Airbnb can produce pluses via more visitors, hotel profits
Written by Michael Lewis on September 27, 2016
Miami Beach’s battle against Airbnb looks familiar. Didn’t we just fight that war against Uber and Lyft? If so, let’s make the likely outcome as positive for all as possible.
Internet home-sharing firm Airbnb is doing well on Miami Beach, where the main industry, hotels, is simultaneously taking a huge hit from the Zika scourge. Brick-and-mortar hotels naturally don’t want a company built (as its name says) on air taking their guests.
Hoteliers complain it isn’t a level playing field because Airbnb doesn’t pay the taxes or meet regulatory guidelines that hotels do. That’s the argument taxi owners offered against Uber – which didn’t even pay hundreds of thousands of dollars for each medallion, just as Airbnb doesn’t pay multi-millions to build hotels.
But business is in a new age of competition spurred by disruptive technologies.
In the newspaper industry, websites that didn’t pay for licenses or newsprint or printing presses – or reporters and editors – quickly grabbed eyeballs and advertising by profiting from unpaid-for content that newspapers had produced. No level playing field.
When taxi owners’ representatives a few years ago brought us a notebook listing the evils of unfair competition by a thing we’d never even heard of called Uber, taxis still had a monopoly and a single cab’s operating rights sold for hundreds of thousands. Uber doesn’t own a single cab but grabbed a huge share of the industry after taxi operators paid lawyers and lobbyists millions to try to halt its incursion. No level playing field.
Now it’s the hotels. Miami Beach has levied millions in fines for those who illegally rent short term in their homes or apartments, aided by Airbnb. That’s the same pattern as Uber drivers, who drew big-money fines before the county legalized the service. Airbnb, like Uber, is likely to pay those fines in the short run as it goes for a long-term legal victory.
On its website, Airbnb details taxes it pays in Florida, including a 6% transient rental tax for reservations of a half a year or less and local county surtaxes of a half percent to 1.5%, depending on the county, for those short-term rentals.
The company also pays tourist development taxes in 22 counties that the state administers, plus the tourist development taxes in nine counties, not including Miami-Dade, that administer their own.
A tax deal in Miami-Dade could be tougher. Most of the county has 6% bed taxes, including 3% for convention development, 2% for tourist development and 1% for sports, but Bal Harbour and Surfside administer their own and Miami Beach administers its own taxes for tourist development and sports.
That division of tax powers might require settlements in each community, once cities decide that if they can’t lick Airbnb, the company can at least fund economic growth via taxes on the guests it sends here.
Miami-Dade can’t erect a barrier against a web phenomenon that’s sweeping the globe just as Uber did. Airbnb says it has placed more than 60 million guests in more than 34,000 cities in 191 nations and has more than 2 million listings worldwide. Why should we freeze its clients out?
We need an accommodation of this accommodations firm and its smaller competitors. The longer and harder Miami Beach pushes back, the more painful it will be for our tourist industry.
Industry research surely reveals just how much overlap there is between the guests of high-quality Miami Beach hotels and the users of a service that sends visitors to homes and apartments. The vast majority of Miami Beach hotel guests wouldn’t put up with someone’s spare room for a vacation, convention or business meeting. They expect service that no householder is prepared to give.
That, after all, is the hotel experience. Guests want good dining, entertainment, more comfort than they have at home and some veneer – plus a staff well trained to serve with a smile and ability. Very few apartments and homes can offer that – and even fewer to be found via Airbnb. If homes are that good they’re not listed, because no paid guests are wanted.
We all know adventurous folks who’d take a chance with someone’s spare room on a trip through Europe. We also know folks who couldn’t afford to visit nice resorts at hotels’ rack rates. These are good candidates for Airbnb. But they aren’t most of us, or the vast majority of present Miami Beach guests.
What Airbnb clients do represent is people who now don’t visit Miami Beach but could come here via Airbnb sites, pay bed taxes, go to stores and restaurants and entertainment, and add to our economy. They won’t cannibalize the visitor industry but could expand it, leaving more money than the community now gets.
This competition might also encourage hotels to find efficient ways to place “remainder” space – rooms not otherwise booked – at marginally profitable prices at the last minute. On an average night more than 20% of Miami-Dade hotel rooms don’t get used. If web travel sites aren’t getting them booked now, the industry needs to find another way – those unbooked rooms being their best way to compete, or cooperate, with Airbnb.
In the end, Airbnb might build efficiency: unused rooms in homes and apartments can yield revenue while our hotels also generate more cash with their now-unbooked rooms.
In the newspaper industry we sympathize with hotels – we’re also a business with tangible products affected by competitors who operate on air alone. But rather than spending to maintain legal barriers to keep out competitors, our hotels would do well to find ways to either compete or cooperate with the lower end of the industry.
Moving toward 100% hotel occupancy 100% of the time – even with some lower rates – would be a great start.