higher housing costs for city residents, loss of tax revenue
February 4, 2019 9:30 AM   Subscribe

“The debates about whether and how to regulate IBSFs (Internet based service firms) often involve theories about their economic costs and benefits. This report aims to inform the debate by testing those theories. Specifically, it assesses the potential economic costs and benefits of the expansion of one of the most well-known of the IBSFs: the rental business Airbnb.” The Economic Policy Insitutue provides an in-depth study of the economic costs and benefits of Airbnb and how cities should respond to it and other IBSFs.
posted by The Whelk (24 comments total) 14 users marked this as a favorite
In a skim of the article I’m surprised to see no comment on the life safety implications. Hotels have a higher standard of required construction safety than long term lodging or apartments precisely because there is no expectation of familiarity by the occupants of their space. If it were safe to build hotels the same as apartment buildings then hotel construction and thus room rates would be cheaper.

We have our current rules because fatal hotel fires used to be a not uncommon event. By the late 1920s it was enough in public awareness that fire safety was a part of hotel advertising. I’m hopeful that we don’t need to experience AirBnB occupant deaths to realize that the rules for those units should match hotels and not apartments. Best case is that the current rules are overreaction and we could relax hotel construction to apartment standards. Either way, this is a not insignificant part of the unlevel playing field from regulatory dodge.

Even more egregious is lack of ADA compliance.
posted by meinvt at 9:56 AM on February 4 [16 favorites]

This article is thorough and devastating. It particularly guts a study commissioned by Airbnb to show their economic benefit, concluding the section: "In short, the results of the NERA study should be ignored by policymakers seeking an accurate sense of the scale of Airbnb expansion costs and benefits."

I like that it shows that the three main Airbnb benefits (revenue to property owners, reduced cost to travellers, increased economic activity in cities) are respectively disproportionally available to the wealthy, only a redistribution of benefits, and a sham. Then once it's demolished the benefits, it can really get into the costs.
posted by Homeboy Trouble at 10:54 AM on February 4 [10 favorites]

They find that each 12 Airbnb listings per census tract leads to an increase in asking rents of 0.4 percent.
Holy shit. That sentence right there should be the death knell of thee whole industry. The rent is too damned high? Guess why. Add to that the disparate impacts on white vs. minority populations (if you only read one bar graph today, make it this one), and the fact that every AirBnB rental is one less hotel occupancy tax paid, and I don't see why any city would allow them to operate. Boston has made several increasingly-loud attempts to forbid them from operating here, but now that there's data, I'm going to start making a racket to my city councilors.
posted by Mayor West at 11:03 AM on February 4 [9 favorites]

Property owners do benefit from Airbnb’s capacity to lower the transaction costs of operating short-term rentals, but the beneficiaries are disproportionately white and high-wealth households.
In my city - and specifically in my neighbourhood - AirBnB rentals are taking entire housing units off the long-term rental market, at a time when we have a housing crisis. City council even passed regulations to limit the rental of entire units, and rooms not in your primary residence, but they can't be enforced because of an appeal.

I have so many friends who use AirBnB (and Uber, Lyft, etc.) They are the kind of people who care deeply about social issues, until it means changing their purchasing habits and going with the more expensive / less convenient but legal, regulated and (in the case of local hotels) usually unionized options. I just don't understand the disconnect.

I don't think that individual actions can solve most - or any? - of our societal problems. But actively supporting bad things really can't help.
posted by jb at 11:11 AM on February 4 [12 favorites]

Really just ban the whole thing. Make "ride-sharing" companies apply for medallions, make "temporary rental" companies have hotel licenses for all of their listings.
posted by tobascodagama at 12:21 PM on February 4 [6 favorites]

I just don't understand the disconnect.

Outside of specific social and intellectual circles, I just don't think people think about it much. The thing that tends to tie a lot of these services together is that the traditional competition is something people already don't like for various reasons. People don't like traditional taxis because they had a bunch of bad experiences with shitty drivers, or they remember all the times taxis drove past them when they were trying to hail one, or they hate having to wonder if a cab will take cards and/or if they'll whine about it. People don't like hotels because of that one time a hotel room smelled bad, or were jerks about check-out time, or just because they wanted a more "authentic" experience and didn't like the idea that they shared a building with a fanny-pack-wearing Look At Me I'm A Tourist vacationer.

It then becomes easier and more socially acceptable to use the new terrible thing because hey, the old thing is also terrible, and this one's more convenient and "nicer," so why not. I don't use Uber/Lyft and I don't use Airbnb, but I've largely given up on convincing other people to do the same and if our joint plans involve those services I don't really raise a fuss. People don't quite look at me like I'm insane anymore, but convenience and "well everything else is also terrible" win every time whenever I bring it up.
posted by chrominance at 12:58 PM on February 4 [10 favorites]

People don't like hotels because of that one time a hotel room smelled bad
Also hotels tend to be in absolutely terrible locations (La Qunita is Spanish for "next to Denny's", not "in the coolest neighborhood").

