Want Better Hotels? Then Support a Free and Open Market
One accomplished hotelier believes that “Airbnb is a mortal threat to the U.S. hotel industry. The only way you can compete with a strong idea is by having another strong idea.” While the hotel industry seems to believe the first part, they are using their political influence rather than good ideas to stamp out Airbnb and other short-term rental (STR) companies. That battle is coming to Missouri.
The author of the quote above is Ian Schrager, creator of boutique hotels and nightclubs, including Studio 54. In a recent Wall Street Journal piece, Schrager talks about the threat and how he is designing hotels to maximize efficiency and deliver a superior service to modern customers. Unfortunately, rather than innovate, some hotels are seeking to use the power of government to thwart competition. And governments are too often willing to do their bidding.
According to The New York Times, the American Hotel and Lodging Association trade group has launched a “multipronged, national campaign approach at the local, state and federal level.” One document shows that the group seeks to work with “a broad coalition of affordable housing advocates, community groups, neighborhood associations, labor, and other progressive entities.” The entire document is worth reading.
We’ve already seen some of this play out in Missouri, although the AHLA document does not cite efforts in the Show-Me State. Some neighborhood association activists have raised unsubstantiated fears about increases in crime. Kansas City’s own Planning and Development Department is exaggerating complaints against short-term rentals such as Airbnb. If Kansas City wants to present itself as a tech-friendly millennial magnet, it ought not keep fighting tech innovations such as Uber and Airbnb. Yet fight them it does.
In the 2017 legislative session, HB608 was an effort to pre-empt the current hodge-podge of municipal regulation that is being driven by the hotel industry’s concerns. The bill kept political subdivisions from imposing fees or prohibiting short term rentals outright, while permitting those subdivisions to impose “reasonable regulation” to “protect the public’s health and safety.” It may have been this last part that doomed the effort, as supporters of STRs feared that “reasonable regulation” was too broad a concession. As of this writing, January 4, there does not appear to be a similar bill proposed for 2018.
More recently, Airbnb announced a deal with Missouri in which it would start collecting and remitting state and local taxes on behalf of their owners. In their statement they estimated this would amount to $1.1 million in tax revenue.
New internet platforms such as Airbnb and VRBO (Vacation Rentals by Owner) offer great opportunities for consumers and for business innovators like Schrager who are up to the task. The churn of the free market—although sometimes ugly in the short term—is the reason why our country enjoys so many technological advantages and conveniences. Allowing big business to use its influence over government to thwart innovation by protecting existing markets isn’t just bad for Airbnb, it’s bad for hotels, government revenue, and consumers.