Posted: Marcus Varner | June 30, 2016


Airbnb Problems: 5 Ways the Crackdown Will Affect Your Next Vacation

airbnb problems

Airbnb is squarely in the crosshairs of the Powers That Be-and it's probably going to make it that much harder to find a good deal on lodging for your next trip.

That's right. Like Uber and other disruptors before it, Airbnb has been labeled public enemy number one by states like cities like New York, Berlin, and San Francisco. These cities are claiming that Airbnb owners are hurting rents in the areas where they operate, and so they've started charging fines and imposing other rules on how much these units can be rented out. Of course, this is part of a much older, but ongoing, struggle.

Plain and simple, many state and city governments don't like disruptive business models, like Uber and Airbnb. They can't tax them. They can't regulate them. They can't control them, for better or worse.

And surely, unions and other special interest groups have something to do with government's inexplicable urgency in cracking down on these upstarts. Taxi driver unions exerted all their power to get cities to crack down on Uber. In the case of Airbnb, it's hotel industry groups who are griping to public officials.

But, of course, the biggest question on your mind is probably, "What does all this political backlash against innovation have to do with me?"

First, it's yet another sad example of government overreaching into the free market against those companies that are actually shaking things up. That affects everyone.

But it also could have real consequences for your next vacation. Here the five biggest impacts Airbnb fans and other lodgers will see in the near future:

1. Rentals will get more scarce

airbnb problems

Consider that a pending New York bill is seeking to ban the listing of apartments on Airbnb, period. Those who violate this ban could be fined up to $7,500.

Berlin's anti-Airbnb law (known as Zweckentfremdungsverbot) will fine people who rent out whole flats up to $115,000. They're also encouraging people to report those they suspect may be renting out their flats.

One natural effect of this type of aggressive penalization by government is going to be a drop in supply. When cities start throwing around fines this big, it's bound to chase away some Airbnb hosts.

As someone seeking an Airbnb rental in San Francisco, New York, Berlin, or any other city with Airbnb legislation, you will almost certainly see the number of choices go down significantly.

2. Rentals will get more expensive

airbnb problems

Of course, for those Airbnb owners who opt to hang in there, things are going to get expensive-or at least, very risky. For example, if Chicago succeeds in passing an ordinance that would charge a 4% surcharge for short-term rentals and require the owners of those units to register (which will surely include registration fee), you can bet that Chicago Airbnb owners will pass these new expenses onto lodgers.

These won't be the only new costs for Airbnb owners. More of them-the smart ones, at least-will purchase insurance and other financial instruments to protect them when fines come calling. These costs will also be passed onto lodgers.

The remaining question then will be: will Airbnb lodging still be cheaper than hotel lodging, once all these new costs take effect?

3. In some cities, business as usual

airbnb problems

The good news is, the crackdown on Airbnb is not widespread. It seems to be confined to only a few large metro areas. And then there are those states and cities that have passed legislation that should keep Airbnb around for years to come, namely San Jose, Rhode Island, Denver, and Philadelphia.

For those seeking Airbnb lodging in these cities and most other cities, Airbnb will offer the same lower-priced lodging options that they always have.

4. Airbnb will likely crackdown on rental owners

Another possible outcome of the crackdown is stronger enforcement by Airbnb itself. For sure, it will be in Airbnb's best interest to avoid negative incidents in other areas that could spur more local and state governments to legislate against them.

On this point, Heather Kelly at CNNMoney commented:

"To convince cities and activists that short-term rentals can serve a common good, Airbnb might have to work harder to weed out sketchy landlords."

5. Airbnb won't be the only company affected

Airbnb might be the most notable company of its kind, but it's certainly not the only one. All of the legislation mentioned above will affect all short-term rentals, including Wimdu and 9Flats.

An Air(bnb)ing of Grievances

In the end, some local and state government will always react negatively to new business models that shake up the status quo. And the industries that get disrupted by them will always be there to raise fears. Luckily, the Airbnb crackdown is and will likely remain limited in in its reach.

Is Airbnb without its negatives as a provider of lodging? Of course not. But as long as local and state governments act to protect the rights of Airbnb and its hosts to rent out properties as they see fit, the free market, not the government, will be free to decide whether the company deserves to live or die.


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Written by Marcus Varner

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