Should Airbnbs Be Banned In Tourist Destinations

The temptation to ban short-term rentals is strong. But cities would do better to step up regulation.

The Predicament

Talk to any resident of a world city popular with visitors, and two complaints inevitably come up: Rents are too high, and there are too many tourists.

It’s tempting (and, data suggest, not unjustified) to place some of the blame for these woes on Airbnb Inc., Vrbo and other websites that facilitate short-term rentals. Critics accuse them of reducing the supply of available homes and saturating popular neighborhoods with wild partygoers. Shops catering to these visitors end up elbowing out other smaller businesses, making daily life even harder for locals.

In response, many cities have already introduced restrictions on short-term rentals, with some moving toward total bans. Barcelona requires property owners to apply for a tourist license for rentals of fewer than 31 days. Earlier this year, authorities there announced they would stop issuing licenses and not renew existing ones until after November 2028. Others are following suit: In September, residents in Budapest’s sixth district narrowly voted in favor of a total ban that would take effect in 2026.

But bans also penalize city residents and visitors, including short-stay hosts conscientiously trying to follow rules and be good neighbors and guests who mind their manners. Is there a compromise that enshrines the ben­efits of short-term stays without driving up costs and frustrations for year-round residents?

The Case For

Because renting out homes by the day is often more profitable than by the month, Airbnb and its ilk are an irresistible draw for landlords. Critics say the proliferation of short-stay listings leaves prospective tenants chasing a dwindling number of long-term rentals, jacking up prices and pushing out those who can no longer afford them.

A 2018 study by New York City’s comptroller found that whenever the number of short-stay listings in a given area increased 1%, average rents in that neighborhood rose 1.6%. The spread of Airbnb and competitors, the study said, was responsible for 9.2% of all annual NYC rent increases from 2009 to 2016.

The Booming Short-Stay Market

To limit this impact, cities ­including New York have placed restrictions on short-term stays. But enforcement is a challenge. A 2017 study of publicly available agreements found that Airbnb and other platforms rarely provided exact addresses for dwellings to cities seeking to monitor locations. Even in cases where rule-­breaking can be proven, hosts often go unpunished. According to a 2022 study, the city of Los Angeles fined or sent warning letters to only a third of the illegal listings detectable within the city that year.

City governments might be more tolerant of short-term rentals if there were a clear economic case. But studies cited by the Economic Policy Institute found they jeopardize revenue flowing into municipal coffers because the recording and implementing of tax obligations from short-stay hosts are less comprehensive than for hotels, partly because some local agreements cede responsibility in this area to the short-stay platforms themselves.

There are also concerns that short-term rentals leave travelers more exposed to scams and other types of harm, compared with hotel stays. Then there’s the nuisance factor: Barcelona’s Airbnb ban comes after widespread public protest in the city against antisocial behavior from tourists, notably late-night noise from tenants of short-stay lettings. Add it all up, and it’s no surprise that many city leaders are contemplating wholesale bans, rather than more stringent regulations.

The Case Against

Airbnb and its competitors may be unfairly taking heat for housing crises that are largely not of their own making. When a country such as the UK would need to build another city the size of London to satisfy its current housing needs, it’s clearly insufficient home-building, rather than tourism trends, that’s to blame. There are also tentative signs that curbs on short-term stays may not be having the desired effect on easing long-term rental costs—and not just because of a lack of enforcement. In September 2023, New York City banned the renting of entire units for fewer than 30 days. (Spare rooms within homes permanently occupied by hosts were exempted from the rule.) One year on, many apartments previously offered for short stays have simply shifted to medium-length stays of more than 30 days, a market that’s even less regulated, while the modest rent decreases observed since then have been attributed to other factors.

“As we have seen in New York City, short-term rental bans do not alleviate housing challenges,” Theo Yedinsky, Airbnb’s vice president for public policy, said in a statement, “only benefitting large hotel chains that rapidly increase their rates. Airbnb has always welcomed reasonable regulations that balance the needs of communities with the ability of residents to earn additional income.”

It’s also important to note that not all Airbnb listings are suitable, or even viable, for full-time rental. Beach or winter sports resorts, for example, commonly have apartment buildings that were always intended as seasonal housing. Additionally, even if most vacation apartments are run by hosts with multiple listings, comprehensive bans penalize ­single-listing hosts who rely on the platforms to supplement their income.

The Common Ground

Although no city appears to have cracked the code on controlling short-term stays, most could do a better job of regulating them. Making sure hosts register their dwellings through a licensing system can make for a safer service, where tax rev­enue is also easier to collect.

Some city authorities say that for full enforcement of existing rules, they would need access to a more robust database that allows cities to click on a short-stay listing, trace it to a specific address and owner, then see how much it has been occupied across all platforms.

Airbnb has been working more closely with cities to address these concerns, moving in the direction of greater transparency. For instance, the company introduced the Airbnb City Portal in 2020, which makes it easier to check listings against licenses.

