Disrupting the Disrupters: Taking on Airbnb and the Short-Termers—Part One

by Inn on the Alameda Santa Fe Hotel | Aug 22, 2016 | Our Point of View

At first, we were like most everyone else—inside and outside the hotel and bed-and-breakfast industries: Airbnb? What’s that? Even just two years ago, Mayor Javier Gonzales didn’t know what it was (he’s now up to speed). It seemed like little more than a glorified version of Craigslist’s housing section—yet another internet distraction that overnight, it seemed, turned into a phenomenon, a behemoth, then a mainstay. After all, VRBO had been around longer, and that had barely registered on anyone’s radar, either.

Fast forward to 2015, to a mere seven years since its first post (in 2008, when its founders listed a futon in a spare room of theirs—on, yes, Craigslist). Today, there isn’t anyone in the hotel world who doesn’t know of Airbnb; and most every traveler coming to Santa Fe knows about it, too.

And despite a record year for the hotel industry last year (when the industry overall broke records for occupancy and rates), Airbnb, the largest home sharing network in the world, with over two million listings globally, had established its disruptive presence in the City Different. Firmly and painfully.

And yet.

As quickly as we all seemed to panic, the panic has shifted into something altogether more . . . inspiring.

Because as dire as it all seemed—only months ago—this whole deal . . . it may indeed have given us hoteliers a shot in the arm. A wake-up call.

First, though, a little more context—and some of the other issues, perhaps even bigger ones, surrounding Airbnb.

“This is a more challenging event in the history of the lodging industry than almost any other.”

So said Bjorn Hanson, clinical professor of the Jonathan M. Tisch Center for Hospitality, Tourism and Sports Management at New York University to New York Times business reporter Elaine Glusac as recently as this past July.

That challenge, as we at the Inn on the Alameda (and other hotels here in Santa Fe) saw it, was: Airbnb, and the people listing space on Airbnb, are reaping the benefits of good results—i.e., making money—without having to pay the costs—i.e., taxes.

Airbnb’s response has been: these people listing on our network are not hotel people. They’re just reg’lar folks trying to earn a little extra. Or, as Jan Freitag, senior vice president of Global Business Development and Marketing for STR, which tracks supply and demand for the hotel industry, told us: “Is Airbnb bad? Is it the big bad wolf? The answer is no. It’s another lodging option. Airbnb’s stance is: We’re growing the pie. We allow people who’d never be able to stay in downtown Chicago the chance to stay there. And then they can infuse money into the local economy with the money they save.”

Which is all well and good—maybe—except that, it’s kinda not.

“Traditional hospitality providers like hotels and bed and breakfasts pay hospitality taxes where they are required by law, so it’s only fair economically that hosts also pay a hospitality tax,” as Murray Cox explained to us in an email. Cox, an Australian software engineer and photographer who now lives in Brooklyn, founded the Nicky Silver-ish insideairbnb.com, a site that purportedly shows every Airbnb listing in cities from New York to San Francisco. He’s a datactivist (a data activist). “In most cities, hospitality taxes contribute to city infrastructure, cultural events, and tourism marketing, all services that a hospitality business like an Airbnb host should contribute to. The major impact on a community that is not collecting taxes from Airbnb is unfair competition and the lost revenue. However, taxes are only part of the story.”

(More on this last part later.)

This is why one B&B owner here in town has been trying to sue Airbnb, and why this person has been trying to rally others in Santa Fe’s B&B and hotel industry to take his side. “Everything they’ve been doing is illegal,” he said anonymously. “It’s basically a 500-room hotel that doesn’t pay lodging tax. These companies have been operating with complete indifference to the law.”

Well, yes. Until, that is, the first of this month.

That’s when the City’s new ordinance on short-term rentals went into effect.

“I’d heard that Airbnb was interested in a partnership with taxing entities, so I reached out,” said Randy Randall, executive director of Tourism Santa Fe. After initially getting through to no one at Airbnb (they have no phone number, nor anyone on their site as a point of contact), Randall had the city attorney threaten Airbnb with elimination of short-term rentals entirely—“That got their attention,” said Randall. “And since then, they’ve been very cooperative, very helpful, and they’ve given us good input on the ordinance.” (Funny how that works.)

And even though it’s a voluntary collection agreement, “The ordinance,” according to Santa Fean David Loeb, a senior equity analyst covering real estate for Robert W. Baird & Co., “has real teeth. The plan is to use the funding source to do the actual enforcing. It’s a really smart thing, and it’s not all that different from what other cities have done. And the Land Use Department is serious about enforcing it.”

Airbnb, then, adds to the tax, and then collects the funds on behalf of its hosts. If any enforcing is needed, it’ll fall to the Land Use Department (which we’d never heard of till this ordinance) to go all Sheriff of Nottingham on the offenders.

But Loeb’s one who thinks this’ll do the trick. “They don’t want somebody to die in a fire in a casita.”

That’s the other part of the ordinance: those listing on Airbnb have to register with the City that they’re opening up a room, or their home or whatever, for money. Once they register, they look all that much more reliable reputable; and safe. And accountable (should something go, not so much wrong but weird and/or hellish: check out airbnbhell.com and/or sharebetter.org for some real doozies).

And although Randall and the City won’t be getting any itemized histories on who might owe and how much—they’ll just be getting a lump check—“Right now,” said Randall, “we’re getting nothing.” So something, obviously, is better than nothing. Plus, “Because of the registration requirement, we’ll know who is working [who’s listing and registered] and who isn’t [registered at all but still listing]. We can now be smart about it instead of being blind. This shadow business has been brought into the light and now they’ll pay their fair share.”

And as Loeb pointed out, “What the City has done is thread the needle, to try to be fair to everybody.”

Not that everybody’s happy. “But,” as Loeb added, “it will level the playing field.”

What it really is is a first step. And a decent one. “I don’t believe the future of hotels is doomed by the introduction of Airbnb,” wrote Cox. “We are simply in an unregulated phase of Airbnb—as time goes by, cities and communities will educate themselves about Airbnb, and find ways to effectively regulate them.”

This, then, is that first bit of regulation. And as much as Airbnb has put the hotel industry on notice, the time is coming for Airbnb as well. If for no other reason than it’s our turn to disrupt the disrupter.

Even so, as Freitag so cheerfully stated, “It’s hard to say that Airbnb doesn’t impact lodging. But it is also fair to say that it doesn’t impact the industry as much as they think.”

Which is how we now have the opportunity to disrupt Airbnb. If it’s true, as analysts like Freitag says, that today’s travelers want more local flair and experiential vacations—“If people want more couches in the lobby and a more social experience, then the hotels should start adding those”—and, as Hanson also told the Times, “guests want a more genuine experience and a place that’s more reflective of local culture”—well, we’ve been all doing that here at the Inn on the Alameda since we opened 30 years ago.

One: We’re not a chain. Two: We love connecting with our guests—and they love making that connectivity with us. Three: We’re authentic. We’re rooted in the culture of Santa Fe, downtown Santa Fe. We’re also part of our community and our neighborhood. It’s why we love what we do, and why people love staying here.

All reasons why we recently decided to list a couple of our rooms on Airbnb. To prove to ourselves, if not the typical Airbnb-er, that we’re exactly what they’re looking for. Only more.