DC Councilmember Kenyan McDuffie has proposed legislation to tighten up regulation on the practice of listing homes and apartments through AirBnb. And in response, the company is waging a charm offensive prominently featuring a junk study full of misleading information.
What McDuffie has proposed would add the following rules to the use of AirBnb by a DC property owner:
- Require all users of AirBnb to obtain a business license and for AirBnb to check
- Require the host to be present during the rental
- Allow for homes to be rented out as a vacation rental, without the owner present, but only for 15 days total throughout the year
This would significantly restrict the use of the service back to the way it was originally pitched: as a way for people to have paying houseguests. This is still the way some owners use the service, but it has clearly been surpassed by the model whereby the host isn’t present. It is essentially a short term housing rental service. McDuffie’s bill would basically end that service in DC. Some might still list their homes for a couple weeks a year, but all the property owners who have created a mini-empire of empty homes for-the-renting would be out-of-business.
GM has seen how in Georgetown the business of buying homes and turning them into AirBnb’s has spread. Almost all of them are technically illegal since they require a business license as a hotel and zoning doesn’t permit that use in residential Georgetown without zoning relief. It’s not clear how McDuffie’s bill would impact that.
In response to this proposed legislation, AirBnb is putting on an ad blitz. And central to that is a study on the supposed positive economic impact AirBnb has on home-owners that the city. And it is junk.
What the study does is take the total number of days users have stayed at DC AirBnbs and multiplied it by $146 (supposedly the average daily spending by a guest). Then they add that total to the total revenues for AirBnb users. From that calculation they come up with $209 million and claim it represents the economic impact of AirBnb on DC. This is almost certainly wrong.
There is no attempt to determine how many AirBnb users were simply using the service instead of using a hotel. It likely a fairly high percentage! How many people are coming to DC because of AirBnb? Probably not many. So for almost all the beds occupied by AirBnb users, a bed sits empty in some hotel somewhere.
Moreover there is no attempt to determine what economic activity has been lost by properties being converted from owner-occupied or rental homes to AirBnb. For instance, there is a home on GM’s block that used to be a rental home, used throughout the year. Now it is an AirBnb and is used only occasionally. All the economic activity created previously by the year-round residents is gone and is very unlikely to have even been replaced by the economic activity of the tourists.
This is a common sleight of hand that is often used by boosters of public financing for professional sports stadiums. They only focus on the economic activity generated by the stadium and totally ignore what economic activity was prevented or merely shifted from other activity. It is a con job.
GM is personally not sure how AirBnb should be handled. McDuffie’s bill seems a tad too extreme, but more regulation is definitely needed. What is not needed is junk statistics from another Silicon Valley company trying to convince you it’s raining while they relieve themselves on your leg.