Why the belle has no clothes at the rental marketplace ball

NB: This is a guest article by Jay Karen, president and CEO of the Professional Association of Innkeepers International.

Airbnb and the fast-growing number of rental marketplaces seem like the belles of the ball among travel-related web sites this year.

Some have grabbed the support of big hitters like Ashton Kutcher and there is clearly a lot of moneykicking about with nine-figure cash investments.

But let’s take a moment and turn the lights on in the ballroom and take a closer look at some of these belles. After all, if we’re going to dance with the belle, we better know what we’re dealing with.

Propagating illegal activity

I’m not sure why the internet police haven’t been blaring the sirens on this one.

Nevertheless, there is no question many (if not most) of the lodging options that can be found on such websites are not complying with local laws.

Towns and cities across the country and around the world have local laws that prohibit homeowners – especially in residential areas – from using their properties as transient lodging for travelers of less than, say, 30 days.

In other words, it is permissible to be a landlord to a longer-term tenant, but it’s not okay to rent your house, apartment or room to folks night after night after night.

In many cases, such nightly tourism activity can disrupt the culture and atmosphere of a residential area or building (in the case of a condo building, where most of the occupants are homeowners).

It’s no secret that all kinds of questionable activity happens across the web, and the web companies do not bear full responsibility for the activity that happens on or on account of their sites.

In the US, the Communications Decency Act of 1996 does a good job holding websites harmless from the content that gets posted on their sites by site visitors or customers (look at Section 230).

But even a site like Craigslist came around to remove a section of their classifieds that was conspicuously advertising illegal activity. That only happened, though, after much public and legal pressure from a lot of powerful people around the country.

Getting back to rental marketplaces, why isn’t anyone crying foul on this one? Should a homeowner be required to show proof of compliance with the law before being allowed to list a room for rent (it might be happening on Oahu)?

Sure, but the inventory on such sites would likely fall to less than one-tenth of its current inventory. Who would pour hundreds of millions into a site with little inventory?

Licenses, inspections and taxation – oh my

Local authorities everywhere are in the business of ensuring the public’s safety. Regardless of your position on the "government-is-good or government-is-bad" spectrum, few will argue against making sure places of business that are open to the public deserve some kind of inspection or review process.

• Do you like the fact that restaurants must be inspected? I do!
• Do you like to know that hotels and B&Bs must follow local fire safety rules? I do!

But...

• How many of the properties on marketplace rental sites, which mostly appear to be in residential situations, have been inspected by fire officials?
• How many have the proper business licenses to be offering over-night accommodations to the traveling public?

Many online reviews indicate hosts are offering food to their travelers too, as part of the overnight stay. Do you think the local health inspector checked out their kitchen or sanitary food-handling skills?

Now, let’s talk taxes for a moment. Some rental marketplaces are not collecting taxes on behalf of their hosts, and the host is not likely collecting taxes either.

I know some readers are thinking the following:

Short-term lodging is usually subject to both a sales tax and occupancy tax. Oftentimes, the occupancy tax is levied to help support all kinds of initiatives to stimulate more travel to the area. Is it fair that a host gets to benefit from the traveler’s dollars, but not put in his fair share?

Safety

I already addressed the safety risks involved in not being inspected by local health or fire inspectors.

But ever since the likes of Airbnb and others materialised a couple of years ago, I’ve been telling people that I am just waiting for a tragedy to happen at one of the places rented on their site.

Some creep is going to rent his apartment to an unwitting young lady, and something terrible will happen. It happened with Couchsurfing.

Little did I know it would be the other way around!  The traveler, in this case, recently vandalized an Airbnb property, triggering reams of publicity.

Now, I do not think it is fair to hold Airbnb, in this case, fully culpable for such a transgression. Crimes occur at hotels all the time, but should the hotel always be blamed, let alone the online booking engine where a perpetrator might have booked a room?

No. But, reasonable measures, policies and the law of large numbers exist to try and minimize the likelihood of crimes taking place.

I get the allure of these rental marketplaces from many angles. To the traveler, "staying at an Airbnb", for example, might be seen as something different and exciting.

The photos on the various homepages are nothing short of amazing, so it is quite seductive. Hosts see it as a cool way to make money and meet interesting people, although this Slate writer certainly differs.

Investors see a new product in the pretty traditional market of lodging. Heck, I represent an industry that perfected the "stay in someone’s home" experience!

But, the tens of thousands of hardworking innkeepers over the years worked WITH local authorities to gain proper recognition as legitimate businesses, have paid our taxes, have gone through inspections, etc.

This isn’t sour grapes about an imposter trying to co-opt our bed-and-breakfast brand (can you see the furrow on my forehead?). It’s bigger than that.

The bottom line, for me, can be explained in an analogy: do you think it would be ok for any one person or any family to start inviting random travelers and locals into their homes for a homemade supper…charge for it…not collect any taxes…and never get inspected by the health department?

Sure, you could just say "Caveat Emptor!", let the online reviews handle the inspection process and not care about safety or a level playing field.

Would you feel the same way if a friend or loved one bought into this and got incredibly (or deathly) ill from an unfortunate event?

There is not much any of us can do to prevent bad or ignorant people from committing awful acts, but we can support reasonable policies and practices to try and minimize it.  Allowing such sites to propagate possibly illegal and potentially unsafe situations is nothing short of enablement.

Maybe it’s time to take a closer look at internet law and start holding web sites more responsible for what gets posted or what kinds of transactions take place on their sites.

Holding sites completely harmless has in turn caused a great deal of harm to many others (anyone want to talk about the proliferation of libel within online reviews, but the absence of any recourse for justice?), but no one in the travel industry really seems to be talking about that.

Maybe rental marketplace sites that actually collect the room revenue should be required to ensure the legality of their host properties.

Short of that, the rental marketplaces is not much more than pimps for illegal lodging.  Anyone want to propose a new Communications GREATER Decency Act of 2012?

NB: Airbnb, for example, has consistently stated it complies with local laws in the areas in which it operates.

NB2: This is a guest article by Jay Karen, president and CEO of the Professional Association of Innkeepers International.