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Paul Zimmerman
pzimmerman@mrllp.com
(310) 564.2670

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Hoteliers Taking Aim at Airbnb

No doubt, Airbnb has found its way prominently onto the radar screens of those occupying the hospitality space. But the question remains: how much of a threat is the short-term rental platform to hotels and resorts?

Some commentators have surmised that competition to hoteliers by Airbnb is not necessarily a negative, nor an overwhelming concern given the projection of shared growth in the overall hospitality marketplace going forward—not to mention the strong grip that hotels continue to have on business travelers, the great majority of whom favor traditional accommodations over Airbnb. They also raise the increasing legal impediments in the form of regulations, zoning laws, and the like confronting Airbnb hosts that might place a ceiling on—or at least slow the pace of—Airbnb’s supply-side growth.

The New York Times recently elaborated on this latter point, emphasizing steps being taken by the American Hotel and Lodging Association to frustrate Airbnb’s march for market share. In her article, “Inside the Hotel Industry’s Plan to Combat Airbnb,” NYT journalist Katie Benner reports on a multipronged, national campaign by the hotel industry to reduce the number of Airbnb hosts. According to Ms. Benner, the national hotel association is making it known – systematically, at the local, state and federal level – that many Airbnb hosts fail to comply with anti-discrimination legislation, tax collection laws, and safety and fire standards imposed on hotels and resorts. It is the hope that these efforts will disrupt Airbnb hosts (undeniably operating as quasi-hoteliers), and lead to more laws and restrictions that will ultimately inure to the benefit of hotel operators.

With a projected market capitalization in the neighborhood of $30 billion, Airbnb’s value sits squarely between that of Hilton’s (~$19 billion) and Marriott’s (~$35 billion). Clearly then, despite the calculation that Airbnb does not pose a significant threat to the traditional hotel model, its size and market penetration cannot be ignored. The American Hotel and Lodging Association certainly agrees. How about you?

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.