Is SF Still The Right Fit For Airbnb?

By Debra J. Saunders
San Francisco Chronicle

WWR Article Summary (tl;dr) Debra Saunders of the San Francisco Chronicle takes a look at how, Airbnb, the $25.5 billion company that was born to disrupt staid financial institutions, has slowly become part of the usually taxpaying power elite.

San Francisco Chronicle

“If you attack the establishment long enough and hard enough, they will make you a member of it,” is how late humorist Art Buchwald described the establishment’s cruelest form of payback.

In that spirit, I watch Airbnb, the $25.5 billion company that was born to disrupt staid financial institutions, slowly become part of the usually taxpaying power elite.

If they were thinking strategically, then Airbnb’s founders probably wouldn’t have started their home-rental platform in San Francisco, a city where residents could do anything in their bedroom except rent it to Danish tourists.

It probably felt right at the time. Brian Chesky and friends rented sleeping space in a South of Market apartment.

Airbnb seemed like a vehicle to let people be free — free to visit pricey cities like Ess Eff without paying hundreds of dollars a night for a hotel room; free for renters and homeowners to make a little extra money on the side by renting out a spare bedroom. It seemed like a bargain for both parties, who could avoid paying the city’s 14 percent hotel tax.

Tourists who booked rooms with Airbnb felt virtuous, because staying in someone’s home or residential neighborhoods gave them entree to the less touristy side of San Francisco. “Hosts” maintained that they were good for their communities because they directed guests to local eateries and, by using existing space, they helped contain the city’s carbon footprint.

There were just a few problems. One: GOP political consultant Reed Galen, who advises tech companies, noted that in San Francisco “the average citizen who’s not a tech zillion-aire hates the tech industry.” Locals blame tech money and highly paid tech workers for driving up the cost of living in the Special City. And Airbnb is another tech company.

Two: Opportunists found they could make more money with short-term rentals than long-term leases so they siphoned space from the city’s already stretched-thin housing stock.

Three: It wasn’t fair that bed-and-breakfast owners and small hotels had to pay a hotel tax, while Airbnb “hosts” did not.

As Airbnb got bigger, it became harder for the Internet platform to allow hosts to opt out of paying the tax and impossible for City Hall not to force the issue. So Airbnb began paying the hotel tax — and, when squeezed harder, back taxes. Now critics complain that many hosts have not registered as businesses and are not submitting inventory of their furniture, appliances and housewares to be taxed, too.

At a Chronicle editorial board meeting Wednesday, Airbnb biggies David Owen and Chris Lehane compared the company to a child approaching adulthood. In the toddler stage, the platform didn’t color within the lines, but as the company matures, it is learning to live within regulations.

City Hall now is pushing for a 60-nights-per-year cap on short-term stays — undeterred by voters’ rejection last year of a 75-night limit.

Lehane told the editorial board that of all the home-rental platforms, “We’re the only one that’s paying taxes.” Airbnb tried to get Sacramento to push through a statewide hotel tax that all home-rental platforms would pay. That’s right — now Airbnb is pointing fingers and pushing for uniform payment of taxes.

In May, after voters in Austin, Texas, passed a measure requiring that ride-hailing drivers be fingerprinted, Uber and Lyft left the city. As San Francisco threatens more regulations, has the platform thought about moving its headquarters out of The Special City? Not at all. Lehane responded, “At the end of the day, we can figure all this stuff out.”

Uber and Lyft also have headquarters in San Francisco. “You have a bunch of Democrats coming into blue cities” with their many regulations and taxes, Galen observed, “and the blue cities want nothing to do with them, or little to do with them.”

Why not settle in a red state, where entrepreneurs are welcome? Lehane told the editorial board about visiting Arizona, where the Republican governor is committed to making the state a hub for the sharing economy. “We were in Arizona actually arguing for some regulations,” Lehane told The Chronicle. Maybe that means Airbnb has become so big that it now wants to make sure scrappy competitors are regulated. Or maybe the head-office guys have migrated away from Airbnb’s roots.

Will the tech community vote for Libertarian Gary Johnson, who wants to lower taxes and reduce regulations? No, they’re lining up behind Hillary Clinton, even though she has shown little sympathy for sharing-economy startups and repeatedly talks in favor of stifling regulations. Lehane said Clinton can “distinguish between the different types of sharing, labor versus assets.”

The home-rental platform, he suggests, rents property (homes) — as opposed, we are to infer, to the ride-hailing platforms that rely on labor (drivers). In truth, both platforms are hybrids that rent assets (rooms, cars) and labor (housekeepers, drivers). Telling the government to pick on someone else may be the world’s oldest profession.

Debra J. Saunders is a San Francisco Chronicle columnist

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