Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Up to a third of Airbnb's price gap with hotels is due to tax treatment

ft.com

Post reply on HN
Print view View original

101–110 of 127 posts

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#101

Post by JohnTHaller »

coding123 wrote: post #16
JohnTHaller wrote: post #14

Earlier quoted context omitted.

Hotel taxes support infrastructure and city services. And things like proper safety and fire regulations in hotels ensure that guests know where fire exits are, that fire extinguishers are available and operational, that smoke detectors are present in the proper locations and functioning, etc. All of those things cost money. AirBnB offers none of those things. It took a string of deadly hotel fires in the 70s to get…

I'm not coming from any experience in this comment, but I'm wondering if AirBNB rentals will ever have such extra regulation since there are no long-hotel hallways, no fire-escapes, elevators, etc... simply because these are already residences - are we to suggest we need normal homes to be safer than they already are? If these places are "unsafe" in this regard, shouldn't it be improved whether or not they are being…

You're in an unfamiliar place and a fire breaks out. If there are no working smoke detectors and you're asleep, you'll probably die. You're making a meal on a stove and you accidentally start a fire. Is there a fire extinguisher... anywhere? If there is, is it even working? If there's a fire and it's smokey and your main route of exit is cut off, do you know how to get out a back way? Is there even a back way? Nobody is checking for these things when you rent an unregulated room from a random stranger on the internet.

If you own your own place and are lax in your upkeep, fire prevention, fire detection, and safety measures, it's likely you who will pay the price. If you're renting your place out as an illegal hotel, you're affecting unsuspecting guests.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#102

Post by JohnTHaller »

wyager wrote: post #60
JohnTHaller wrote: post #14

Earlier quoted context omitted.

Hotel taxes support infrastructure and city services. And things like proper safety and fire regulations in hotels ensure that guests know where fire exits are, that fire extinguishers are available and operational, that smoke detectors are present in the proper locations and functioning, etc. All of those things cost money. AirBnB offers none of those things. It took a string of deadly hotel fires in the 70s to get…

> Hotel taxes support infrastructure and city services. As a tourist, there's no reason I should have to provide an inordinate level of support to the regional regulators. I'm happy to pay sales tax like everyone else, and the costs of property and utility taxes are already built into the cost of my stay. > And things like proper safety and fire regulations Residences already have to obey regional safety and fire cod…

> As a tourist, there's no reason I should have to provide an inordinate level of support to the regional regulators. I'm happy to pay sales tax like everyone else, and the costs of property and utility taxes are already built into the cost of my stay.

I support our local infrastructure via my income tax as well as my property taxes in addition to my sales tax. You don't pay income tax, so you are charged the latter.

> Residences already have to obey regional safety and fire code.

They obey basic building codes. They may not have working smoke detectors or fire extinguishers. Secondary exits may easily be blocked by storage, furniture, etc.

> That's true, but you're already paying for that in an AirBnB, because as I said, it also has to follow regional fire code.

Nope, it doesn't. AirBnB rentals are unregulated and have none of the fire safety mechanisms or inspections of licensed hotels.

> You seem to be under the false but unfortunately common impression that all, or even the majority, of regulations have anything to do with improving consumer safety.

You seem to be under the incorrect assumption that these regulations weren't implemented specifically because hundreds of folks in the 70s were killed in hotel fires because they were unregulated.

> The false premise here is that residential building code is not already "up to speed".

A building code that a structure was built to decades before has less bearing on how safe that dwelling is today without smoke detectors, working fire extinguishers, marked exits, available secondary exits, etc than you seem to think it does.

Remember, just because you're responsible and have a working smoke detector, CO detector, and fire extinguisher as well as secondary exits that are easily accessible doesn't have any bearing on the random stranger you rent from on AirBnB. They may just not care and you'll be none the wiser.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#103

Post by okreallywtf »

wyager wrote: post #76
okreallywtf wrote: post #71

Earlier quoted context omitted.