I'm still not convinced that these services are as terrible or as great, and really not by this lazy article. Oh really? The actual costs of transportation, highway, and air-travel, both of which are MASSIVELY SUBSIDIZED almost to their own detriment, are not major portions of the expense of travel? Oh thank you for that piece of info. The benefits of property ownership in wealthy holiday metros mostly accrues to white property owners? Thank you for that insight.

Also attempting to balance your cities' budgets on the backs of visitors can easily be gamed, but that one I'm much less sympathetic to. IOW, yes, you should pay equal taxes to renting an AIR BNB vs a traditional hotel room.

Also, NYC (for example) has about the same number of hotel rooms as Orlando (and both by far the most), so acting like this is some kind of individual failure rather than governmental/corporate monopoly is also not really correct.
posted by The_Vegetables at 2:40 PM on February 4 [1 favorite]

To go farther, AIR B&B revenue in cities that collect it is the 3rd largest general revenue source, generally moving towards either sales tax or property tax, which ever is the lesser depending on the specific community. Wouldn't surprise me if they are surpassed in many vacation metros in the next decade.
posted by The_Vegetables at 2:44 PM on February 4

this lazy article

that's a weird description of the press release summary for a 27 page economic paper that includes a review of the relevant literature around the subject & some original analysis.
posted by feckless at 5:02 PM on February 4 [8 favorites]

I mean, you might disagree with the analysis, but it ain't a clickbait listicle.
posted by feckless at 5:03 PM on February 4 [6 favorites]

People don't like traditional taxis because they had a bunch of bad experiences with shitty drivers, or they remember all the times taxis drove past them when they were trying to hail one

This is not a small thing? I try not to use ride services if there's another comparable option, but also I've never been able to get a cab to go to mother's address on the south side of Chicago (and I'm White! I have it a lot easier than a hell of a lot of people!) Taking a Lyft to her house and getting someone who was super excited to pick me up because he lived a few blocks away was a goddamn revelation. I got home and I didn't get shamed for it. I'm for better oversight and regulations for these services, but let's not pretend that there aren't major issues with cabs.

(Before Lyft we used an unlicensed cab number, but they all drive for Lyft/Uber now)

Hotels vs Airbnb always seemed like they were different services to me (I'll use VRBO first, which I assume has the same systemic problems), but asking people to give up Airbnb is a lot less tricky of an issue than giving up Lyft.
posted by dinty_moore at 6:54 PM on February 4 [2 favorites]

I just don't understand the disconnect.

Because I'm broke.
posted by MisantropicPainforest at 7:33 PM on February 4 [1 favorite]

that's a weird description of the press release summary for a 27 page economic paper that includes a review of the relevant literature around the subject & some original analysis.

Well I just gave 3 reasons why the 'economic analysis' was lazy, but hey believe what you want. I'll give a 4th. They say that 'noise' is a reason why hotels are away from residences, but any serious economic analysis would show that beer bong Brad is not the primary hotel guest in any city. This analysis is the equivalent of the simplistic analysis of the city growth and development in the SimCity/Model Metropolis thread.

Or I guess we could just heavily regulate residence hotels and cabs without any structural changes. I'm sure that will work perfectly.
posted by The_Vegetables at 7:46 PM on February 4

Because I'm broke.

when AirBnB, Uber and Lyft got started, my SO and I were living on 17k a year.

Maybe I just really don't get the entitlement because I was raised to think of taxis and hotels as super special things you only got to use on special occasions. To this day, I will ride a bus home at 2am rather than take a cab. The idea of taking a cab anywhere you don't absolutely have to (like the airport at 4am, or to the hospital with a sick relative) is a middle class choice, at least within any city with half-decent transit.

Really broke people don't take private cars within cities or vacations that don't involve tents.
posted by jb at 8:45 PM on February 4 [2 favorites]

Oh thank you for that piece of info... Thank you for that insight.

Well I just gave 3 reasons why the 'economic analysis' was lazy, but hey believe what you want. I'll give a 4th.

I mean, your reasons are mostly just you agreeing with their points but in a snide tone like a teenager on a 90s sitcom. Someone's coming across lazy here, and it's not the lengthy, detailed economic article. The one new fact you bring, that AIR B&B™ revenue is somehow larger than anything I've ever seen could really use a good citation.

They say that 'noise' is a reason why hotels are away from residences, but any serious economic analysis would show that beer bong Brad is not the primary hotel guest in any city.

