Accommodation sharing site Airbnb has agreed a deal with authorities in Amsterdam, to collect local taxes from those renting through their site, and remit them to the city.
The deal follows similar agreements already concluded in the US, notably in the company’s home city of San Francisco and followed by deals with Portland and San Jose, and is seen as a necessary step in legitimising the sharing website’s offering.
Amsterdam city authorities and Airbnb issued a joint statement explaining the details of the deal, designed to “promote responsible home sharing and simplify the payment of tourist tax for hosts in the city”.
Under the agreement, Airbnb hosts will be presented with clear information about the rules of private renting in the city, which Airbnb will promote prominently and hosts will have to declare they have complied with, prior to making a listing; and emails will regularly remind them of those obligations. Airbnb will from February start collecting a 5% tourist tax from hosts, to pass to the city. And the two bodies have committed to work together to stamp out illegal hotels.
“This is good news for our hosts, who will benefit from a simplified tourist tax process and clearer information on what local laws and regulations may apply to them,” said Airbnb in a statement. “It is also a great example of how we are working together with policy makers across the world on progressive rules that strengthen cities and help local residents make a little extra money to afford living costs.”
The Airbnb deal follows rule changes in Amsterdam that now specifically allow householders to rent out their homes on an occasional, short term basis. Currently Airbnb lists just over 1,000 Amsterdam properties on its website.
The Amsterdam agreement is expected to be the first of a series of similar agreements Airbnb is brokering across Europe. It is understood to be in discussion with the French authorities, and will no doubt be making representations in the UK, where the government has recently announced a review into the sharing economy – keen to ensure initiatives are encouraged, and taxes are collected wherever possible.
Since launching in 2007, Airbnb has proved an increasingly large nuisance for those in the hospitality industry, and a great new source of accommodation for consumers. Launched off the back of a shortage of accommodation when a conference hit San Francisco, the concept has allowed thousands of space providers – from homeowners to unbranded hotels – to sell their space online. Despite the origins of the concept – renting out sofa space – much of the accommodation listed today is of a high quality, including even high end country homes and luxury apartments. And despite the growing volume of the Airbnb offer, hotel group chief executives continue to insist it does not impact on their business.
Back in the US, a number of states are now looking at legislation to legitimise Airbnb listings – but at the same time taxing short term rentals. Some are adapting longer term rental rules, while others are being led by local hotel lobbying to adopt a similar regime to that which they operate under. And in San Francisco, Airbnb’s arrangement with city authorities has been challenged by rival HomeAway, concerned the legislation is tilted in favour of Airbnb’s agency model.
Airbnb has been a little coy about sharing all of the data about its market impact, but released figures in March 2014 about the UK market, that give a flavour of its scale. At that point, Airbnb said it had hosted more than 1 million guests from the UK, with over 330,000 Brits testing out Airbnb in 2013. To date, it declared 11 million guests had used the site, and at that point over 600,000 properties in 192 countries were listed.
Progress in Europe looks to be in distinct contrast to Airbnb’s experience in New York, where authorities demanded the site provide details on a number of hosts and listings, as they sought to track down individuals contravening the city’s existing ordinances. In common with London, New York residences are legally bound not to sublet on a short term basis.
The attorney general’s actions revealed a significant amount of data about Airbnb in New York. It suggested the site would generate USD282m of revenue from New York listings in 2014, while almost three quarters of rentals contravened state law. Tax losses were reckoned at USD33.5m over four years.
A data analysis conducted by Skift in early 2014 noted two thirds of Airbnb’s 19,500 New York listings were for entire homes or apartments, with all but 2% of the remainder being private rooms.
HA Perspective [by Chris Bown]: One of the great promises of the internet was that it would more effectively link up buyers with sellers. It has been doing this successfully for many years, but it is only now that some seriously disruptive “sharing economy” entrants are fulfilling the promise directly for consumers; though arguably some – such as the Uber taxi service – have required app technology as well, to really come to life.
These disrupters generally cut across old world rules, and upset vested interests, as steam-age regulations fail to cope with the innovators. The responses have included protests with taxi drivers jamming city streets, and demands for yet more regulations, as from Berlin hoteliers.
The Amsterdam agreement is a pragmatic solution that addresses two key issues which hoteliers regularly complain about: the tax dodging issue, and legality. However, there appears to be little attempt to tackle their other gripe, that of health and safety. It also demonstrates again that AIrbnb is prepared to meet in the middle, rather than impose their own model, something Uber stands accused of.
All eyes will next be on London, where serviced apartment providers are trying to finesse a change in London’s out of date short letting rules – without encouraging a free-for-all and driving more hard-up Londoners to rent out their spare rooms, increasing Airbnb’s inventory.
Entertainingly, hotel company chief executives always insist that Airbnb is not really a competitor, a view that it suits Airbnb to encourage. Most travellers love the great value, certainty and safety of their own room, insist hotel chiefs, in preference to saving a little by risking a night on a mad stranger’s sofa. In the same vein, Airbnb tells us 73% of Amsterdam listings are outside the neighbourhoods of the city’s hotels, while the average Airbnb guest is over 30 and stays longer than the average hotel guest. And it suggests the site is simply helping out recession-hit homeowners, for whom the modest extra income helps them pay the bills.
Two facts somewhat undermine this story, however. The first is that hotels are learning from Airbnb: new brands – such as Hilton’s Curio – increasingly talk about delivering a curated local experience, precisely the strength of the offer from Airbnb hosts.
The second is the experience of the Hotel Analyst team (all indisputably over 30). One counts four overnight hotel stays in 2014, against 20 nights booked via Airbnb – not one of them on a sofa or in a shared room, and all of the advertised quality. Another has just booked accommodation via Airbnb in a German city, around the dates of an upcoming hotel conference. Almost overlooking rooms in an adjacent five star branded hotel, the comfortable private apartment costs around a quarter of the price – and includes free wifi.