reason L.A.'s hotel room rates are rising at a slower rate in some neighborhoods than others. With a deluge of supply, hotels can't necessarily capitalize on lodging scarcity to raise prices.
A another paper argued that short-term rentals, specifically like those offered by Airbnb, are contributing to L.A.'s housing crisis. Aside from taking vacant units off the market, the paper points out how building owners have been known to evict tenants and replace them with Airbnb lodging, as happened in Santa Monica last year.
The L.A. Times also concluded that Airbnbs are exploding across Southern California. The Times found Airbnb listings had increased 42 percent during the final seven months of 2015, and opined that, basically, hotel companies need to pay attention.
The biggest sticking point about Airbnb for both regulators and hoteliers alike are the small percentage of Airbnb hosts who lease space on a regular basis. The most recent study says about 22 percent of Airbnb operators lease their properties for 180 days of the year and 4 percent lease space for at least 360 days.
While Airbnb is quick to point out the vast majority of its listings come from small-time operators who, for example, rent out a bedroom occasionally, critics point out how the vast majority of Airbnb revenue comes from whole-home rentals. According to the Los Angeles Alliance for a New Economy, approximately 89 percent of Airbnb’s revenue is sourced from whole-home rentals, none of which is subject to the same regulation as hotels.
Lots of cities have actually been cracking down on Airbnb, worried about the company's tendency to squeeze already highly limited rental stock. Santa Monica has been rigidly enforcing legislation against short term rentals since 2015, and West Hollywood considered banning the service outright all together.
Up in San Francisco, Airbnb launched an incredibly passive aggressive ad campaign after the city forced the company to pay $12 million in backed hotel taxes it didn't think it needed to pay.
Note: Airbnb sent us the following statement via email following the publication of the above piece:
This factually inaccurate study was paid for by the hotel industry and is intended to mislead and manipulate. Over the last two years, LA officials have heard from thousands of middle class Angelenos urging the city to adopt clear, fair rules for home sharing and allow Airbnb to collect taxes on behalf of hosts. Airbnb initiated a dialogue with city officials about enabling the platform to remit taxes on behalf of users in late 2014, and we welcome AHLA's support in moving that process forward.