Airbnb is also involved in projects such as the Airbnb Housing Council that promote affordable housing in urban communities. “We have successfully worked with governments around the world to enforce proportionate local STR regulations,” Yedinsky said in his statement, “and believe cities should address the needs of their individual neighborhoods prescriptively as a more effective way to regulate.”

There are city leaders who say that Airbnb has been a benefit and that current restrictions are working. Rui Moreira, mayor of Porto, Portugal’s second-­biggest city and a popular tourist destination, says recent constraints placed on the number of Airbnbs permitted in its most popular neighborhoods have proved effective, encouraging hosted apartments to spread out from the city core. That’s helped spur the economic revival of run-down areas that might otherwise struggle to find funding, he says.

Source: Bloomberg

Airbnb Hosts Look To Drop the ‘Airbnb'

This April, more than 600 landlords, real estate agents and small-property managers traveled to a swanky resort in San Diego to get advice from Jesse Vasquez. A former salesperson at a hospice- care company, Vasquez now manages more than a dozen properties, in addition to his side hustle coaching his peers. “We don’t have to be relying on Airbnb,” Vasquez told his audience. “Don’t allow these big companies to supply your clients. Build your own house on your own freakin’ land.”

Airbnb, the world’s biggest short-term rental platform, is thriving—it added more than a million active listings in 2023 while posting a record profit. Its hosts, at least those in the US, not so much. Through May of this year, earnings for US hosts had declined in 22 of the past 28 months, according to analytics firm AirDNA. Hosts blame oversupply, regulatory changes and Airbnb Inc.’s own policies. Some, like those at Vasquez’s event, think the solution is to cut out Airbnb altogether.

In part, this is what always happens when people rely on internet platforms to make a living. It’s akin to Uber drivers asking passengers to call them directly the next time they need a ride, or YouTube influencers and TikTok celebrities cutting side deals with brands to secure advertising income they won’t have to split with the platforms. Who likes a middleman?

On Airbnb, there’s a specific opportunity in the shift to mid-term rentals—stays of longer than 30 days but shorter than the leases people sign for their primary apartments. Attracting enough new people to rent an apartment once or twice a week essentially requires a service like Airbnb. If you’re only looking for a few renters a year, it becomes more reasonable to find them yourself.

In practice, though, this strategy is often a way to supplement Airbnb income rather than replace it entirely. Vivian Yip, an Austin-based host who came to Vasquez’s conference, began the shift several years ago and has done well enough to quit her day job. Her property management company now includes more than 20 homes. Still, she relies on Airbnb for half of her bookings. “I’m not strong enough to replace Airbnb,” she says.

Chief Executive Officer Brian Chesky has downplayed the importance of individual hosts circumventing Airbnb’s services. In an email, a spokesperson added that the company offers benefits that are hard to replicate, including background checks, payment processing and insurance. “When bookings and communication move off our platform, we are no longer able to ensure hosts and guests are covered by our extensive built-in protections and support,” they wrote.

Airbnb wants to hold on to those hosts who are focused on longer stays, a group that’s bigger than it was before the pandemic. It’s tailoring its platform to appeal to them. Last summer, for instance, it reduced service fees for stays of more than three months.

For now, the mid-term segment is dominated by large companies such as Anyplace, Blueground and June Homes, but smaller players are also setting up their own booking websites, drawing renters in with lower prices for properties also listed on Airbnb or Vrbo.

For some hosts, the trick is not to find renters one by one but to form relationships with institutions that will bring in regular business. These can be companies helping their employees relocate, or insurers and government agencies in search of temporary housing for displaced families or contract workers.

The interest in direct bookings creates an opportunity for businesses such as Furnished Finder LLC, which charges $100 annually for listings rather than taking a commission. Interest in the site spiked last fall when New York City effectively banned short-term apartment rentals, and in October the platform added more homes than in any month of its 10-year history, according to CEO Jeff Hurst.

Today, Furnished Finder has 300,000 listings in the US. It’s a far cry from Airbnb’s 7.7 million globally, but the company is profitable and plans to hire more engineers and product managers, says Hurst, who was hired in late 2023, one of a wave of former Vrbo employees who’ve migrated to the company.

The hunger to develop alternate strategies to find tenants is a big reason people were willing to pay the $897 Vasquez charged for his conference. He talks up the benefits of rental hosts referring potential clients to one another. “The mid-term space is all about connections,” he says.

Vasquez rented out his first mid-term property to a travel nurse in 2015, then built up his portfolio by making a housing deal with his local hospital in Modesto, California, and managing other people’s rentals. He now brings in more than $80,000 a month in profit.

His social media following exploded after he appeared on a real estate investing podcast last year. The increasing prominence provided a significant boost for what has become an even bigger source of income for Vasquez than rental housing: giving other people advice about rental housing.

After the podcast episode, Vasquez got more than 300 new students for his yearlong mentorship program, which costs $6,500. He says his online mentorship program turned a $1.3 million profit last year. The conference attracted 60 more sign-ups, adding to the 450 people who’ve taken the course. Profit is once again projected to top $1 million. “It’s so crazy to feel like this movement is happening,” he says, “and I get to be a catalyst.” 

