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Airbnb making millions from ‘illegal hotels,’ hotel industry report claims

That's So Money: Jennifer Schonberger explores why major cities are cracking down and banning owners turning their homes and apartments into short-term rentals like Airbnb

 

Home-sharing service Airbnb is rapidly taking marketshare away from traditional hotels. But a new report funded by the hotel industry claims the billion dollar behemoth is not playing fair. 

According to the new report, backed by the American Hotel & Lodging Association (called “Hosts with Multiple Units – A Key Driver of Airbnb Growth”) companies like Airbnb are “providing a platform for commercial operators to run illegitimate, unregulated and often illegal hotels in communities across the country.”

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Adding: “True home-sharing, where the owner is present during the guest’s stay, accounts for less than 20 percent of Airbnb’s business. 81 percent of Airbnb’s revenue nationwide – $4.6 billion – comes from whole-unit rentals where the owner is not present. That’s not home sharing, that’s a business.”

In other words, hotel industry officials say Airbnb is skirting the law to avoid paying the taxes and fees big companies have been subject to for decades. 

Katie Longo, a representative for the American Hotel & Lodging Association told Fox News, “Our hope is that this new data provides officials at every level of government the information they need to double down on their efforts to close the illegal hotel loophole and hold Airbnb and other short-term rental companies accountable.

"And, we call on Airbnb to join us in the fight to take down illegal hotels from their platform. It’s time for them to finally move beyond just words and take real, concrete action.”

The report, conducted by CBRE Hotels America, looked at Airbnb’s bookings from October 2014 to September 2016, and found that nearly 58 percent of Airbnb’s total revenue in Miami came from hosts with multiple units. Oahu came in second with 53.5 percent, followed by New Orleans with 42.3 percent.

In other words, the survey claims Airbnb isn’t just your average Joe looking to make a little cash on the side.

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Airbnb, which is now worth over $30 billion, recently purchased the upscale rental platform Luxury Retreats for $300 million, allowing them to offer concierge service and 4,000 properties within Luxury Retreats.

On Thursday, Airbnb issued a statement condemning the report: “This misleading, inaccurate report was bought and paid for by the big hotels and is the latest example of the industry’s willingness to say and do anything to protect their record profits, preserve their ability to price gouge consumers and squash their competition."

To further complicate matters, Airbnb and several players in the hotel industry are intricately linked in one major way that builds a co-dependence to maximize revenue. 

Airbnb spokesperson Ben Breit told Real Deal Miami, “As the AHLA already knows, many of their member inns, motels and hotels list rooms on our platform, so these are included in the very data on ‘commercial’ listings the big hotels seem so concerned about.”

Airbnb was not immediately available for comment.

Rebekah Sager is a writer and editor for FoxNews.com. She can be reached at rebekah.sager@foxnews.com. Follow her on Twitter @rebekah_sager.