Airbnb Goes Luxe
("Airbnb dives into ultra-high-end rentals. Here’s what brokers think," Real Deal - LA Real Estate News on Jun 2, 2019)
Last week, Airbnb announced it was rolling out Airbnb Luxe, a vertical featuring properties that rent for $1,000 or more per night. The properties on the Luxe website must pass a 300+ point inspection, including a strict set of standards, from chef-grade appliances to high end finishes. Renters using the service can take advantage of the services of a trip designer—like a concierge or butler—to arrange tours, transportation, and more. We expect that Airbnb’s foray into the bespoke property market will convert some former skeptics of the model who have historically viewed Airbnb as an accommodation option for cost-conscious travelers.
Disney Works its Magic for STRs
("Anaheim leaders are reversing their ban on short-term rentals that offer an alternative to hotels to tourists to Disneyland and the area," OC Register - Business News on Jun 5, 2019)
The Anaheim City Council is reversing its 2016 ban on short-term rentals after seemingly recognizing that travelers’ lodging demands are not sufficiently met in the area surrounding Disneyland. Although there is some nuance to how the ban reversal will be implemented—including that STRs in communities with homeowners associations will not be authorized—generally speaking, this is great news for STR owners and operators. One City Councilmember rationalized the decision in part by explaining that “Anaheim is supposed to be the city of kindness, not the city of bans.”
New Orleans Looks to Further Restrict STRs
("New Orleans inches toward tighter short-term rental regulations," Curbed - New Orleans on May 20, 2019)
The New Orleans City Council, after years of debating, is within 90 days of taking a final vote on new short-term rental regulations that will result in further restrictions on owners of short-term rental units. The new regulations would outlaw rentals of entire homes in residential neighborhoods and maintain a total ban on short-term rentals in popular neighborhoods including the Garden District and most of the French Quarter. We are interested to see if, upon passing the proposed regulations, New Orleans manages to succeed in enforcing the new law. Some jurisdictions—including Seattle—have found significant challenges in gearing up their enforcement efforts. This is a trend we expect will continue as local jurisdictions try to keep up with explosive STR innovation.
Airbnb poised for a reprieve in the EU
("Why Airbnb Could Escape the Uber Trap in Europe," Fortune Magazine on Apr 30, 2019)
The Court of Justice of the European Union is considering whether Airbnb was breaking the country’s housing laws by operating without an estate-agent license. The question is how much control Airbnb exerts over the transactions between hosts and guests. It appears, based on an opinion issued by the top legal adviser to the Court, the housing laws will be determined to not apply to Airbnb because hosts maintain significant control over each transaction, including decisions relating to rental rates and cancellation policies.
Guesty offers innovative and more streamlines tools for property management side of short-term rentals
("How Automation Technology Is Changing Property Management, Forbes - Innovation on Apr 26, 2019)
("How Automation Technology Is Changing Property Management," Forbes - Innovation on Apr 26, 2019)
Guesty is an innovative company thinking about ways to make the property management side of short-term rentals more efficient and seamless for operators and guests. It offers a unified calendar to manage properties listed on multiple online travel platforms, keyless entry options, task management systems for cleaning and repair teams and pricing tools.
This week’s Short-Term Rental Update features a number of interesting topics, including these highlights:
Short-Term Rental Operator Lyric raises $160M
("Airbnb Leads $160 Million Investment in Business-Travel Startup," Bloomberg Quint - Stories on Apr 17, 2019)
Lyric is a small, luxury apartment rental company working to change the narrative around short-term rentals. It prioritizes regulatory compliance in every jurisdiction where it operates. Of note, Airbnb, which has been deeply involved in regulatory compliance litigation nationwide, is leading Lyric’s latest funding round of $160 million. It appears that Airbnb is doing everything in its power to tidy up its house before a highly-anticipated IPO.
