2017-02-09 / Front Page

Airbnb Seen as Creating Uneven Playing Field

By Barry Bridges

In recent days, a search on airbnb.com for available rooms in Newport returned approximately 300 possibilities for short-term lodging. And while that may benefit travelers and the tourism industry, bringing the rentals in line with local licensing requirements can be challenging.

Airbnb is an online marketplace matching hosts with travelers seeking accommodations other than traditional hotels. Founded in 2008, Airbnb says that it “provides access to millions of unique accommodations from apartments and villas to castles and treehouses in more than 65,000 cities and 191 countries.” The company makes money by charging service fees for bookings made through its website.

Evan Smith, president and CEO of Discover Newport, told Newport This Week that Airbnb is a critical component in the city’s tourism formula.

“Airbnb is one of the hottest trends in travel today,” he said. “From a tourism perspective, we want Airbnb here. It gives us more room inventory and more product diversification.” To illustrate the point, Smith compared Aquidneck Island’s 4,000 available hotel rooms to the stock of 10,000 in Savannah, Georgia and 14,000 in Charleston, South Carolina.

“When Airbnb first started, no one paid any attention to them because they seemed incidental. But it has evolved to be the largest lodging institution in the world.”

According to Smith, local Airbnb stays tend to be for less than three nights, while other online businesses in the space, such as HomeAway.com and VRBO.com, tend to focus on longer-term vacation rentals.

Notwithstanding his general endorsement, Smith said it’s important to further dissect issues created by Airbnb’s role in the “sharing economy.”

“Two years ago, the challenges were that Airbnb transactions were escaping sales and lodging taxes, and the properties were not in compliance with city regulations,” he reported.

That was partially resolved in 2015, when the state of Rhode Island adopted a budget provision addressing the tax discrepancies. Hosts who rent rooms for less than 30 days must now collect the 7 percent Rhode Island sales tax, a 5 percent statewide hotel tax, and a 1 percent local hotel tax from their guests.

But the second part, meeting municipal licensing requirements, remains elusive.

“One of the things giving this context is the 2003 Station nightclub fire, which prompted Rhode Island to adopt one of the most aggressive sprinkler laws in the nation,” Smith continued. “About half of the bed-and-breakfasts in Newport closed because they couldn’t make the kind of investment needed to upgrade. Today, we have two different lodging standards: hotels and inns that are licensed and inspected, and Airbnb properties that are not.

“More work has to be done to level the playing field. You can’t have two sets of rules. Municipalities have to identify the properties and figure out a way to approach this,” said Smith, who added the problem is being played out in every city in the country. “We don’t have the inspection part worked out yet.”

Newport County Chamber of Commerce Executive Director Erin Donovan-Boyle echoed those words.

“Airbnb is a very innovative business model, and innovation is something that the chamber advocates for. The company is great from a consumer’s perspective, but things do need to be on a level playing field,” she said. “Hotels and B&B’s have to follow certain rules with state and local governments. Newport area businesses want the same opportunities to thrive.”

She also concurred with Smith in saying that the hospitality sector is not necessarily hostile to Airbnb, but is looking to governments to enforce applicable regulations for everyone.

“Business people understand that businesses change and evolve. It’s not that they don’t want competition, it’s just that they want everyone on equal footing,” said Donovan-Boyle.

But evening out the rules has proved difficult for municipalities.

Newport Zoning Officer Guy Weston told Newport This Week that clamping down on unlicensed guesthouses, or rentals less than 30 days, is not as easy as taking note of who is advertising an available room through Internet sites such as Airbnb.

“We don’t have the resources to check to see that 300-plus offering are registered as guesthouses with the city,” he said. “We generally don’t go out to investigate unless there’s a complaint.”

Furthermore, not all listings are noncompliant. “If you track down some of these, they’re actually not here, but in neighboring communities. They may list the room as being in Newport because it’s such a popular destination.”

Another factor is that some of the rentals are in areas of the city where they are permitted as of right, such as Thames Street. Guesthouses are permitted by right in the limited business, waterfront business, general business, and commercial-industrial districts. In other instances, hosts are properly registering.

Advertising a room does not in itself violate regulations. “It’s not strong enough evidence to establish a violation,” said Weston, who explained that municipal court has thrown out such cases. “Just because they’re advertising doesn’t mean someone is in the room.”

The Newport City Council has been relatively silent recently on short-term rentals. A workshop in August 2015 examined some of the enforcement issues involved, but no follow-up action has been taken.

On a different set of considerations, Weston acknowledged that residents sometimes bring up their quality of life concerns, as the transient nature of Airbnb guests sometimes causes problems such as illegal parking and trash left behind on sidewalks.

“You can lose the sense of being in a neighborhood if homes are being used that way,” he said.

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