Recently, travelers have often decided to book their stays using room-renting sites like Airbnb instead of using traditional hotels. Some people do this to save money, while others prefer the feel. In some instances, all hotels are booked because of a big event — like the Indianapolis 500 — and this is the only option available.
But questions have come up about this new form of lodging.
Hotels don’t like Airbnb because it’s a form of competition, and they say these online hosts don’t have to follow the same rules as hotel owners. Airbnb hosts don’t have to pay the same taxes or follow the same safety precautions. They don’t have to pass inspections or insure themselves the same way. They say it’s unfair. That it’s not a level playing field.
Governments are unsure of what to do. These Airbnb hosts aren’t paying the same taxes that hotels do. In some cities they aren’t contributing to the hotel/bed taxes, which often helps pay for convention centers and sports stadiums. Since they aren’t zoned as a commercial business, they aren’t paying the same property taxes that a hotel would. But city leaders across the country are wondering whether it’s worth their effort to try to crack down on Airbnb. That’s because laws can be hard to enforce.
“We joke that they’re like whack a mole,” said Brenda Myers, president and CEO, of Hamilton County Tourism, Inc. “Once you try to suppress them, they’ll pop up somewhere else, so it just makes more sense to work with them and adapt. Everybody is waiting for a solution. Including me.”
ASSESSING THE PROBLEM
Myers said the hardest part about trying to figure out what to do about Airbnb is that it can be difficult to get solid data on the issue.
“From a governmental perspective, it is generally recommended to regulate them because you at least know where they are,” she said.
The company itself isn’t handing over that information to counties, but there are companies like AirDNA that use computer technology to run reports to sell.
Myers said Carmel has had more than 1,500 “rooms” available on peak this year but they count a little more than 350 “hotel comparable rooms” in the county.
She provided a report that showed there are about 33 listings in Carmel on Airbnb. In October of this year alone, there were 985 nights booked in Carmel for entire place rentals out of 1,367 available nights listed. The average price for an entire listing was about $320 and about $93 for an average comparable hotel room.
I began to do my research by contacting some Airbnb hosts on the site for interviews, but the site does a good job of keeping their identities somewhat confidential. You can see photos of the hosts and their houses, but it doesn’t list full names, home addresses, phone numbers or e-mail addresses, and in fact if you try to inquire about a room the Web site automatically filters out any of that information to prevent people from booking without using the site. So if you browse the site, you might be able to guess which homes are the ones listed, but it’s not immediately publicized.
It’s also hard to know if someone is a frequent host on the site or not. The way Airbnb works is that you can do it as often or as little as you want. Many people do it once for a big event, like the Indianapolis 500, to make extra money, and never do it again. Others turn it into a business where they are hosting people five nights a week. But you can’t really tell how often someone is renting their rooms. I guess you could base it on reviews or word of mouth information.
DECIDING WHAT TO DO
I was curious what the City of Carmel’s position was on Airbnb, and so I asked Carmel Mayor Jim Brainard about it one day. The conversation came up because I saw that Scott Jones, the billionaire tech entrepreneur, decided to list his famous mansion on Airbnb. Brainard said Jones needed to get his property rezoned as commercial and that he planned to. I looked it up on the site and sure enough Jones had taken down his listing.
For a property like the Jones mansion, it’s easy to see the owner’s intention to use it on Airbnb as it received media attention. He also appears to have the money to rezone his property if he chose to do so.
But for other small-time hosts, the issue can be more complicated. Brainard said he has chosen to treat them all equally since most people didn’t sign up to live next door to a hotel when they bought their houses.
“Unless the property is zoned as a hotel or boardinghouse or has a variance, it cannot operate as a business,” he said. “Leasing rooms is a business. It is not fair to adjoining homeowners who relied on zoning when purchasing their homes. Conducting a commercial business may also subject the property owner to the commercial property tax rate, roughly double the residential rate.”
For Carmel, a letter was drafted in November to be sent to all Clay Township homes advertising on the site. No additional laws appear to be on the horizon and no such laws exist in Carmel, Westfield, Fishers or Noblesville.
I ran into Westfield Mayor Andy Cook at an event recently and asked him about Airbnb. He said Westfield gets by far the biggest share of Airbnb users in the county because of the travelers in town for events at Grand Park. He said Westfield is working on building more hotels, but when everything is already booked people often turn to Airbnb. He said he doesn’t really have the desire to go after these Airbnb hosts and crack down on the issue because the local hotels are already doing well and it’s more effort than it’s worth in his mind.
