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NY Times: Airbnb Pledges to Work With Cities and Pay ‘Fair Share’ of Taxes

Monday, November 16, 2015   (0 Comments)
Posted by: Sarah Stegmeyer
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SAN FRANCISCO — A week ago, Airbnb fired off a warning shot to cities that it would fight back if municipal officials proposed rules that might curtail its home-sharing service.

“There is going to be more people doing home-sharing tomorrow than there are today; there is going to be more the day after that,” Chris Lehane, Airbnb’s head of global policy and public affairs, said at the time to underline how the company is unstoppable. “This is now a movement.”

This week, Airbnb dialed back its rhetoric.

“There is going to be more people doing home-sharing tomorrow than there are today; there is going to be more the day after that,” said Chris Lehane, Airbnb’s head of global policy and public affairs. Credit Jim Wilson/The New York Times
“Given the size of the Airbnb community, this just seems like the right time for us to be very specific about the types of commitments we’re willing to make,” Mr. Lehane said in an interview. “Cities are looking to do the right thing, and they need the right information to do so.”

The shifts in Airbnb’s messaging show the tightrope the company is walking as it tries to expand its business in a tricky regulatory environment. Many towns do not have rules in place to deal with an online service for people to rent out their rooms or homes on a short-term basis. The company, which is now seven years old, has not waited for permission to operate in many locales. In some cases, Airbnb has avoided city-mandated hotel taxes or strict safety regulations that apply to hotels and regulated bed-and-breakfasts.

Airbnb has had plenty of momentum, now with upward of two million listings across more than 34,000 cities, and with private investors valuing the company at more than $24 billion. That has allowed Airbnb to flex some of its muscles with local regulators — but too much flexing can backfire.

Airbnb found this out recently after dueling in the run-up to a San Francisco election over a ballot initiative that would have cut the supply of short-term rentals, affecting the company’s business in its hometown. Airbnb spent more than $8 million fighting the measure, called Proposition F, and the company came under intense criticism for its series of anti-Prop F billboards and ads in the city.

Airbnb worked to help defeat Prop F, but then held a news conference in which the company said it could mobilize its users to vote down proposed rules that were aimed against it in other cities. The language was not well received by some policy makers, including Aaron Peskin, who was elected to San Francisco’s Board of Supervisors last week. He said at the time that the Airbnb issue would not go away.

“If Airbnb is not at least somewhat flexible on their part, cities will just dig in their heels,” said Rob Atkinson, president of the Information Technology and Innovation Foundation, referring to the company’s changing tone with municipalities.

Many of Airbnb’s messaging changes lately originated with Mr. Lehane, who, after performing consulting work for the company for years, officially joined Airbnb full-time in August. Mr. Lehane, a longtime political operative, brings to the job a reputation for hands-on, bare-knuckle sparring with Washington insiders.

Mr. Lehane said Airbnb’s messages were not inconsistent. The mobilization of voters was meant to fight against the hotel industry, which has not been receptive to home sharing, he said.

“We have always said we want to partner with cities,” Mr. Lehane said. “As Prop F in San Francisco made clear, our community will fight and win if the hotel interests are threatening the economic lifeline of home sharing, but on the natural we would prefer to be lovers of cities and not fighting with the hotel industry.”

The pledges within the Airbnb Community Compact are intended to give local governments data and other information that they have been asking for from the start-up. Some municipalities have long appealed for Airbnb data to help them crack down on illegal operators of large blocks of rooms, for instance.

That issue was front and center last year in New York City. Last May, after a protracted battle in court, Airbnb agreed to hand over anonymized data on the company’s hosts in the city to Eric T. Schneiderman, the New York State attorney general. The goal, Mr. Schneidermann said at the time, was to hunt down so-called illegal hotels using the service.

On Wednesday, Mr. Schneiderman said Airbnb’s Community Compact “is a transparent ploy by Airbnb to act like a good corporate citizen when it is anything but. The company has all of the information and tools it needs to clean up its act. Until it does, no one should take this press release seriously.”

Airbnb has also faced regulatory issues internationally, in cities including Barcelona and Berlin.

Taking a cooperative stance with cities may not only help Airbnb on the regulation front but may also ease any concerns by hosts who rent out rooms and homes on the service. On Thursday, the company plans an event in Paris for hosts, where the company said it would share tips to help them make more money. The gathering will also serve both as an incentive for hosts to keep using Airbnb and as a strategy to help cut down on the churn of people listing homes for rent once or twice without returning.

Other on-demand companies have also had to soften their approaches with local governments. Uber, the ride-hailing giant valued at more than $50 billion, was known for its hard-charging stance into cities, bypassing local legislators until it reached a tipping point with consumers.

But David Plouffe, the former adviser to President Obama who is now Uber’s senior policy adviser and a company board member, has courted regulators with appeals about how the service can help lift stagnant wages and rejuvenate the middle class.

“All of these companies have organized to deal with this risk to reputation,” said Derek van Bever, the director of the Forum for Growth and Innovation at Harvard Business School. “The regulatory risk warning light is flashing bright red on their management dashboards.”

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