Collaborations Within the Sharing Economy: Airbnb & City Government

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It’s been a battle many have been watching closely. Airbnb is one of the most prominent models of an effective sharing economy business. By allowing users to rent other’s apartments, it has created an ecosystem of trust and varying tourism. There are travelers, like myself, who prefer experiencing the culture of a new city, something hotels can’t fully do. When you stay in someone else’s home, you truly get a deeper glimpse in how they live.

However, the business has been facing some interesting challenges over the past couple of years — not necessarily from users but from government. In most cities, the government oversees how hotels are run, partly for safety purposes but also for much-needed tax revenue in tourism. Hotels normally pay a hotel tax of sorts in the United States, and even in NYC, regular bed-and-breakfasts need to pay a hotel occupancy tax — but how do cities handle Airbnb? They’re not quite hotels but they are functioning in a fashion that could be argued to be similar.

Today, Airbnb might be one step closer to navigating this. Gothamist is reporting that Airbnb has agreed to collect the same 14% hotel tax as San Francisco hotels. San Francisco joins Portland, Oregon as leaders in starting to collect tax revenue from the company. Airbnb will show the tax as a separate line item for guests to pay, keeping it easy and simple for users.

And it looks like San Francisco isn’t stopping with collecting taxes on apartment rentals. It is looking to create further “shareable housing” regulations, while Airbnb is continuing to protect hosts by hiding their names and identities.

What does this all mean for the business and the sharing economy? It is time that governments recognize the legitimacy of services like Airbnb to benefit the city as a whole, without over-regulating them, just because their models are new and unproven. The beauty of these services is that we’re taking the excess capacity of the resources we already have in this world and maximizing their use by making them communal — instead of simply creating more. And government on a local and national level would do good to consider how the consumer (and local businesses) can benefit. In fact, Airbnb found that they were bringing a big economic impact — to the tune of $ 632 million in one year, with visitors staying an additional two nights longer on average than those in hotels. Plus, the average Airbnb guest spends $ 740 in the neighborhood where she stays. All these aspects are huge pluses for consumers and neighborhoods.

On the flip side, sharing platforms must bear the growing pains for the time being and acknowledge that governments do create safety nets, in addition to hopefully working towards fair-and-balanced regulation for these industries. While services like Airbnb are quickly adapting by using in-house policy teams to address these issues and navigating the challenges that arise, governments can help them better plan for these and work together with technology companies and citizens to develop plans to work for everyone in the end. The more we can collaborate together, the more shareable our cities will become.

Image courtesy Airbnb.

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