Airbnb is an example of the sharing economy at its most dynamic. In the seven years since it was founded in San Francisco, the online company has smartly connected two underserved audiences — travelers looking for cheaper alternatives to hotel rooms, and homeowners seeking to earn extra income by renting out space to visitors for short-term stays.
Fifty million people worldwide have used the service, which features 1.5 million listings, and revenue this year is forecast to top $850 million, up from about $250 million in 2013. That explosive growth has attracted the attention of elected officials, neighborhood groups, the hospitality industry, and housing advocates. Their concerns include the removal of rental units from already tight housing stocks, unfair competition for hotels, tax avoidance, safety, and an influx of transients into neighborhoods.
Many of those same issues have surfaced in Boston, where Airbnb lists about 1,500 properties. The Globe’s Matt Rocheleau reported last week that 15 percent of the city’s Airbnb hosts advertise more than one rental space. That indicates they may be running so-called rogue hotels — collecting money for residences they don’t live in, but use specifically for short-term rentals.
Legislation cosponsored by Massachusetts state representatives Aaron Michlewitz, a Boston Democrat, and RoseLee Vincent, a Revere Democrat, would establish regulations for short-term rentals modeled after those enacted in San Francisco. The proposed law offers a sensible framework for short-term rentals. It defines a host as someone who has lived in an apartment, condo, or house for at least 60 days — a provision designed to prevent illegal hotels. Hosts would have to register, obtain a license, and show they have adequate insurance. An excise tax would be charged for each rental, Michlewitz said, and could be “collected relatively easily from the hosting platform, like Airbnb, as it is in other cities across the nation.” The tax would be similar to the local room-occupancy excise the state already allows to be levied — money collected would go to communities where the rentals are based.
Michlewitz says the bill offers protections to hosts and renters, while allowing Airbnb — and similar platforms, such as FlipKey — to “grow and flourish.”
Christopher Nulty, an Airbnb spokesman, said the company supports regulations that are “simple and clear,” but they should be made at the municipal level. “Places like Cape Cod and Boston look very different, and thus the same rules likely don’t make sense,” he said.
Massachusetts — a hotbed of innovation — should encourage businesses like Airbnb. But no company, no matter how cool or novel, should operate outside of basic regulations that ensure consumer safeguards. Establishing some uniform ground rules will soon matter, because as Michlewitz notes, “The sharing economy is going to become more of the norm.” The state legislation doesn’t appear to be overbearing and, according to its sponsors, would allow communities to set their own taxes on short-term rentals.
Technological advancements pose challenges to conventional ways of doing business. In some cases, government should let free markets have their way. In others, such as short-term rentals, modest intervention is necessary. A few old-style rules likely won’t slow the new economy’s sprint to the future.