Airbnb Back in Court
("New rules don’t seem to be bringing Boston many short-term rental applications," Curbed - Boston on Apr 10)
Earlier this week, Airbnb was in court arguing that the City of Boston’s short-term rental ordinance that took effect in January is “draconian” and violates the Communications Decency Act. A Massachusetts federal judge questioned why the City of Boston shouldn’t be free to impose restrictions on Airbnb’s units as the City sees fit. The judge has yet to rule on the motion. As always, we will continue to monitor.
HomeAway and Airbnb Lose the Battle Against Santa Monica
("Airbnb Loses Major Fight Over California City's Rental Law," Bloomberg Quint - Stories on Mar 13, 2019)
On March 13, the Ninth Circuit ruled against HomeAway and Airbnb in a closely-watched lawsuit the two short-term rental platforms filed against the City of Santa Monica. The lawsuit alleges that Santa Monica’s ordinance regulating the short-term vacation rental market is preempted by the Communications Decency Act and impermissibly infringes upon each company’s First Amendment rights. The ordinance authorizes licensed “home-sharing” (rentals where residents remain on-site with guests) but prohibits all other short-term home rentals of 30 consecutive days or less. It also requires the platforms to collect and remit taxes and regularly disclose listings and booking information to the city. We expect that this decision will bolster the confidence of some local governments that have been watching from the sidelines to determine if strict short-term rental regulations will hold up in court. An obvious corollary is that the industry is likely to invest more resources in jurisdictions that have shown greater hospitality to these platforms. In our view, some regulation is both necessary and reasonable if short-term rentals wish to stake a permanent claim in the travel industry. We will continue to monitor where that line of reasonableness is drawn as the arguments play out in the courts and local legislative bodies.
Short-Term Rentals Continue to Gain Market Share
("Booking Holdings breaks down private accommodation revenues for first time, now at
20% of total," Phocuswire, Feb 27, 2019)
Alternative accommodations, including short-term rentals, accounted for 20% of the overall annual revenue for Booking Holdings, the parent company of Booking.com. Notably, 40% of Booking.com’s active customer base booked an alternative accommodation within the past 12 months. We see no indication that growth in the short-term rental market will slow down anytime soon.
- The industry is exploring ultra-short-term stays (in increments of minutes or hours) under startup Recharge, which allow hotels to rent out rooms for less than one day to people who need space for a quick nap. Recharge recently added private homes to its platform. We could see this model being useful for travelers with long layovers who need a place to leave bags and freshen up between flights. We’ll monitor to see if the concept gains traction.
("Short-term rental platform Recharge adds private homes" on Inman, Jan 29, 2019)
- The City of Victoria in British Columbia is ratcheting up its enforcement efforts against illegal short-term rentals. It started by educating short-term rental owners, then sending out warning letters, and is now preparing to dish out hefty fines to violators, which could amount to $500 per day. ("City of Victoria to start charging illegal short-term rental operators" on Vancouver Island Free Daily, Jan 21, 2019)
Florida Blacklists Airbnb Over Israeli Rental Policy, GC Denies Discrimination
Law.com - Legal News on Jan 29, 2019 (subscription required)
Florida Gov. Ron DeSantis Tuesday prohibited state agencies from using the short-term rental service. DeSantis had earlier criticized Airbnb for its decision to not list properties in the West Bank area of Israel.
Will Berkshire Pot Shops Create More Income for Airbnb Hosts?
Spectrum Local News - New York Capital Region on Jan 23, 2019
Airbnb hosts in Berkshire County earned $9.8 million in 2018, serving nearly 62,000 visitors. With two recreational marijuana shops already open in Berkshire County, and the potential for more on the way, 1Berkshire CEO Jonathan Butler said it's an opportunity for even more green in the area. "We're a visitor destination and this has the potential to bring in another audience of visitors," Butler said. And Airbnb hosts like Andy agree. He offers a whole house in Housatonic on the app, just a few minutes away from the shop in Great Barrington.