Phew, glad we're away from simplistic analysis. Hotel guests frequently arrive, leave and walk and talk in the halls earlier and later than average residents in an apartment building. They're not bound by the social contract in the same way that residents are. Even if a party crowd is 5% of the Airbnb market - that's still one party every three weeks if you live next to an Airbnb unit. (Note that Airbnb has higher use by holiday makers than business people, and one advantage Airbnb often offers is multi-bedroom units conducive to a large group)
posted by Homeboy Trouble at 8:55 PM on February 4 [1 favorite]

Oh man, if your idea of a cheap poor person holiday is camping, I don't think we can even start to talk about cultural class norms, because they are obviously different from where some of us are living.

(camping without a car? difficult. camping equipment? expensive. the appeal of camping? can be somewhat lost on some folks who find having stable heating situations as privilege, also culturally just not a thing one did or knew anyone else who would do it and there's the sneaking suspicion that you'd do something wrong and get the cops called on you)

Staying with a family member or friend is more what I'd expect from a low cost vacation. Being able to get your own room does feel like a goddamn privilege after years of air mattresses and couches, though, and I'm really uncomfortable condemning poor folks from wanting that and taking it where they can afford it, instead of laying the blame on the companies and governmental structures that incentivize vacationers over long-term renters.
posted by dinty_moore at 9:09 PM on February 4 [2 favorites]

You can camp in relatives backyards - as I did before I met someone who could drive.
posted by jb at 5:43 AM on February 5 [1 favorite]

You're right that camping is a step up from the holidays I had when we were on welfare (most of my childhood). When I think to the holidays then, they were going to my grandparents for a week, or going down east with my other grandparent (where we had family).

What I'm objecting to is people using their feeling like they don't quite have enough to justify participating in an abusive market. When I was merely "broke" (<25k) and not living on welfare, the few holidays I had were camping - or staying in hostels, or frankly, actual B&Bs, which are comparable in price to AirBnB - and you can get a private room, sometimes a private bathroom (which now that I'm 40 and experiencing the 3am pee is worth so much more).

Our purchases still matter. Five years ago, I was on minimum wage. I still wouldn't shop at Walmart (really is the cheapest option) because of how they treat their workers.

When it comes to food, we don't have options. We have to eat. But vacations are a choice and we can make better choices.
posted by jb at 5:54 AM on February 5

Or you can stop blaming the poors for systemic issues and instead push to legislate to prevent these sorts of abuses.
posted by dinty_moore at 6:02 AM on February 5 [1 favorite]

beer bong Brad is not the primary hotel guest in any city.

Uhhh, new orleans here, reporting for duty.
posted by eustatic at 9:10 AM on February 5 [2 favorites]

Or you can stop blaming the poors for systemic issues and instead push to legislate to prevent these sorts of abuses.

I did - I support Councillor Cressy and the efforts to regulate AirBnB in Toronto (see the links I posted above). And our efforts are being undermined by AirBnB hosts appealing any attempt to regulate them.

What I was saying is that it's no good to say you care about something like housing inequality or the growth of gig (aka unprotected, unstable) work - and then immediately become the customer of the companies that are making shitloads of money, particularly when the purchases are entirely discretionary (unlike food or clothing, for example).

I'm not blaming "the poors" (as you pointed out, no one who is using these services are poor, because the actually poor - like my brother on disability or my recently homeless relative - can't afford them. I'm blaming the rest of us who have choices about how we spend our money, and I'm watching most of my moderate income but not poor friends - and also a lot of friends with excellent incomes - make choices that are actively bad for the rest of the city, and especially bad for lower income people.
posted by jb at 2:26 PM on February 5 [2 favorites]

I've had money, not much really but enough to get a safe hotel without bedbugs. I need A) a bed B) a place to leave my bag C) a shower. That's it. I have ear plugs so the pipes can rattle away. It was easier to find that hotel before the internet became widely used by everyone, and not just myself. And, plus, I don't have quite so much money anymore.

Solution: hostel.

There are good and bad experiences in hostels of course but for hostels it seems the internet is a real friend, through Yelp and whatever else you can get a good idea of what is waiting for you when you arrive late and cold and tired. Many hostels -- most? -- have a room you can sleep in on your own, or with a travel companion, it'll cost you more but not what a hotel will cost you, not by a long shot.

There is a hostel in Houston that is just great, exactly where I want to be when in Houston, closse to museums and to fun restaurants and The Jung Center and these huge live oaks shading everything, and live oaks are I think the friendliest tree around, you'll feel good just walking the neighborhood, though you'll be sweated through by the time you reach the sidewalk -- sorry. (Did you know that Houston is below sea level? It's essentially a swamp. A swamp with good museums but a swamp nonetheless.) Houston has a truly great radio station -- KPFT -- and they are on the same block as the hostel is, it's fun to drop in and say hi. The hostel itself was at one time the mayors residence, huge live oaks, a nice pool, a pool table, etc and etc. It's like major clean, it's really run well.

