Regulate and tax airbnb…carefully

On August 11, 2017, in Latest News, by The Somerville Times

By William C. Shelton

(The opinions and views expressed in the commentaries and letters to the Editor of The Somerville Times belong solely to the authors and do not reflect the views or opinions of The Somerville Times, its staff or publishers)

This month concludes my seventh year as an airbnb host. I offer a room in a home, not a hotel. The difference for both my guests and I is significant, which I will get to. I’ll also get to airbnb’s impacts on Somerville, for good and ill, and how to keep the good while reducing the ill.

But first, I want to tell you about my time as a host. It’s been one of the more enriching experiences in my life. People from six continents, every race, disparate cultures, and an indeterminate number of sexual preferences have stayed with me.

With astonishingly few exceptions, they have been lovely guests – kind, curious, conscientious, considerate, communicative, and clean. I enjoy getting to know them. What I love most is conversations in which they let me see the world, my city, and even myself through their eyes.

Correlating distinguishing behavior patterns with guests’ nationalities is a favored pastime among some airbnb hosts. I don’t participate. Not because I think that it’s politically incorrect, but because I sincerely don’t see significant differences by nationality. The only thing that I can say with certainty is that Americans are the fattest.

My delight in being an airbnb host has become somewhat constrained as the company’s culture and operations have become more corporate. In their promotions and in a book, they like to tell the story about how three “ordinary guys” started providing airbeds and cereal as a way to pay their rent.

But airbnb is now valued at over $30 billion. It seeks additional capital only to fund its relentless growth. It can fund its working-capital needs from cash on hand because it collects fees when guests make reservations, but doesn’t pay hosts until the second day of a guest’s stay, which can be months later.

To spur growth while minimizing costs, airbnb has been encouraging hosts to treat their homes more like hotels, and to behave as unobtrusive staff. I first noticed this when they changed their methodology for designating “Superhosts.”

This status was originally intended to recognize hosts who were exceptional in their care for guests. To win it, I had to submit a long application, a video, and examples of having gone above and beyond for guests. Airbnb confirmed these examples and awarded the designation. But that required paying staff to do the work.

Three years ago I was notified that Superhost status would henceforth be based on an algorithm rather than qualitative analysis – number of bookings, response rate, reservation commitments, and guest ratings. This requires virtually no staff time.

Since my hundreds of reviews average 4.8 out of 5, I wasn’t concerned about losing my status. I was concerned about debasement of the vision that the company’s founders initially proclaimed and that I embraced.

I wrote them a letter that began, “There is only one thing that a host can do, so that a guest will remember his or her stay, ten years later, in an empty room, at dusk, and feel a surge of warm recollection. It is to pay attention—to see, understand, and care for the guest as a unique human being and in a uniquely appropriate way.” I received neither an acknowledgement nor a reply.

 

Then airbnb began nudging hosts to not screen their guests, but to allow “instant booking, like a hotel.” Every week or so I get an email telling me how many more reservations I would get if I complied. And now I get emails urging me to allow airbnb to control my pricing, algorithmically adjusting it to what it tells me is demand in my area.

Nevertheless, I believe that on balance airbnb still does good, unlike Uber, for example, which remains an amoral, lawless, and renegade organization, despite recent whitewash efforts.

And the good that it does is not just for me, but for my city. I send my guests a guide to my neighborhood when they make a reservation. When they arrive, I offer them a tour, acquainting them with our wealth of great places to eat, hear live music, appreciate art, sample craft beers, learn history, and enjoy our amenities.

I would estimate that my guests have contributed between $100,000 and $200,000 to a neighborhood economic cycle that is constrained by its lack of a daytime population. And when those guests return to their homes, they share their favorite Somerville gems with future travelers.

Airbnb has provided another benefit to Somerville. As long-term residents are priced out of the city, our community fabric unravels. But revenue from offering a room has enabled some to remain here. I personally know of two hosts who were thus able to avoid foreclosure. I know another, elderly host, whose landlord forbid her to continue the airbnb activity that enabled her to meet his ever-rising rent. She’s now gone.

It’s fair to tax airbnb revenue, given that city services help make Somerville an attractive destination. However, the tax should be proportionate to a host’s revenue, rather than a regressive one-size-fits-all room tax.

Today there are 324 airbnb listings in our city, charging from $20 to $699 per night. The average is $142, while the median is lower. Charging the same room tax to all hosts would be grossly unfair to hosts who offer, and guests who need, the lowest-cost accommodations.

