WASHINGTON—The American Hotel & Lodging Association (AH&LA) has released phase two of a study conducted by the Pennsylvania State University School of Hospitality Management, providing an analysis of Airbnb’s presence in the city of Phoenix.
The study shows that a majority of Airbnb’s revenue in Phoenix comes from commercial hosts, rather than occasional renters, according to Vanessa Sinders, head of government affairs for AH&LA. “Home sharing and occasional home rentals have been going on for decades. We support the rights of property owners to occasionally rent their homes to earn additional income,” she said on a conference call on Wednesday.
However, Sinders said commercial operators are using Airbnb to run illegal hotels that compromise consumer and public safety and security. By using the Airbnb platform, they avoid paying the taxes and other revenue burdens that any legal hotel incurs. “These commercial operators are not sharing at all,” she said.
Sinders further explained that guests who book with short-term rental websites have no way of verifying whether the properties are compliant with basic health and safety standards, such as carbon monoxide and smoke detectors. Families living in Airbnb-dominated neighborhoods can expect “a revolving door of strangers next door,” she said.
The report found that 85% of Airbnb’s revenue in Phoenix comes from hosts renting units for 30 days or more per year, accounting for more than $41 million in revenue for Airbnb in the city. According to Sinders, this statistic indicates the majority of hosts are not occasional renters.
The study also found that 14% of operators listed properties for rent more than 180 days in the year, which brought Airbnb $9 million in revenue; and 14% of Airbnb operators in the city rent-out multiple units.
Dr. John O’Neill, professor and director of the Center for Hospitality Real Estate Strategy at Pennsylvania State University, who was also on the conference call, called the trend in Phoenix “alarming.” Dr. O’Neill directed the research. “Phoenix, like many large metropolitan areas across the country, is seeing a significant growth in the number of Airbnb hosts that are renting out their units full-time, or operating multiple units as often illegal hotel businesses,” he said.
Dr. O’Neill said the report represents the first comprehensive national look at Airbnb’s hosts and earnings. According to AH&LA president and CEO Katherine Lugar, this glimpse into Airbnb’s data is long overdue. “We’ve seen time and time again that Airbnb is unwilling to be transparent with their data, and now we know why: a growing portion of their revenue comes from commercial landlords using the platform to run businesses without having to abide by the rules of the road that guide all other commercial lodging operations,” she said.
AH&LA and its supporters want Airbnb and companies like it to be legally regulated by local municipalities or the U.S. government.
Marion Hook, owner of the Adobe Rose Inn Bed & Breakfast in Tuscon, AZ, welcomes competition, especially from small business. “Competition is what pushes us to do better for the communities we’re operating in and for the guests we serve,” she said on the conference call.
With the same small business mentality, Hook said small business owners are required to abide by health and safety regulations as well as collect and remit taxes; commercial operators who use Airbnb should be required to do the same. “If Airbnb and other short-term online rental companies are going to be declared legal players in the lodging industry, they should have to follow the same basic rules as the rest of the industry in order to ensure fairness, respect communities and protect consumers,” she said.
Hook said that the taxes she and other small business owners pay help Arizona’s tourism department and organizations like the Arizona Lodging and Tourism Association, which she and Airbnb both rely on to drum up business. “Tourism is the second largest industry in Arizona, and it employs over 200,000 residents and generates $2.9 billion annually in state, local and federal taxes,” she said.
Kim Sabow, president and CEO of the Arizona Lodging and Tourism Association, who was also on the conference call, said “We must protect consumer safety, the character and security of our neighborhoods, as well as ensure fair and equitable tax responsibilities important to Arizona’s economic future.”
Phoenix is the first of 12 cities profiled in the series of reports that comprise the second phase of the analysis of Airbnb’s platform. Phase one of the analysis was released in January, and showed that, between Sept. 2014 to Sept. 2015, “multi-unit operators” accounted for 13.9% of Airbnb’s Phoenix hosts and drove 40.6% of the company’s revenue in the city—totaling more than $17 million.