As Airbnb Grows, So Do The Problems Cities Have With It
AUDIE CORNISH, HOST:
The home-sharing site Airbnb has grown so big that investors consider it worth $31 billion, more than the Hilton Hotel network. And as Airbnb has grown more powerful, it acknowledges that it has had more and more controversies with cities. The headline of an investigation published in Wired goes further and declares the company is executing a, quote, "guerilla war" against local governments. Reporter Paris Martineau wrote that story. She's here to talk more about it. Welcome to the program.
PARIS MARTINEAU: Thanks so much for having me.
CORNISH: So let's talk about what's at stake here - occupancy taxes, right? How do they work, and why has it become a problem for Airbnb?
MARTINEAU: Yeah. Don't change your radio station yet. It's actually an interesting subject. So when you stay at a hotel in the U.S., you're charged occupancy taxes. These tax dollars are especially important to cities in tourist areas in particular and are used to fund public works projects and to maintain the sort of things that attract tourists to their towns in the first place. Airbnb maintains that it isn't legally responsible for collecting these taxes. It says that that's its host's responsibility, but few do. Airbnb tries to remedy this by getting cities to sign these things called voluntary collection agreements.
CORNISH: Right. So these are agreements that say, look; we're going to make sure all of our Airbnb hosts - right? - the people who use the service, will collect these taxes, and we will make sure, local city, town mayor, to get that money to you.
MARTINEAU: Yeah. It makes it so that automatically whenever you check out, let's say, on the Airbnb site, the tax is automatically added in there like any other tax you'd normally pay. But these agreements give the company special protections from audits, shield hosts from city officials and makes it extremely difficult for cities to check to see if they're even getting the correct amount of taxes from Airbnb.
CORNISH: Help us understand what makes this guerrilla war. I mean, how does Airbnb go about trying to deal with cities?
MARTINEAU: Yeah. So Airbnb has kind of a multipronged approach they deploy in these sort of situations. Let's use, I guess, the case of Palm Beach County, Fla., for example. The first tactic generally is to mobilize their hosts or guests individually. In Palm Beach County, they send out a bunch of emails directly to the hosts saying home sharing is under attack; go to this city council meeting, and stand up for your rights. And this was in response to a county ordinance that would have forced Airbnb to collect taxes on behalf of their hosts.
In addition to that, Airbnb also uses lobbying often. Airbnb has a bunch of different PACs all over the nation that it pours money into. And then, in addition to that, when a county or city passes rules that Airbnb does not agree with, oftentimes Airbnb will file a suit.
CORNISH: Why are cities and towns having such difficulty fighting back, so to speak?
MARTINEAU: One of the reasons is Airbnb has this reputation among city officials as being very litigious. In the past five months alone, Airbnb has spent over a million dollars to overturn regulations in San Diego. But it's also sued Boston, Miami and Palm Beach over rules that require Airbnb to collect taxes or remove illegal listings.
CORNISH: You spoke with the head of public policy for Airbnb. What did they have to say?
MARTINEAU: The head of public policy for Airbnb, Christopher Nulty, says that Airbnb is responsible for paying taxes and that these agreements that it forms with cities show that and that Airbnb has a great relationship with cities.
CORNISH: What's at stake for cities and towns wrestling with this?
MARTINEAU: I think probably the most important to city officials and just communities at large is their housing stock. In the case of New Orleans as well as San Diego, Boston, countless other cities around the nation, officials told me that since Airbnb's popularity has surged, there are whole streets and blocks and neighborhoods where it's just basically a hotel district.
The houses that normally used to be full of families are now just full of people who come in for a weekend to go party or someone who goes there for Mardi Gras. It changes the face of the community, and it makes it much harder for residents to find affordable housing because investors are snapping up properties left and right 'cause they can make a killing from them.
CORNISH: Paris Martineau, reporter for Wired magazine, thank you so much for sharing your investigation with us.
MARTINEAU: Thanks so much for having me.[POST BROADCAST CORRECTION: In this interview, a guest incorrectly says that Airbnb has spent over a million dollars to overturn regulations in San Diego. The amount spent is actually more than a half-million dollars.]
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Correction April 6, 2019
In this interview, a guest incorrectly says that Airbnb has spent over a million dollars to overturn regulations in San Diego. The amount spent is actually more than a half-million dollars.