And expecting hosts to collect the tax would be burdensome and awkward, while creating an unnecessary administrative cost to the city. In San Francisco, Portland, and Amsterdam airbnb calculates the tax, withholds it, and remits it to the cities. The Commonwealth should make this a requirement for airbnb’s doing business in Massachusetts.

The airbnb locations that are the most troublesome to their neighbors seem to inevitably be those that offer entire housing units and/or those that don’t have “adult supervision” on site. Moreover, in our inflationary housing market, entire units offered as short-term rentals reduce housing supply while inflating sale prices based on illegally obtained rental revenues.

“Illegally,” because Somerville has an ordinance that prohibits short-term rentals of entire housing units. It should be enforced. And aldermen might consider an amendment that requires airbnb hosts to reside where they are offering rooms.

Common-sense policy making and enforcement can ensure that short-term rentals are an asset to our city, rather than a liability.

 

6 Responses to “Regulate and tax airbnb…carefully”

  1. PeterH says:

    An excellent piece of writing, and worthy of placement in the national
    and international press. But would they take notice – any more than the
    politicians of MA – of the sensible solution for airbnb tax which is offered
    here? So, congratulations Bill Shelton for 7 years of 5 star rated service
    in the many hundreds of reviews you receive, and for being an
    exemplary example of how an airbnb host might treat their guests, and
    for doing all this while still offering a very reasonable price to access
    your home. Airbnb, as Bill says, can offer a solution to some of our
    residents in these financially difficult times. Airbnb can offer a solution to
    tourists who don’t wish to pay the exorbitant rates of many Boston hotels,
    and there is the real value of an airbnb host who provides guest services
    beyond those of a hotel. To the many students who come to Greater
    Boston for college, airbnb can offer reasonably priced accommodation
    while they attend college interviews, and when they look for apartments
    to live in. And all this – as Bill notes also – has many instances of a
    price range between $20 and $142 per night. And to the person/people
    charging $699 a night: I hope you have room for many guests in your
    house, or is this kind of pricing symbolic of the type of greed which
    wasn’t within the system of values which airbnb originally started with?
    For this kind of price we could stay at The Four Seasons Hotel. Thank
    you – again – Bill for this most excellent article, and I’ll wish you good luck
    for your next 7 years of airbnb up on Prospect Hill.

  2. Max says:

    Why should people running semi-legal rooming houses get preferential treatment on taxes? There are lots of Somerville homeowners who charge a rent much lower than market-rate. This helps actual residents of Somerville who are working to get by and have no extra time or money to rent an Airbnb. Why aren’t they taxed differently? There are lots of other examples of people who truly deserve a different tax structure, other than the self-serving people who are often doing a disservice to our neighborhoods by being Airbnb hosts.

  3. ritepride says:

    Airbnb should be taxed the same as hotels. Airbnb place the same and in some cases more burden on the taxpayers. Additional vehicles parking in the neighborhood. Costs to our Fire/Police/EMS/DPW, for additional services. Increase strain on water/sewer systems. Increased trash/garbage in our neighborhoods. Do Airbnb have the proper insurance like a hotel?

    The house fire on Appleton St. was reported in the news as an illegal Airbnb. A probable cause could be the improper disposal of a cigarette. Thus not only endangering the lives of the occupants but also the lives/homes of others living in adjacent homes. There should be proper permits required by the city and notifications to the neighborhood homes.

  4. Otownville says:

    Ritepride,
    I assure you any increase on water/sewer is being paid for by the homeowner and are they ever paying for it. As for other services, these airbnb guests are spending money in the city, coffee in the morning, dinner at night, a show in the evening etc. That all goes to somerville’s tax revenue. Airbnb for the most part is good for the city as long as it is done legally and not abused.

    Bill as for the “Americans are the fattest” I’ve seen you and you’re no wallflower. I guess is wouldn’t be a Bill S rant without a dig at the hometown team.

  5. MMR says:

    The homeowner may pay for water and sewer usage, but that’s just the tip of the iceberg. These homes are using residential parking permits for commercial use. They are making money on the inconvenience of other residents and they should be paying more for the privilege. The fire on Appleton Street is a perfect example of what can happen. It doesn’t do me any good that the ‘guests’ are buying coffee and dinner in the city if I can’t park on my street or have rats caused by poor garbage disposal.

  6. Old Taxpayer says:

    We need the same rules and regulations as hotels do. It should be on a level playing field. But I expect it will go the way of Uber and taxi companies with different set of rules and regulations for the same service.

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