Will The Ban To Rent Rooms On Airbnb Succeed?

Airbnb Bello

By, Sue Hoyuela

Back in the 1920’s it was determined that alcohol was “bad.” Activists made enough noise to get it legally banned all across the United States (except Maryland) on the grounds that misuse or abuse of alcohol was dangerous and/or morally wrong.  As a result 1920 – 1933 is now known as the Era of Prohibition. But did that stop people from selling alcohol? No. Did that stop people from buying alcohol? No. Looking back on history, all Prohibition succeeded in doing was to force the industry underground into what came to be known as Speakeasies, or places where alcohol was bought, sold and consumed illegally.

Because prohibiting the sale of alcohol did not eliminate the demand for alcohol, the industry continued until regulators came to realize that they were missing out on lots of tax revenue. So they went back to the drawing board and decided to legalize alcohol and tax it instead.

By legalizing and taxing folks who rent rooms on Airbnb, city regulators create a win-win-win situation: homeowners, landlords and real estate investors thrive by making sales, travelers can spend money and buy the products that they want, and taxes are collected by the government to be used for the greater good. These are all things that stimulate a healthy economy by keeping the money flowing.

In the same way, the sharing economy is opening up new business opportunities for regular people to rent rooms in their homes to short-term guests through home sharing websites like Airbnb, VRBO, Wimdu, 9flats and many more. This is not an industry that will one day replace hotels by any means. Instead, it just offers another option for travelers who are a little more adventurous, who want to add a little spice to their trip by staying with locals.

Using a home-sharing site like Airbnb or VRBO is definitely not for everyone and the majority of travelers have no interest in them whatsoever. But it is becoming quite popular for Millennials, the younger generation who want to try something new, enough so that local governments are feeling the need to ban it because, again, activists are rising up and saying it is “bad.”

Arguments for why sharing one’s home with travelers is “bad” vary from place to place. Some cities have enough passionate nay-sayers that they have come to officially ban home-sharing. Most complaints have to do with noise pollution and parking disruption from short term guests in their neighborhoods. This could easily be solved with a little education for local hosts on the topic of “Neighbor Management”.  Responsible hosts who communicate with their guests and educate them on how to respect their local neighborhoods, would go a long way toward alleviating the stresses that some neighbors are experiencing now as a nuisance.

From a local government’s standpoint, they have two choices. They can ban short-term rentals, or tax short-term rentals.

For arguments sake, let’s say they decide to ban them and make it illegal to rent rooms in a private home. The local government then needs to begin a lengthy and expensive process. Meetings need to be held and laws drawn up to regulate the home-sharing industry in their area. New government departments need to be created and teams hired. These teams then need to be trained in the new laws, and policies and procedures need to be implemented for catching, fining and punishing offenders. This creates a lot of red tape and expense which, in theory, will be offset by the revenue brought in from the fines collected from the home owners who are illegally renting rooms. However, after the salaries, overhead, legal fees, court fees and time spent prosecuting, the net revenue may be less than anticipated.

As an alternative, the local government could approach Airbnb, VRBO or any other home-sharing site and ask them to simply collect and remit a tax from every booking directly to them each month. In fact, this system is already in place in many cities. For example, Airbnb can set up a new city’s tax collection services in just a couple of weeks. They add a snippet of code to each listing within the city boundaries and start collecting and remitting Transient Occupancy Tax right away. All it takes is a little communication and they are up and running.

History has shown that prohibiting an industry with high demand only causes it to go underground. Prohibition of alcohol in the 20’s was based on the dangers of misuse. When it comes to renting rooms in one’s house, the consequences are nowhere near as dire and the nuisances can easily be managed so as to create a win for everyone.

Leave A Reply (2 comments so far)

  1. chioma
    1 year ago

    This should not be ban or prohibited for it helps some of us that cannot afford to pay the hotel bills, even though there are some hotels that are cheap but their rooms are so bad and can even cause someone to be sick. They do not care, also in the hotels, their checking out time is not right , eg if your flight or bus time is 7pm, and you check out from the hotel at eleven am that means you will go to the airport or the bus station to stay instead of you resting till about an hour for you to leave and one can be so uncomfortable,Secondly, some hotels stink, no kitchen to use, baths very nasty but the ones that are ok are very expensive and at times nobody to help you so many inconviniences in the hotels.Airbnb is better for the rooms are clean and you have immediate attention and you can make your own food and check out anytime you want to. You host is willing to assist in anyway he can and more over it creates business opportunity to people.

  2. Ramona
    1 year ago

    Thanks for sharing Sue.