What Airbnb regulations could mean for entrepreneurs
In just eight years, Airbnb Inc. has amassed more than 3 million private home listings, making it bigger than the world’s largest hotel chain. And entrepreneurs such as Kama Cicero have come along for the ride.
Cicero, a veteran Brookline real estate agent, manages 18 Boston rental properties through Airbnb. In turn, Cicero’s company supports a small army of other service providers: housecleaners who scrub things down for the next guest, a general contractor to handle maintenance and repairs, and a pair of office support staffers who manage check-ins and handle guest complaints.
“By the time you’re done, after you’re paying this person, that person, it’s like I don’t know what’s left over,” Cicero said with a laugh. “It’s reciprocal. There’s money going everywhere. And all of these companies are very happy about it.”
This is the miniature economy that has sprung up around short-term rentals through websites such as Airbnb. But with public officials in Massachusetts and around the country embracing new regulations on these services, the ecosystem that helped the industry grow could be curtailed.
In New York, people who rent out apartments on Airbnb for short-term stays — under one month — now face hefty fines. Other cities have limited the number of homes that can be listed in one building or how many days they can be rented in one year, restricting revenue for landlords and property managers.
Boston City Councilor Sal LaMattina, who has scheduled a hearing Monday afternoon on potential city regulations, said he increasingly hears complaints of investors converting former homes into Airbnb rentals, potentially worsening a tight housing market.
“If you live in the city and you own property and you live there, I’m fine with it. If you want to rent a room in your residence to help you pay the rent, I’m fine with that,” LaMattina said. “I’m against investors buying up properties and turning them into Airbnbs.”
Officials in Cambridge are also considering legislation that would restrict short-term residential rentals, while Massachusetts state lawmakers are expected to consider their own bundle of new regulations and taxes on Airbnb listings when the Legislature reconvenes in 2017.
It’s part of a wave of regulatory pressure building across the country on Airbnb, the San Francisco company that has quickly dominated the online home-rental business. The legal backlash has been prompted by growing worries that property owners are turning traditional homes, apartments, and condos into furnished apartments meant for Airbnb and similar services, such as HomeAway, VRBO, and TripAdvisor-owned FlipKey.
They’re drawn by the possibility of a bigger payday, with some Airbnb property specialists claiming that they can get two to three times the typical rent by converting units to short-term stays.
Mashvisor, an online service that compiles real estate market and Airbnb data to help investors evaluate rental properties, estimates that a property in Boston’s North End that typically rents at $2,000 a month, for example, can fetch more than $4,000 per month on Airbnb.
Airbnb is aware that large property owners and management companies are operating on its service and doing well. In data recently provided to the Globe, the company said more than 10 percent of its properties in the Greater Boston area — those rented for six months or more — generated more than a third of Airbnb host income over the past year.
Airbnb has fought some high-profile battles with regulators in the past few years, arguing that old-school hotel rules could restrict its new take on the hospitality industry. But the company has taken a more conciliatory approach in recent months.
Earlier in December, for example, Airbnb released a “Policy Tool Chest” listing specific steps — from collecting hotel taxes to limiting the number of rentals per owner — that it has agreed to in different cities. In San Francisco and New York, the scenes of its toughest policy battles, Airbnb has agreed to prevent people from renting out more than one address, with some exceptions for “traditional hospitality providers.”
The company’s most persistent message has been that lawmakers should not restrict the ability of everyday homeowners to rent their properties on a more casual basis, distinguishing them from the commercial operators who control dozens or even hundreds of listings.
“This is a platform for the middle class, and it’s having a huge impact on people being able to make ends meet,” Airbnb global policy lead Chris Lehane said in a conference call with reporters in early December.
Smaller Airbnb entrepreneurs such as Cicero say some level of regulation, including hotel-style taxes and safety inspections, would help legitimize the growing industry. But they also worry that Airbnb’s drive to secure deals with local regulators could lead to rules that are too strict, squeezing them out of the market.
Cicero also objected to the idea that her business was sucking inventory from long-term housing stock. She said the landlords she represents tried to rent their apartments on the traditional market but couldn’t attract tenants even after dropping their prices — perhaps because of the flood of new high-end apartments and condos sprouting in Boston over the past several years.
If regulations forced out middlemen like her, Cicero cautioned, those individual landlords would just offer the properties on Airbnb one by one — without the expertise it takes to manage a quasihotel properly.
“It’s better to have people like us,” she said. “We’re not going to let in the people that are going to destroy the place, have wild parties, and ruin the integrity of the neighborhood. They’re going to be happy, and they’re going to spend money. It’s like [a] wheel that goes around and around.”