Airbnb Challenges AH&LA on Tax Issues

Airbnb this week fired back at a series of American Hotel & Lodging Association reports alleging the company is trying to avoid paying taxes in Los Angeles and other U.S. markets.

The most recent of AH&LA's Pennsylvania State University-conducted studies of Airbnb, released last week, estimates that if Airbnb operators in Los Angeles followed the same tax rubric as other local lodging businesses in the region, they would have owed municipal governments more than $41 million in local taxes between October 2014 and September 2015. The report builds on an initial AH&LA study released in January.

Airbnb defended its practices in an April 4 letter addressed to AH&LA president Katherine Lugar, and provided to BTN. Airbnb global head of public policy Christopher Lehane wrote that the company has worked with governments across the country for more than two years to try to make it possible for Airbnb to collect and remit transient occupancy taxes on behalf of its hosts.

"In an effort to advance our commitment to pay hotel taxes, we have repeatedly offered to collect applicable hotel taxes on behalf of hosts in New York and Los Angeles, our two largest U.S. markets, dating back to 2014, as well as in any other municipality willing to work with us on the tax front," Lehane stated. "Had we been able to collect and remit taxes in New York and Los Angeles, we would have sent a combined $63 million in new revenue to two cities alone last year."

Lehane wrote that Airbnb cannot collect or remit taxes in Los Angeles until the city council reaches a decision on how to regulate short-term rentals, and further puts forth that AH&LA and other hotel industry players have worked to oppose policies that would allow Airbnb to collect or remit taxes in New York City.

For its part, AH&LA maintains the position that it wants a level playing field in which all lodging operators play by the same rules.

"The commercial operators that Airbnb and other short-term rental platforms facilitate ought to play by the same rules as the tens of thousands of lodging properties … that we represent all across the country, each of which pay their fair share of taxes, obey zoning and licensing laws and abide by strict health and safety regulations that protect communities and the traveling public," AH&LA senior vice president and head of government affairs Vanessa Sinders said in a statement to BTN. "In contrast to Airbnb, these properties do not pick and choose which laws they follow or when they pay taxes or how much they are willing to pay."

In 2014, Airbnb joined Washington-based trade group The Travel Technology Association, whose members include Expedia, Priceline and Sabre. Travel Tech and AH&LA have butted heads in the past over occupancy tax issues as they relate to online travel agencies.

Airbnb & Illegal Operators

One issue that Lehane's letter to Lugar did not address was the share of Airbnb revenue generated by multi-unit operators or full-time hosts.

The Penn State study found that full-time operators in Los Angeles from September 2014 to September 2015 accounted for 4 percent of hosts but more than 31 percent of Airbnb's overall revenue in the region. Multi-unit operators made up 19.4 percent of hosts and accounted for 46 percent of revenue, or more than $129 million, for the company. Airbnb in September 2015 estimated that 80 percent of entire home listings — in which a host is not present in a unit at the time of stay — in Los Angeles are rented less than 90 nights per year.

When asked by BTN whether Airbnb is doing anything to cull those multi-unit and full-time operator listings from its platform, an Airbnb spokesperson responded via email: "This study shows that the hotel industry gets what it pays for, which in this case is a specious study intended to mislead and manipulate. Airbnb is succeeding for the very simple reason that our hosts—the vast majority of whom are middle-class people sharing their homes in order to create supplemental income—provide guests authentic, transformative experiences."

Airbnb got into hot water in February when a report from Inside Airbnb, an independent site that tracks and provides data on Airbnb listings, found that Airbnb purged more than 1,000 listings in New York City before making data available to the public on Dec. 1, 2015. The data dump came after Airbnb published a Community Compact, pledging to release annual Home Sharing Activity Reports for key markets with such information as geographic distribution of listings, average number of days homes are listed and the safety records of listings, as well as work with cities to ensure the company is honoring local laws.

In a letter to New York state legislators on Feb. 28, Airbnb admitted to removing 1,500 listings that were controlled by commercial operators and that "did not reflect Airbnb's vision for our community. This was not the first time we removed listings from our platform. Over the past few years we have removed thousands of listings in New York City because they were not permanent homes, as well as for other quality issues."

Sinders' statement to BTN referenced the February revelations, "While pledging more transparency, the company's actions don't match their words," she wrote. "In cities across the country, Airbnb has proposed what amounts to an 'honor system' of tax policy and safety enforcement, but after admitting in February to scrubbing data before releasing it to the public in order to hide the number of unregulated commercial landlords using its platform, it's hard to trust them."

Some managed business travelers, meanwhile, are lending their trust to Airbnb. Recent research from Phocuswright found that 72 percent of business travelers who booked with Airbnb during the past two years are part of managed programs. Some 40 percent of business travelers who booked with Airbnb for a work trip during the past two years came from midsize companies that employed 500 to 1,999 workers.