You said in a lot less words the same thing I just finished typing. To expand on your point, I have friends who have been occupying a nearly 100 year old house for 30+ years who in the last 2 or 3 started renting it on AirBnB. I lived there while in college for a few years as well. It had live knob-and-tube wiring [1] whose asbestos sheathing had long since flaked off or were ready to flake off at the slightest touch…

> When doing renovations (prior to being an AirBnB) a lot of these issues were fixed Exactly. Any house that has not been renovated recently enough to adopt modern safety regs is unmarketable. > but had the city not forced them to add extra exit lights and fire extinguishers and smoke alarms, people would have been staying there with absolutely no idea about any of this. So you're complaint is that in a hypothetical…

But we live in the universe where you can 100% guarantee that all AirBnB's have up to date building codes because they've been renovated? Do you not see the issue with that logic? Can you not imagine a circumstance when a house was renovated right before a major change in building codes and didn't have to be renovated again prior to being a AirBnB? I'm not entirely sure you aren't just trolling at this point.

Of course, this doesn't really matter since as has been stated by myself and others: normal building codes that are sufficient for a homeowner are not necessarily sufficient for other occupants who are paying to stay a night there, but your logic is terribly flawed anyways and it must be pointed out.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#104

Post by JohnTHaller »

EdHominem wrote: post #56
JohnTHaller wrote: post #14

Earlier quoted context omitted.

Hotel taxes support infrastructure and city services. And things like proper safety and fire regulations in hotels ensure that guests know where fire exits are, that fire extinguishers are available and operational, that smoke detectors are present in the proper locations and functioning, etc. All of those things cost money. AirBnB offers none of those things. It took a string of deadly hotel fires in the 70s to get…

> Hotel taxes support infrastructure and city services. So restaurants that don't charge the extra foreigner-tax are destroying the city infrastructure? Or are their regular taxes expected to cover it? Why not with hotels? Why can't they simply be assessed the real cost of supporting their usage? If there was a cost associated with hosting an out-of-town guest, why is it a percentage of the room rate? Of course, the…

Hotel taxes go to support things like inspections that ensure things like exit signs, fire extinguishers, smoke detectors, CO detectors, secondary exits, etc are all up to code on a regular basis.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#105

Post by digitaltrees »

EdHominem wrote: post #28
mdorazio wrote: post #13

Earlier quoted context omitted.

Which hotel regulations do you think are overly onerous and ridiculous? Most of those regulations were put in place to protect communities and customers, not the hotels themselves. Zoning laws prevent tourists from overrunning resident communities where people don't want them. Safety and health regulations ensure that customers won't get injured or sick during their stay. Taxes help cities pay for all the improvement…

> Which hotel regulations do you think are overly onerous and ridiculous? The many extra taxes and tariffs on guests. Occupancy taxes, tourism improvement fees, etc, that the city is only able to capture by abusing its control over the hotels. It's easy to pass laws that don't affect people who live in your area because nobody is that motivated to stop you. Hotels and other legitimate businesses suffer because the ci…

All taxes have an effect on domestic parties, even if they apply to tourists, so those domestic parties will be the ones fighting against. I think national hotel chains are capable of advocating their interest, as is AirBnB.

I don't think I have ever seen an example of someone imposing a tax "just because they can". Indeed, there are very real limits, at all levels of government, to the power to levy any tax. While this is a very complicated area of law with a lot of history of debate and change, the basic premise, is that taxes have to be tied to a reasonable social interest (general welfare), can not be arbitrary or capricious or designed to harm a specific party etc. If your state or local community doesn't limit taxing authority, then be part of the change you want and pursue a limit.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#106

Post by digitaltrees »

wyager wrote: post #51
stephengillie wrote: post #10

Earlier quoted context omitted.

"Loaded language" makes it sound like these are fully legitimate businesses on the receiving end of undue criticism. But then you point out how these businesses are operating in the same market, but avoiding the market regulation, almost as though they are operating in a quasi-illegal state. Why do you believe the regulation of these markets is particularly onerous? Can you provide some specific examples?

