• Airbnb’s ‘unprecedented favouritism’

The American Hotels & Lodging Association has launched its latest attack on Airbnb, calling for greater legislation and attacking the agreements already made with various jurisdictions.

The protests were made as Airbnb CEO Brian Chesky said that the sharing platform was “halfway through the two-year process of getting ready to go public”.

Airbnb is currently required to collect tax in Chicago and North Carolina, but is also collecting and remitting taxes in more than 200 locations under voluntary compliance agreements.

Dan Bucks, who was executive director of the Multistate Tax Commission, authored the study and said that: “Having studied 12 of the 200 supposed ‘voluntary tax agreements’ Airbnb has entered into with states and localities – nearly all of which have been kept secret at Airbnb’s demand – it is clear they are actually not tax agreements at all, and they do nothing to ensure the right amount of tax will be collected.

“The agreements Airbnb is getting states and cities to sign do not require Airbnb to disclose all information relevant to its tax status, and they consciously shield with secrecy the identity and addresses of local lodging operators, or ‘hosts’ as Airbnb calls them. They do not contain actual tax information. In short, they do not do what normal tax agreements do.”

The report called upon agencies to stop signing what it described as Airbnb’s “deeply flawed agreements”, which it said provided “unjustified and unprecedented favouritism for Airbnb and its lodging operators through a broad range of tax and regulatory handouts not available to other citizens and businesses”.

Bucks added: “The agreements do not even guarantee that Airbnb’s lodging tax payments will be full and accurate. Airbnb gets to keep its books and records secret from tax agencies and provide only anonymous data for tax auditors – data that could be fact or fiction. These provisions insulate Airbnb from accountability for the taxes they pay. While there is no evidence of tax abuses – only a thorough, independent audit of books and records could determine that – and the agreements appear specifically designed to make audits impossible or as difficult as possible.”

The report was joined by a second AH&LA report, conducted by Penn State University’s School of Hospitality Management, which looked at the rise of commercial activity on Airbnb between September 2014 and September 2015 in 12 cities in the US.

The study said that nearly 30% (USD378m) of Airbnb’s revenue in these markets came from listings available 360 days a year, with each of these operators averaging more than USD140,000 in revenue during the period studied.

It also reported that individuals or entities renting out two more residential properties on Airbnb account for 17% of hosts in the 12 cities studied, and this rapidly growing segment of “multi-unit operators” drives nearly 40% of the revenue in those markets, which equated, it said, to more than half a billion dollars a year.

AH&LA president & CEO Katherine Lugar, said: “Unfortunately, this report shows a troubling trend as a growing number of residential properties are being rented out on a full-time, commercial basis, in what amounts to an illegal hotel, and using Airbnb as a platform for dodging taxes, skirting the law and flouting health and safety standards.

“This is not about ‘home sharing,’ a practice that has existed for decades as a way for individuals to make a little extra cash by renting out the occasional room or home. But this data tells a very different story than the one told by Airbnb, who wants the face of Main Street but the wallet of Wall Street. As a corporation valued at more than USD25bn, they have a responsibility to protect their guests and communities; they should not be enabling the corporate landlords who are clearly using their platform to run illegal hotels.”

The organisation has also proposed an amendment to the The Multistate Tax Commission to its model law on lodging taxes, adding dwelling, bed, room and “multiple rooms in a dwelling” to the MTC’s 2012 model uniform statute for collection and remittance of lodging taxes by online marketplace-style, short-term rental intermediaries such as Airbnb.

While the reports were being published, Airbnb CEO Brian Chesky told a lunch hosted by the Economic Club of New York at the New York Stock Exchange: “We are halfway through the two-year process of getting ready to go public”.

HA Perspective [by Katherine Doggrell]: The AH&LA do not like Airbnb. This has been made amply clear as they generate reports about in the same volume that most people generate Facebook posts. And there is an angry face under all of them.

What makes this latest set different is that the criticism has extended to those who have done the deals with the sharing platform and their ilk, accusing them, at best, of having the wool pulled over their eyes. It also bears noting that the AH&LA acknowledges that “there is no evidence of tax abuses”.

Neil Baylis, competition partner, K&L Gates, told us: “From the consumer perspective, Airbnb is a huge success – and its proposed IPO will show just how successful. The deals have been done, and there will be more deals to do, but it seems to me that there is less concern now than there was a year ago about the effect of Airbnb on local property use, pricing and availability.

“AH&LA is trying to protect its members from market forces. That is their job but it won’t wash politically if the majority view is that Airbnb provides a useful service.”

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