Regulation & Legal Developments
Ogden residents vote to regulate short-term rentals
Las Vegas Review Journal - Business on Jan 31, 2019
The Ogden high-rise in downtown Las Vegas, a case in point in the fight against illegal vacation rentals, has almost entirely relied on the city for policing for a decade. But now for the first time, enforcement is possible in-house. A supermajority of residents at the condominium tower voted to allow the homeowners association to regulate illegitimate short-term rentals, targeting a point of contention that had never been addressed by policy since the building opened in 2008. By a 189-29 vote as of Tuesday, the residents agreed to a revision to The Ogden’s bylaws that creates background checks for long-term lessees, boosts funding for expanded security and institutes a fine system for units found to be operating in the home-sharing space without the proper licensing from the city.
Va. bill would override Fairfax rule limiting short-term rentals to 60 days
The Washington Post - Local News on Jan 30, 2019
The debate over how to regulate the booming short-term-rental market found new life in the Virginia General Assembly this week under a bill that seeks to override how the state’s largest jurisdiction chose to handle the issue. Legislation on its way to the Senate floor would triple the amount of time homeowners in Fairfax County are allowed to take in tenants under Airbnb and similar websites, replacing a 60-day annual cap approved by the county last year with a 180-day limit.
Airbnb critics say blocked law would save housing units
Crain's NY - Retail News on Jan 22, 2019
A new report from critics of Airbnb and other home-sharing platforms claims New York City could lose nearly 11,000 housing units if new regulations on the companies don't go forward. A federal judge this month blocked a New York City law that would have subjected Airbnb and HomeAway to reveal detailed information about their business. The ruling comes as the companies challenge the new law in court. The groups New York Communities for Change and Tenants PAC issued a report on Tuesday that analyzed government and rental data. It found that without the law, 10,800 units could be diverted for use as short-term rentals. The groups maintain that home-sharing platforms drive up rental prices by reducing available residential units.
D.C. mayor declines to sign unanimously approved bill regulating Airbnb activity
Curbed - Washington DC on Jan 18, 2019
According to Mayor Muriel Bowser, the bill is overly restrictive and may be challenged in court. In a signal of her disapproval, D.C. Mayor Muriel Bowser has opted to leave unsigned a bill that prohibits homeowners from renting out, on a short-term basis, homes other than their primary residences. The legislation, which the D.C. Council unanimously green-lighted last November, also limits the total number of days per year that homeowners may rent out their primary residences when they are absent (for so-called “vacation stays”), to 90 in most cases.
Oceanside to crack down on short-term rentals with new program
San Diego Union-Tribune News on Jan 28, 2019
Oceanside plans to better regulate its short-term vacation rentals by hiring a full-time enforcement officer, requiring licenses and annual fees, and streamlining the tax collection process. The proposal outlined by first-term Councilman Chris Rodriguez got the City Council’s unanimous approval Wednesday, along with the stipulation that details of the program be worked out by city staffers and ready for the council’s consideration in 120 days. Like San Diego, Del Mar and many other tourist destinations, Oceanside has been looking for years for better ways to regulate short-term rentals.
Complaints Over Rowdy Partiers Could Revoke This Airbnb Manor's Business License
Colorado Public Radio - News on Jan 17, 2019
As communities grapple with how to regulate short-term home rentals on sites like Airbnb, residents in one Denver neighborhood gathered at a hearing Thursday to ask the city to revoke their neighbor’s license to rent. Garth Yettick has been renting his property on Marion Street, “Marion Manor,” through sites like Airbnb, HomeAway, VRBO and others since summer 2017. He argues the million-dollar home is his primary residence, while neighbors have said they hardly see him at the house.
Privacy concerns are front and center in this week’s Short-Term Rental Update:
Regulation & Legal Developments
- A federal district court judge in New York preliminarily enjoined from taking effect a New York City ordinance that would require home-sharing platforms to turn over voluminous customer data on a monthly basis. The court held that the ordinance likely violates the Fourth Amendment’s prohibition against unreasonable searches and seizures. ("Airbnb, Inc. v. NYC: Data Collection And Fourth Amendment Protection" on Forbes news, Jan 7, 2019)
We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.