On July 12, 2014 we opened our Airbnb short-term rental when we hosted our first guest, a young woman from Edmonton attending the World Domination Summit in Portland, OR. Prior to then, we had virtually no knowledge of the company’s history, corporate philosophy or issues related to municipal code and zoning laws.
Within six months we became an Airbnb Superhost, I testified at the Portland City Council and I have been inspired and let down by this company who sells its platform on an axiological enthymeme: Belong Anywhere. As a community development professional, business philosopher and homeowner, I continue to be fascinated by the critique, curious about the business implications and absolutely enthusiastic to be a host.
Sociologically, Airbnb is a great case study of a disruptive innovation. Made possible by Internet technology and social networking, on one hand, Airbnb is simply facilitating an authentic need in a novel way. The core issue around Airbnb’s business model is that individuals have a way to rent short-term accommodation to anyone. Until the advent of Airbnb, (which is now the largest hospitality company in the world), short-term lodging has been 100% the domain of hotels, motels and licensed bed and breakfasts. Short-term lodging is defined as less than 30 days.
The concept of home sharing is as old as human society. But as the illustrious Niccoló Machiavelli observed in medieval times, the innovator has for enemies all those who have done well under the old conditions and lukewarm supporters in those that may do well under the new. While considerable critique warns that short-term rentals are harming “the economy”, in fact, Airbnb is actually again proving the core theorem of Adam Smith’s invisible hand that guides the development of business institutions to meet supply and demand.
The economy, after all, is an expression of social value exchange that organizes at the most basic level to satisfy human needs through products and services. People are quick to forget that economics is a social science first, and secondly objectified data derived from mathematical equations and numerical inferences that can create highly detailed patterns that often correctly interpret human behavior – but not always.
Critique: Short-term rentals hurt the economy.
Harm is inflicted first by reducing total hotel room nights hurting established business interests; and second, by reducing City lodging tax revenues charged against hotel room nights.
According to progressive economist Baker, Airbnb is helping people facilitate a ripoff on the local economy because tourists aren’t paying lodging taxes and Airbnb hosts are skirting – even violating - local regulations by operating beyond the legal permission of local zoning laws. Zoning laws, for most people, are just another part of the invisible tapestry of living in a place that remain outside of people’s day-to-day thinking. As a community development professional having trained as a city planner, I was totally unaware that short-term rentals were against the law until I became involved in Portland’s civic debate. I imagine other more or less educated people are often unaware of all manner of laws codes – albeit this is not a viable legal defense, but it does indicate the sheer complexity of managing a City and building a shared knowledge of its rule of conduct and operation.
I suspect that like myself, most people that Beck accuses of skirting local zoning laws don’t even know that they exist – or at least they didn’t as the Airbnb idea first emerged.
One of the indirect benefits of Airbnb’s success is that people in cities worldwide are becoming more educated about local laws and agitating to change policies that no longer serve people’s needs as they did in the past. Civic engagement in local government is a good thing.
The counter argument from Airbnb hosts is that short-term lodging actually improves the economy. This is a tension between large corporate estates and the distributed heterogeneous expression of a local economy. When more people are owners of capital and able to participate in a meaningful way in society, society is stronger and healthier.
Competition is a fundamental part of a healthy economy because it forces companies to strive to improve their quality of delivery. It is the job of policy makers to ask the question if the net impact of a disruptive technology outweighs established interests not to delimit the growth of a new sector of the economy because some people don’t like it. The fact is the urban zoning pre-dates any consciousness whatsoever pertaining to sustainability. It is further saturated by an soon-to-be totally outdated post-colonial mindset that wanted to keep people and commerce strangely separated.
From an ecological design perspective, widely distributed micro-hotels representing all manner of business models effectively meets the needs of diverse groups of people (economically and otherwise).
Critique: Short-term rentals are unsafe for guests and neighbors.
The safety argument has two main dimensions.
Airbnb customers may be walking into firetraps or other unsafe dwellings.
Neighborhoods and neighbors are at risk by unsavory Airbnb guests.
Regarding guest safety, I think it is actually quite fantastic that the City of Portland requires short-term rentals to have an inspection and pass basic safety requirements. As Baker points out, “[h]otels are regularly inspected to ensure that they are not fire traps and that they don't pose other risks for visitors.” What is despicable, and I have not heard discussed in a single print piece or by the City leaders, is that rampantly across Portland there are landlords renting dwellings on a long-term basis that do not meet basic safety standards and sometimes do not meet basic living standards and this is because the City of Portland has decided to preferentially prioritize the safety of short-term renters ahead of the long-term renters, i.e., residents of Portland.
The second safety issue is by far the more glamorous concern – with notable personalities like Sen Dianne Feinstein (CA) outraged by the City of San Francisco’s ruling to alter the zoning code permitting short-term rentals because it will ruin the character of local neighborhoods.
On this note of character, I am still curious why in Portland requires only short-term rentals to provide neighbor notifications of their business. The assumption is that strangers arriving to their Airbnb will disturb the daily comings-and-goings of a neighborhood. To the same token, people that have home-based businesses of other ilk entertaining customers in and out of the neighborhood stand just as much chance to disturb the character of the neighborhood. To fully embody their political position on safety, all home-based businesses should have to satisfy the same neighbor notification that short-term rental business do.
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