> Why do you believe the regulation of these markets is particularly onerous? Can you provide some specific examples? Have you ever stayed in a hotel, and have you ever stayed in an AirBnB? For me, in both cases, the answer is "many times", and the overwhelmingly clear conclusion is that AirBnB offers a vastly superior experience to staying in a hotel for a vastly lower cost. If you look at regional hotel regs; it's…

If the product is better, even after paying equivalent tax and regulatory compliance costs, the yes, that is a deserved victory for AirBnB that I would support and encourage.

The problem, is that it is impossible to compare the two products if a large part of the appeal is lower cost due to regulatory arbitrage.

If an AirBnB host decided to operate a brothel, some may deem that to be a superior product to a standard AirBnB host...not really a fair comparison.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#107

Post by Zach_the_Lizard »

empath75 wrote: post #45
wmeredith wrote: post #20

Earlier quoted context omitted.

Customers love Uber because it's prices are currently subsidized by VC money. Once that goes away, we'll see how competitive they are.

I actually preferred uber when it first launched and it was kind of expensive and you got nicer cars and more professional drivers.

You can still use Uber black for that.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#108

Post by stale2002 »

digitaltrees wrote: post #93
jeffdavis wrote: post #85

Earlier quoted context omitted.

Most cities seem to love tourism, to the point that it's considered an industry and has its own advertising. Tourists pay sales tax and indirectly pay other taxes through businesses that cater to tourists.

You cant set sales tax at different rates for tourists, so you have to make up for this difference elsewhere if it is determined the sales tax contribution from tourism does not fully compensate for the costs.

The tourists are a net benefit for cities. If anything, they should pay LESS taxes, not more.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#109

Post by stale2002 »

DasIch wrote: post #91
stale2002 wrote: post #27

Earlier quoted context omitted.

Uber is profitable in the USA. So I see no reason why its won't stay competitive.

Apple is profitable but it certainly not competitive on pricing. Monopolies also tend to be profitable, competitiveness isn't even a concern there.

????

So are Uber's prices too low, because it is being subsidized by VC money, or are the prices too high, because it is a monopoly?

You can't have it both ways.

My argument is that their prices are just fine where they are now, and that there is no upcoming price hike, because the prices, in the USA, are profitable NOW.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#110

Post by digitaltrees »

dmix wrote: post #79
digitaltrees wrote: post #29

Earlier quoted context omitted.

So are you saying we should get rid of any regulation where "customers love a service" that doesn't follow the regulation? So we should allow a contract killer for hire on-line marketplace because drug cartels would really love to book their preferred hit man from an iPhone app?

What part of "we should find common ground" means "get rid of any regulation"? You prove my point perfectly by ignoring all context and making it us vs them, rather than weighing the value of both sides. The goal should be to update regulations to reflect modern reality, not destroy the massive value created by these new services (and an array of future services) by applying rigid century old hotel/taxi regulations a…

I don't take issue with finding common ground, or revising regulation. I will even acknowledge that regulations are slower to change than private actors are at innovating. Which is a problem.

I agree with you that grey markets can show an inherent problem with a regulatory regime and should be viewed as providing useful information. That being said, people will always break the law, that doesn't, by itself mean there should be no law, the question is what is the right balance given the competing objectives.

But I think your examples are excellent. Regulation can definitely go to far, have unintended consequences, and create real social harm. The problem is that what is ok changes over time; right now we are comfortable with using cadavers for research, but society was not at the time due to certain beliefs in place. Perhaps we will have a similar change with stem cell research in the future such that some of the current restrictions will seem similarly antiquated. But to say that both were inherently irrational is not a fair reading of facts or history. My point is that its good to debate what regulation is beneficial and revisit the debate regularly.

There will always be a tension here, regulation to protect social interests, and freedom to allow individual commerce, and that is ok, society should always reevaluate its structure as should any organization. I am merely reacting against the impulse to eliminate ALL regulations or say that business models that ignore relevant regulations are valid and superior.

For the record, I am actually a big fan of AirBnB, and use it regularly. I support their mission, I just think we have to be honest about the sources of their success, a part of which is a unique, better product, but a part of which is due to regulatory arbitrage. If we are not honest, we cant learn from what they have done and replicate it in other sectors. If my company takes the same approach in health care, I would go to jail, so why should we encourage this mind set for others reading hacker news?

Post reply on HN