In a sign of just how concerned Airbnb is about the threat of taxation and regulation, the company commissioned a report from HR&A Advisors, which concluded that Airbnb guests contribute $56 million to the San Francisco economy. The understandably rosy report also indicates that just 20 percent of the money Airbnb guests spend in San Francisco goes to lodging with the other 80 percent being spent as tourists on retail and food.
Airbnb is facing the threat of legislation at the local level in many major cities. It’s already illegal to rent out your apartment in San Francisco for less than a month, and in a seemingly hypocritical move, given that Airbnb rentals should be illegal, the city imposed its hotel tax on Airbnb hosts last year. Housing stock is notoriously short in San Francisco, as is hotel supply, and tenants rights advocates are concerned that landlords may use Airbnb to start turning apartments into short term rental properties. There have been anecdotal reports of the practice in New York where landlords decided they could make more money using Airbnb for short term rentals than renting their apartment monthly.
There’s already a bill on the table in San Francisco that would empower city panels to conduct investigations of landlords that are using their apartments as short term rentals. And for the many more people that are just trying to earn extra cash, the city is looking at allowing a certain number of rentable days a year to allow Airbnb to exist, but to prevent using apartments as hotels. Any way you slice it, Airbnb has a regulatory headache brewing in housing constrained cities like London, New York and San Francisco, and it’s fair to say that at the very least, Airbnb hosts are going to have to charge hotel taxes.