There is a hostel in San Franscisco -- Ft. Mason -- that is exactly where I want to be when in SF -- step outside the door, take ten steps and you're looking at downtown to the right, the bay when looking directly ahead, the Golden Gate if you crank your head a bit left. I've been extraordinarily lucky in trips to SF, way more sunny days than cloudy, much less rainy and/or bone-chilling winds.

I've got a good eye for a nook, a corner that's right there in the open except that it's not quite: I've a place I *love* to sit, and write, and scratch myself, look out at the bay, then lean back close my eyes, live in my heart with Otis Redding "Dock Of The Bay", a song I've loved since the first I heard it but couldn't know young that I'd ever sit there on gorgeous sunny days, watching the ships roll in, watch them roll away again. I just can't recommend this highly enough -- find you a nook, sit back, dream a little bit, consider Otis Redding's voice, that amazing, almost melancholy yet totally peaceful song he co-wrote, and think also of Jack London's words -- with eyes closed I can almost see London sailing the bay, I can damn sure feel him.

The deal is that mostly what I need is a bed and shower, place to brush my teeth and be in with a nice internet connection. Hostels provide that, plus generally I get to meet some interesting people there also -- the Ft. Mason hostel has this common area with a really sweet fireplace that is great on chill, rainy nights, a book or a tablet and pen or a laptop. Sit back, read, write, but keep an eye open, might be that there's someone there that wants to talk, or needs to.

For fun, and a clue, look at their shoes -- shoes worn by Europeans are about 43 times better that the garbage we put on our feet and clop around on. One afternoon here in Austin I pegged a guy on the bus, pointed at his shoes and said "You're not from the US." and he wasn't, here's this German guy, bright as the sun, sleazing 'round ATX with the unwashed.


I've not used AirBnB though I likely would, was I traveling with a sweetie or what-have-you. The *instant* people began to rent their home on Craiglist to people looking for a place to stay during any of the 37,943 festivals in Austin, the city got all finger-wavey because hey, let's don't let someone utilize their property as they see fit without cutting in the city, which was/is of course the biggest piece of the cities gripe regardless the bullshit they spewed whilst waving said finger(s). I've let people stay in my bitty condo but never for a buck, and always when I'm here, a night, maybe two (I'm incredibly socially inept, and this condo is incredibly small, fits two pair of shoes, one mountain bike, a computer, a coffee pot), travelers, either friends or friends of friends, once a young couple, superb singer-songwriters who'd been sleeping in a van as I recall, that old futon was lumpy and hard as the rocks in your driveway but they sure loved to shower etc, peanut butter toast and a banana maybe or an orange, coffee a certainty, strong enough to curl your toes, and likely your hair, served up in big white mugs.
Mugs. Not cups. Big honkin' mugs. If you finish it you'll not sleep until Thursday, if even then.

I've not ever used Lyft or Uber -- I've a pickup and a bicycle and I live right on a fairly major bus route -- but I'd damn sure use them over the tacky taxi service here in town, who forever had it their way and didn't give a damn about the person waiting for their service while being repeatedly lied to -- "He's almost there!" or whatever. They deserve to be put down.

Seems to me that people use these services because they are far, far better than other options. I know, I know -- unions, etc -- but that ship has sailed long ago, and I don't see it coming back.
posted by dancestoblue at 5:25 PM on February 5

Yeah I don’t know about taxi companies where you folks live or traveled but when I’d go to San Francisco pre-Uber/Lyft, finding a cab was like finding a unicorn. I was on a business trip and rode in everything BUT a cab one week. Black car making a few extra bucks, tourist van looking for some cash, a goddamn limo that was empty and offered to take me where I was going for 30 bucks, etc., gypsy cabs, a dude with a Lincoln that was just a dude with a Lincoln. And even if you could find a cab, their credit card readers were mysteriously always broken.

Cab companies where I live now will pitch a fit if you’re not going that far or they don’t think you’re worth their time, but I can always get an Uber or Lyft. Sometimes even if you call for a cab they just plain won’t show up because they prefer airport to downtown runs.

I’ve got a lot of problems with them at a corporate level but in terms of forcing the cab companies to take credit cards and actually pick people up and do short routes if they want to compete, they’ve been great.
posted by Ghostride The Whip at 9:14 AM on February 6

I get that there's problems with them, but air bnb really does offer something different from hotels. Being able to easily get two bedrooms for my family, a kitchen to fix some meals in, and a living room that's comfortable to sit in and doesn't wake up sleeping people, is amazing. Hotels really don't offer something comparable.
posted by Margalo Epps at 4:46 PM on February 17

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