Source: Bloomberg Business Week

Vacation rental sales upend guests’ plans

A few days before flying to Bali, Indonesia, I received an unexpected email from Airbnb: My host had sold my vacation home. h “We’re reaching out with the unfortunate news that your reservation was canceled,” it said. “Your refund is on its way.” But wait – I didn’t want my money back. I needed a place to stay while I was in Indonesia. Airbnb assured me I had nothing to worry about. It would find a new rental and cover my extra expenses. But, as always, some restrictions applied.

'Know your rights if you’re faced with abruptly having to find different accommodations'

Sales cancellations are on the rise

Selling a vacation rental out from under a guest is becoming a big problem, insiders said. There are no statistics on the number of vacation rentals with active reservations that are for sale. But Justin Gordon, who runs the rental price comparison site HiChee, says more hosts are putting their rentals on platforms like Airbnb and Vrbo while they wait to sell their properties. He has seen the disruption it causes guests who are about to leave for vacation. “I felt so sorry for the guests,” he said. Did I mention the Indonesia rental? That wasn’t my first cancellation. I rented a condo in Oahu, Hawaii, a few years ago through Vrbo. A week before I checked in, I got an email saying my stay had been canceled because the property was sold. “Many homeowners are investors, buying properties low and selling high or holding them for a set number of years as a part of their financial strategy,” said Matthew Deal, managing director of Element Vacation Homes, a central Florida vacation rental company.

A cancellation can have consequences for the seller. For example, if you list your home on Vrbo, you might have to pay the platform a cancellation fee, which gets higher as your arrival day approaches. “In addition to financial penalties, repeat offenders may see limited search visibility on the Vrbo app and site, temporary suspension or revocation of their Premier Host status,” said spokesperson Nola Lu. Airbnb has similar restrictions. “We expect Hosts to honor accepted reservations,” said spokesperson Aaron Swor.

What are your rights when your vacation rental is sold?

 If your vacation rental is sold before you arrive, you have some rights – though not as many as you’d assume.

• For rentals booked directly through the owner, your rental contract will outline your right to a refund. If you’re dealing with a host who has only one rental or can’t accommodate you at a different property, you’ll get a full refund, but you’ll have to start over and find a new vacation rental. Pro tip: Use a credit card to book. If the owner flakes out and tries to keep your money, you can always dispute dispute the charges.

• For rentals booked through a popular vacation rental platform like Airbnb or Vrbo, the platform will offer a full refund or accommodate you at a different rental property. If there’s a price difference – and there usually is – then the platform may offer to cover the extra cost.

• If you booked through a property management company, your rights may not be spelled out in your contract, but chances are the company will have a plan “B” ready. For example, Element Vacation Rentals has a policy to promptly present multiple options to displaced guests, including comparable properties from its portfolio and those of its competitors. Ask about the policy before you make a reservation. At least, that is what’s supposed to happen if there’s a cancellation. But let’s talk about what actually does happen.

What if an owner sells a vacation rental?

 When an owner sells your vacation rental from under you, you’ll probably feel confused and upset. And even as you’re processing the loss of your rental, your host may ask you for a favor. When the owners of Gerri Detweiler’s Airbnb rental sold their place, her host asked her to cancel the rental. The reason? The host didn’t want to incur a fee from Airbnb. So Detweiler, a personal finance expert from Sarasota, Florida, canceled the stay. “I didn’t bother booking another rental with Airbnb,” she said. For both of my cancellations, I had no choice. I was only days away from checking in. To their credit, both Airbnb and Vrbo helped me. Vrbo found a new rental in Hawaii and covered the price difference. Airbnb offered a coupon and sent me a few options for a replacement rental in Bali. The only one available on such short notice was thousands of dollars more than my original rental, so Airbnb increased the amount of the coupon to cover the extra cost.

The difference between the platforms was in their approach to the situation. Vrbo transferred me to a special team that took care of everything quickly. With Airbnb, it felt like more of a negotiation. But in the end, I was grateful to have the protection of both vacation rental platforms.

This could happen to you

This isn’t an abstract issue. Two of this year’s hottest housing markets – Orlando and Tampa, Florida – are popular with vacation renters and are likely to have lots of homes that are also on the market. But that’s not the real problem. It’s that most vacation rental customers don’t know their rights when they rent. They either assume that they have no choice but to take the refund and that they’re on their own. Or they believe the vacation rental company must find them a comparable rental and cover any price difference. But you’re not on your own unless you rented directly through an individual – and even then, the previous owner may be able to refer you to another rental. And your vacation rental platform won’t automatically find you a new place and pay for it. You may have to negotiate. The best solution is disclosure. Vacation rental owners should tell you if their property is for sale. Then you can make an informed decision about whether you still want to rent the place – and take your chances.

Source: USA Today