Airbnb and the unalienable right to exist

Owners of a house rented by airBnB

Guess, guess … What would be the biggest dream of an hotelier? No doubt, it would be that homeownership was prohibited. If it were up to the tourist industry, citizens would be obliged by law to rent a hotel room … of course.

No, the idea is not surreal. This is what follows from the hotel lobby actions against the explosion of the phenomenon of residential exchanges. The Airbnb concept today moves more than 9 million passengers worldwide. The lodging on offer surpasses the figure of 500,000 units, from single rooms to multi-housing properties in 33,000 cities in over 190 countries. If we compare these figures with those of hotel empires such as Marriott International, which manages 3,800 hotels and 666,000 rooms, the conclusion drawn by the dean of the division of the Preston Robert Tisch Center, Bjorn Hanson, is that Airbnb is “the biggest brand of accommodation in the world.” And it has achieved that in just seven years.

Airbnb was founded by three Americans – Nathan Blecharczyk, Joe Gebbia and Brian Chesky – in 2007. After the legend of startups born in a garage, the idea was the development of an ecosystem based on accommodating friends. They called it Air, because they thought they would lodge them using inflatable mattresses, and BnB, for bed and breakfast.

At first no one took them seriously, which should have been of concern to some executives of multinational hotel connoisseurs of the ‘garage effect’ coined by Bill Gates, Steve Jobs, Larry Page, and others. Even the established companied cheered their backpacking ease by the immediacy with which they would find accommodation for tourist left behind in cases of absolute no more vacant rooms in hotels. The current mayor of Barcelona came to stop by their office during the Mobile World Congress because hotels were full, reports Molly Turner, legal responsible for Airbnb.

Then came the discordant voices, those who alerted the tourism industry that the American startup was pressing prices down and tarnishing the name of the city, as it happened in the most chic areas of New York, the Upper East Side and the Upper West Side, where a luxury hotel room can cost $ 3,900 per night with occupancy around 90 percent. It is said that two years ago, the hotels in these areas had come to have an occupancy rate of 95 percent, but because of Airbnb the current rate has fallen to 90 percent. And then the lobbies began to move, spreading from New York to Chicago, Barcelona, Madrid, Amsterdam and many other tourist cities.

A wave of corporatism has hit even the most liberal countries these days, which have broken the tradition of no state intervention just for a pittance in the tourist business, if we compare Airbnb with other powerfulmultinationals. Barcelona has banned renting houses for the time the owner pleases. And in New York, the ban that no one follows affects only houses that are rented for less than 29 days. Naturally, this decree is subject to dispute, as the state governor must explain to citizens why a home is rentable for more than 29 days and not 25 or 40. It also raises the question whether this ban will legally reach hotels, some of which have popularized having guests for life.

Would a theater company scheduling touring sessions have to switch hotels each month? It is assumed that the ruling also outlaws the act of subleasing. And what about other leases such as rustic resorts, many of whom make contracts for the whole ski or beach season? Nor should other rental fields escape these irrational standard effects, like renting an excavator, a chainsaw or a car. Should we change vehicles exactly every 29 days? There is no sensible argument to differentiate between renting a room and renting a delivery van.

This precedent is very negative for the tourism industry because it weakens the offer. Not only  does it put obstacles on free enterprise, but it also exposes its more conservative and inept facet for innovation. Various reports in recent weeks indicate that the activity of Airbnb hardly affects hotel billing by 15 percent. It is certainly too early to determine exactly the influence of home exchange portals on the hotel industry, but there is evidence that it’s very different from the hotel market, just as the hostels consumer market is very different from traditional hotels. These lobby actions delegitimize innovative hoteliers who should denounce the irrationality of this standard and disengage from the cheesy hotel industry sector.

“The hotel demand will remain strong in the coming years, thanks to increased corporate spending and leisure,” said a recent report by PwC consulting firm. David Hantman, director of Airbnb, denies that the phenomenon significantly affects the profitability of hotels, as it is a particular business that is even beneficial for the community: “Eighty-seven percent of renters in New York offer a room in their house and carefully choose who they accept in. The money they earn with this extra is what allows them to make ends meet. “And he insists that the average Airbnb traveler is 35 years old, while the host is on average 38. “This puts them away from the backpacker profile and indicates that this is not only about finding a low cost accommodation, but about having a different experience to the hotel,” he concludes.

The hotel industry has a new pain in the neck with this exchange system. That, in essence, is the same system of P2P exchanges, which the recording industry unsuccessfully resisted. Lest the hotel industry not get involved in the same puddle and end up, just like the record industry, finished by popular will. It should neither assume the operation of this new digital economy will finish them, lest not the Jurassic Park of hotel business ask for a Google rate like the one that has been approved in Spain with the Copyright Act.

It should be wise, then, to take this P2P controversy to the terrain of wisdom, imagination and understanding of a new reality imposed by the use of the Internet. Let’s talk about taxes, which is the unfairness under which many of the detractors of Airbnb shield themselves. What is the tax burden that should be borne by this and other residential exchange companies? Obviously, those derived from their activity, like any tourist company. No other, as the attorney general of New York unsuccessfully sought. Not the ones derived from the business, but those derived of their own activity. Just like the hotel booking centers do not face taxes for the overall turnover tax reserves but for the commissionable rate, exchange centrals should only bear the burden of their taxable commissionable rate. Airbnb insists that the payment of other taxes is a matter between the homeowners and the administration. Each booking is only between 6 percent and 12 percent .

And herein lays the crux of the matter: How to relativize paying taxes for a neighbor who’s not subject to the scrutiny of quarterly tax returns, costly accounting, transparent billing, and the collecting selflessness of the taxpayer. How can we implement an open, responsive and transparent system in which the Treasury only charges for the time of the transaction itself? Especially in a country like Spain, affected by an alleged six million unemployed workers and an estimated informal economy of 30 percent. Picaresque, or tax inefficient?

If that which worries hotels is the taxation of competition, it is reasonable to require a fair taxation system, but unreasonable to seek the ban of the activity. If the hotel lobby itself does not practice market freedom with their peers, with what face will they defend a redundancy or closure of businesses?

 “Wealth is like salt water; the more the more we drink, the thirstier we become,” said Schopenhauer. 

Fernando Gallardo |

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