NATIONAL REPORT—Miami appears to have a growing problem with Airbnb. More than any of the 14 markets studied, the city has the highest percentage of multi-unit operators and full-time operators on Airbnb, according to a new report released by the American Hotel & Lodging Association (AH&LA) that provides a detailed analysis of the rise in commercial activity taking place in Miami on Airbnb, one of the most trafficked short-term rental websites.
Among the findings the study revealed were the five Miami-area zip codes with the most properties listed on Airbnb accounted for more than $79 million, or 65% of Airbnb’s revenue in the Miami metropolitan area, and operators listing units for rent for more than half the year accounted for $93 million of revenue.
The study was conducted by John O’Neill, MAI, ISHC, Ph.D., professor of hospitality management and director of the Center for Hospitality Real Estate Strategy in the School of Hospitality Management at Penn State University, and examined activity on Airbnb between October 2014 and September 2015.
In addition to the impact on the hospitality industry, the rise of Airbnb is creating issues for every city as communities deal with unhealthy levels of noise, a revolving door of strangers and changes to the residential feel of neighborhoods, according to Troy Flanagan, VP, state and local government affairs, AH&LA.
“It is a detriment to communities and their residences. Regulations are not being enforced and Airbnb can—but won’t—crack down on operators not following the rules as they drive a large and growing portion of revenue,” said Flanagan during a conference call.
Much like other cities, Miami is dealing with the difficulties of enforcing long-established guidelines for short-term rentals to protect the areas in which these enterprises now exist.
“Communities are struggling with the enforcement piece. There are local ordinances in place to regulate it, but what’s lacking is a willingness to work with regulators on Airbnb’s behalf. It would allow for the proper enforcement of statutes already on the books,” Flanagan said. “Now, our problem is they’re out there advertising and we’re struggling to find them. They’re required by law to abide by the statute. Airbnb could stop it overnight, but their actions increase the likelihood it will continue.”
“The Transient Public Lodging statute has been on the books since the 1980s. What has changed over 25 years is that we didn’t have the internet or Airbnb when it was created,” said Carol Dover, president and CEO, Florida Restaurant and Lodging Association on the call. “These operators are not paying bed taxes, not being inspected or regulated and safety is a huge part of this. It’s imperative we keep customers and neighborhoods safe.”
Among the key findings were:
• Full-time operators—those who listed their units for rent more than 360 days per year—accounted for more than $47 million or nearly 40% of Airbnb’s revenue in the Miami area, a higher percentage than in any of the other cities studied.
• Three-quarters or 76% of Airbnb’s revenue in the Miami metropolitan area—more than $93 million—came from the nearly 30% of operators who listed their units for rent for more than 180 days per year.
• Almost two-thirds or 62%, the highest percentage of the 14 cities studied, of Airbnb’s revenue in the Miami region—more than $76 million—came from operators who listed multiple units for rent.
For business owners like Stefano Frittella, owner of the Pelican Hotel in Miami, Airbnb’s rise has had a significant affect on his bottom line.
“In my zip code, there are more than 1,400 illegal operators. My average daily rate (ADR) has dropped 22% compared with last year as a result,” Frittella said during the conference call. “Furthermore, by driving up the cost of rent in the Miami area, illegal hotel operators on Airbnb are exacerbating the housing crisis that is hurting so many working families in Miami, making it harder to live and work in our communities.”
“These illegal businesses are not only disrupting Miami’s communities, but they are undermining one of the most important sectors of our economy. Florida’s hotel and lodging industry is an important segment of the state’s economy, employing more than 160,000 residents and generating $5.4 billion annually in state, local and federal taxes,” said Dover. “Illegal operators on Airbnb are threatening the business climate that Miami has worked so hard to develop. If Airbnb wants to be a legal player in the lodging industry, they should have to follow the same basic rules as everyone else in order to ensure fairness, respect communities, and protect consumers.”
Miami is the fourth of 14 cities profiled in a series of reports that comprise a second phase of an analysis into the commercial activity being transacted on Airbnb’s platform. The initial analysis, “From Air Mattresses to Unregulated Business: An Analysis of the Other Side of Airbnb,” was released in January.