Hotel Industry’s Latest Airbnb Attack to Upend Short-Term Rentals

COMMENTARY Economic and Property Rights

Hotel Industry’s Latest Airbnb Attack to Upend Short-Term Rentals

Jan 2nd, 2020 2 min read
COMMENTARY BY
Romina Boccia

Director, Grover M. Hermann Center for the Federal Budget

Romina is a leading fiscal and economic expert at The Heritage Foundation and focuses on government spending and the national debt.
Travelers looking for unique accommodations at reasonable prices happily use Airbnb and other short-term rental platforms such as VRBO/HomeAway. stockcam/Getty Images

Key Takeaways

Consumers love the flexibility, price savings and amenities offered by short-term rentals.

Rather than impose heavy-handed regulation and ban short-term rentals, governments should respect property rights.

State and local authorities can enforce their own regulations and restrictions without imposing undue liability on a third-party provider.

Travelers looking for unique accommodations at reasonable prices happily use Airbnb and other short-term rental platforms such as VRBO/HomeAway. And people like me who share our homes with visitors sure do like the additional income.

There is one big problem, however. Hotels don’t like the competition.

Instead of vying for customers by improving their facilities or service—or lowering their prices—the hotel industry has chosen a different approach: lobbying state, local and national politicians to quash the competition for them.

Their latest attempt is through H.R. 4232, the PLAN Act. This federal proposal would strip rental platforms of legal immunity for moderating user comments posted on their websites.

Section 230 of the federal Communications Decency Act shields blogs, social media platforms and a variety of internet applications from legal responsibility for much of the content posted by the public, except in criminal matters. This provision enables platforms such as Airbnb, Facebook and Craigslist to moderate public postings without the risk of legal challenge for user-generated content.

For rental platforms, this means being able to post lodging offerings without first having to verify that users are in compliance with all possible local zoning ordinances, homeowner association restrictions, residency requirements, etc. Now the hotel industry is seeking to compel Airbnb and other rental platforms to remove listings and content in cases where homeowners are reportedly in violation of such rules and restrictions.

The PLAN Act would amend section 230 to remove liability shields for rental platforms, making them liable in civil suits and subject to prosecution if they fail to remove listings and content that violate local zoning ordinances and other possible restrictions. It asks that “providers of an interactive computer service” that facilitates “the lease or rental of real property” engage in policing of user-generated content or face liability for lawsuits for “failure to cure the alleged violation.”

It would be patently impossible for an online marketplace to ensure third-party compliance with 50 state laws and rules imposed by tens of thousands of localities. And that’s precisely the point of the bill. According to documents obtained by The New York Times, the American Hotel and Lodging Association is fully committed to “reining in” competition from short-term rental providers.

By reducing the number of alternative lodging options visitors can access, the hotel industry can effectively confine more travelers to their properties, increasing the industry’s ability to charge higher rates in light of less competition.

A study by researchers at Harvard and the Massachusetts Institute of Technology found that hotel profits decrease slightly in markets with Airbnb activity. It reduces hotels’ ability to raise prices, especially during peak travel periods. Of course, it’s a boon to consumers who benefit from having more options at reasonable prices.

The PLAN Act would enable states, localities and others to request that rental platforms remove listings and content for zoning and other possible violations, directly reducing the supply of alternative lodging options the public can access on such platforms.

Consumers love the flexibility, price savings and amenities offered by short-term rentals. Hosts value the ability to earn income by sharing unused space with visitors. Local businesses love being able to serve a broader pool of customers, especially during tourist season. Residents who prefer not to live next to short-term renters can join homeowners’ associations that prohibit the practice. In any case, private companies should not be forced to become zoning agents for state and local governments.

Rather than impose heavy-handed regulation and ban short-term rentals, governments should respect property rights. If problems develop, they can use existing nuisance protections to maintain order in residential communities. They should not succumb to hotel lobbyists eager to eliminate alternative lodging options. That’s corporate cronyism, the very antithesis of consumer protection.

Congress need not exclude online rental platforms from section 230’s liability safe harbor. State and local authorities can enforce their own regulations and restrictions without imposing undue liability on a third-party provider.

This piece originally appeared in The Washington Times