ORLA Advocacy: Leveling the Field on Short-term Rentals
Short-term rental companies like Airbnb claim they simply help regular folks occasionally rent out a spare room in their home to make some extra money. A growing body of research reveals a significant – and rapidly growing – portion of Airbnb’s revenue in major U.S. cities, including Portland, is driven by commercial operators who rent out more than one residential property to short-term visitors, essentially operating just like a hotel. Closing this 'illegal hotel loophole" is the only way for state and local governments to protect communities and ensure a fair and competitive travel marketplace.
ORLA is engaged in several discussions with cities and counties across the state addressing short-term rental issues. In February 2018, Portland settled a longstanding lawsuit with the vacation rental website HomeAway and its affiliates over unpaid lodging taxes. The settlement requires HomeAway to begin collecting city and county lodging taxes on behalf of its Portland customers, and will allow customers to register for a short-term rental permit online. Read more. Update: As of September 2019, the City of Portland and Airbnb have reached an agreement to share data on rentals to allow the City to enforce its permitting requirements. A ruling earlier in 2019 by the U.S. Court of Appeals for the Ninth Circuit upheld the City of Santa Monica’s short-term rental ordinance against a challenge by Airbnb, leaving the door open for other municipalities to adopt similar ordinances. This new agreement between Airbnb and the City of Portland is expected to reduce the number of unpermitted rentals.
Key Findings CBRE Hotels’ Americas Research released a new analysis, Hosts with Multiple Units – A Key Driver of Airbnb Growth, which adds to the overwhelming weight of evidence showing that short-term rental companies, specifically Airbnb, are providing a platform for commercial operators to run illegitimate, unregulated and often illegal hotels in communities across the country.
Some of the data revealed in the study showed:
In the U.S., hosts renting out two or more entire-home units generated nearly $2 billion in revenue in 2016. In the 13 markets highlighted, revenue reached $700 million.
81% of Airbnb’s U.S. revenue – $4.6 billion – comes from whole-unit rentals (those rentals where the owner is not present during the time of the rental), rising from 78% in the prior year.
Each of the 13 cities studied saw an increase in the total number of listings by multi-unit hosts.
In almost every market examined in the report, the percentage of revenue from multi-unit hosts increased from 2015 to 2016.
Revenue growth for entire-home properties increased by an average of 76% in the 13 markets studied.
Another report, Airbnb Agreements with State and Local Tax Agencies, reveals how Airbnb agreements create risks of reduced compliance with lodging tax laws, with state and local tax laws more generally, and with local land use, housing and building safety laws.
Both reports, along with additional research, are available to ORLA members in the Resource Library of the Member Portal (log in required):
Hosts with Multiple Units – A Key Driver of Airbnb Growth
Airbnb Agreements with State and Local Tax Agencies
Establishing Oregon’s Compliance Framework Oregon should pass legislation that requires short-term home rental properties to register with their local taxing authority before they are marketed through online exchange sites. Additionally, for jurisdictions that have a business licensing program in place, operators should secure the proper licenses. While state law needs to acknowledge that some smaller municipalities do not have the resources to carry out inspections for consumer protection, the law can define when and where such inspections are appropriate.
During the business registration process, operators should also show that they have notified their insurance carrier and lending institution that a commercial transaction is occurring on the premises. In areas where there aren’t enough local resources to monitor safeguards, insurance carriers will most likely require coverage for protection and liability – beyond a customary homeowner policy. And finally, operators should report and remit their room tax collections.
Short-term Rental Tools and Information As part of the ongoing effort to fight back against Airbnb’s litigation threats against cities and states that pursue short-term rental regulations, Santa-Monica based law-firm Zacks Freedman & Patterson has released fact sheets on their website summarizing the legal rebuttal arguments made in the recent op-ed in Law360 (attached) by managing shareholder Andrew Zacks entitled, “The Law Will Not Help Airbnb Evade Rental Ordinances.”
Reining in “Illegal Hotels” Across Oregon there is growing concern that some home sharing platforms are enabling the proliferation of “illegal hotels,” where commercial operators list multiple units in the same region of the state or list units for extended periods of time without consideration for both local and state law. This unregulated commercial activity often compromises consumer safety, impacts affordable housing supply across Oregon and endangers the character and security of residential neighborhoods.