Jeffrey Brown, CEO at Schahet Hotels, which includes the Hampton Inn in Carmel, told me he thinks the issue isn’t about the person who rents out their rooms once in a while for a big weekend like the Super Bowl or the Indianapolis 500. He said it’s more about the people who are renting their rooms out constantly and running a business out of their home. Some cities across the country have attacked that issue by limiting the number of days out of the month or days out of the year that a host can rent a room out, but, again, that can be hard to enforce. How do you know if someone is doing it all the time or just once in a while? Brown said there are instances where you’d easily know, especially if neighbors provide information, and without any law on the book there’s nothing to enforce. Hard to enforce is better than nothing to enforce in his mind.
“There are a lot of laws on our books that are tough to enforce, but we still make these things against the law,” he said. “It doesn’t make it right.”
Some cities have made prohibiting hosts from renting out a room for fewer than 30 days out of the month. So that basically means you can sublet an apartment or have a tenant or roommate but you can’t have traveling guests for a night or two. Some have outlawed it based on zoning. Others use homeowners association covenants or rental agreements to crack down on Airbnb hosts. It’s a much bigger problem in places like New York City, San Diego, San Francisco and Chicago.
A side issue from taxation and fair competition is safety. Many people have e-mailed me saying they wouldn’t want to live next to an Airbnb because they don’t know who would be coming and going from the property and they like to know their neighbors. A hotel is different, since guests have to provide proof of identity, there are security procedures in place and most hotels aren’t mixed in with residential properties.
Airbnb hosts say safety isn’t a concern. They say they can ask for deposits and verify identities of guests and they have separate doors with locks. Maybe an item or two has been damaged, but they say they haven’t had any rowdy parties.
“I still worry a little bit, but I’ve taken precautions like adding a security deposit,” said Kari Souers, who has rented out her ranch-style Carmel home. “Guests pay the deposit up front, and I have three days after they leave to make a claim, or they get the deposit back. The only negative experience I have had is when a guest’s child drew on an (Indianapolis Colts player) Anthony Castonzo autographed football with a red Sharpie. Now I’m smarter with my valuables and take important documents, photo albums, etc. with me when I leave the house.”
Brown said security concerns aren’t just about guests, but hosts as well. He said his daughter stayed at an Airbnb because her work booked it and she didn’t feel safe leaving her belongings in an unlocked room with people she didn’t know.
REBUTTAL FROM AIRBNB HOSTS
After I heard from Mayor Brainard that he planned to tackle this issue, I thought it was only right to get some feedback from those who would be affected.
One host, Pamela Schneider told me: “Airbnb provides something that hotels cannot, a home atmosphere to make memorable events special … like family gatherings for weddings, anniversaries, a respite place for a family who is undergoing cancer treatments at a nearby hospital, along with weary business travelers who enjoy an evening beverage by the fire after a long day. Many times hotels in our area are filled, and we are able to keep travelers in our city and recommend favorite restaurants like Charlestons, Muldoons and Bub’s Burgers to our guests. Airbnb is about connecting people together, coming as guests and leaving as family. Airbnb provides travelers with a freedom of choice … to stay in a castle in Italy, a treehouse in Oregon, or a log home in Carmel.”
She tried to make an argument that her taxes are already high enough without being forced to rezone as a commercial business and that her taxes have doubled over the years. Brainard disputes that assertion, and he provided data to show that on average most homes have seen their property taxes decrease since he took office.
Another host, Karen Kedanis, said Airbnb is totally different than staying at a hotel, so it can’t be regulated the same.
“I’m not competing against the hotels: I offer something totally different, a choice for something more personal. I offer an experience in someone’s home, a slice of Carmel culture. Many people have been against Uber. But it is obviously a very successful business model that people want. The free market should dictate, not heavy handed government. There were people, and still are, that opposed roundabouts because they do not like change. But Carmel has been innovative and accepting to new ideas. Airbnb is an innovative new idea, like Uber. Airbnb is home sharing. It’s giving people a choice not to stay in a hotel but to stay in someone’s home. We live here. Everyone wants a choice, just like uber or Lyft.”