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

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

#21
post #18

"around a third of the $100 saving you make over the price of an average hotel room" Up to 30USD of the 100USD I save compared to a regular hotel? PER NIGHT? In that price range, $30 are a mere tip.

Yes, in a London hotel in 2015:

> On average, guests paid $220 a night for a hotel room in 2015 before VAT, while Airbnb hosts received $142, according to the Hotelschool report, which was calculated in dollars. After taking account of hotel room VAT and Airbnb fees (assuming a 10 per cent guest fee and a 3 per cent host fee, plus VAT) the prices were $264 for the hotel room and $164 for Airbnb.

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

#22
Hotels are heavily taxed because tourists and business travellers can't vote. In many cases cities like London and NYC are non-fungible goods, so if you want to go there you just have to pay the taxes. If they ever get high enough that hotels can't book rooms, the businesses should lobby the government to lower them.

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

#23

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…

Law usually needs to be tailor to the specific facts of a situation. Here there is a clear difference in a building being used as a residence with a small and consistent set of people using it as opposed to a much higher volume of guests using it for a business purpose. Just think about the increased risk of accidents, fire, or crime introduced as multiple guests stay in a space: they will increase the risk of crime by bringing valuables in rotating shifts, increased risk of fire as some guests will smoke or bring faulty electronic devices; I could go on, but the point seems clear. Higher traffic use results in greater risk. These factual differences should be taken into account when writing an insurance contract (a form of "law") or regulation (also a form of "law").

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

#24

Hotels are heavily taxed because tourists and business travellers can't vote. In many cases cities like London and NYC are non-fungible goods, so if you want to go there you just have to pay the taxes. If they ever get high enough that hotels can't book rooms, the businesses should lobby the government to lower them.

could you add in your analysis of airbnb or how it relates to what you've written - you've left it entirely out of your paragraph and I can't draw an immediate conclusion.

(Though maybe you were adding information about hotel taxation without any thoughts about airbnb or how it relates.)

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

#25
post #6

Earlier quoted context omitted.

"Skirting the law" is loaded language that makes it sound as though they are doing something illegal. They are not. It's true, though; the reason companies like AirBnB and Uber are so vastly superior to the entrenched competition is that they don't have to deal with all the ridiculous and pointless red tape that makes taxis so horrendous and American hotels so insanely expensive. I'm not sure how anyone can recognize…

Public safety regulations are not pointless red tape. They are created after real tragedy that shows a clear need. In fact, fire regulations in NY first applied to apartments, while hotel owners fought for decades to avoid the regulation require it fire escapes (Read the following for more information http://www.uvm.edu/histpres/HPJ/AndreThesis.pdf ) Even after fire escapes were mandated hundreds of people died in a…

> Public safety regulations are not pointless red tape.

This is the typical refrain of people who are trying to pitch pointless red tape; "it's about public safety!"

Of course, 90% of regulations in any given industry have nothing to do with "safety" and everything to do with sustaining the bureaucracy that created them. Even those regulations that are nominally intended to increase safety are often counterproductive, and cause more utility loss than they prevent.

> Is your position that we would be better to just ignore fire and other safety rules for all hotels?

Are you really under the impression that the competitive advantage of AirBnB comes from ignoring fire code? That's insane for multiple reasons, but mostly that all residential buildings (including AirBnBs) have to obey fire code already.

> In light of a clear rationale for such regulations

You're making two false assumptions here; one is that most regulations even nominally have a "clear rationale", and the second is that regulations that appear to have clear rationales to some self-interested regulatory group actually do. Most people, including regulators, don't bother to look beyond first-order costs imposed by proposed regulations. It's quite likely that many safety-oriented regulations claim a great deal more lives than they save, since the increased economic burden of those regulations sucks up resources that would otherwise be used on e.g. healthcare or personal enjoyment. On an individual level, the difference is very smal, but multiplied over the millions of people who are affected by the regulation it adds up to a lot of man-hours and lives lost.

> That would be like a race between two cars, one that has a 40 mile/hour speed limit, the other no speed limit. Which car would you pick?

The unlimited car is clearly superior, so you're not exactly helping your own argument here.

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

#27
post #12

Earlier quoted context omitted.

Just look how successful the products are (not talking about the companies) without heavy government intervention. Both of those would not exist if they had followed laws designed a (half?) century ago for different types of businesses. And customers love those services. Rather than finding a common working ground that keeps customers happy that outnumber those unhappy with it by 100:1 and instead updates laws like i…

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

Uber is profitable in the USA.

So I see no reason why its won't stay competitive.

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

#28
post #6

Earlier quoted context omitted.

"Skirting the law" is loaded language that makes it sound as though they are doing something illegal. They are not. It's true, though; the reason companies like AirBnB and Uber are so vastly superior to the entrenched competition is that they don't have to deal with all the ridiculous and pointless red tape that makes taxis so horrendous and American hotels so insanely expensive. I'm not sure how anyone can recognize…

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 city stole (took because it could, for no good purpose) money from the guests that they'd have otherwise spent on services they actually wanted.

The hotel should only be billed for services delivered. If the guests consume a lot of water the hotel needs to pay for it, etc. If that rate is below cost, it should be raised.

The extra tax is just a "because we can" and is one of the things an efficient economy will route around.

> they're definitely knowingly enabling their customers to do illegal things.

They're enabling a primarily legal operation - people renting things. It's not their job to police which units are legal to rent and which are not.

I could buy legal things at Costco and commit a crime with them and it's not Costco's duty to stop me.

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

#29
post #12
post #9

Earlier quoted context omitted.

Maybe we should be asking why some industries are heavily taxed and others are not

Just look how successful the products are (not talking about the companies) without heavy government intervention. Both of those would not exist if they had followed laws designed a (half?) century ago for different types of businesses. And customers love those services. Rather than finding a common working ground that keeps customers happy that outnumber those unhappy with it by 100:1 and instead updates laws like i…

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?

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

#30
post #25

Earlier quoted context omitted.

Public safety regulations are not pointless red tape. They are created after real tragedy that shows a clear need. In fact, fire regulations in NY first applied to apartments, while hotel owners fought for decades to avoid the regulation require it fire escapes (Read the following for more information http://www.uvm.edu/histpres/HPJ/AndreThesis.pdf ) Even after fire escapes were mandated hundreds of people died in a…

> Public safety regulations are not pointless red tape. This is the typical refrain of people who are trying to pitch pointless red tape; "it's about public safety!" Of course, 90% of regulations in any given industry have nothing to do with "safety" and everything to do with sustaining the bureaucracy that created them. Even those regulations that are nominally intended to increase safety are often counterproductive…

Actually no, owner-occupied residential buildings do not have to meet codes, under the liberal belief that it's OK for a person to subject themselves knowingly to certain hazards. However it is not OK for that owner to subject others to those hazards, which is why hotels and rental properties have to meet those codes even as the codes change. Therefore it is a regulatory advantage of AirBNB that unregulated residences are offered up as hotels without meeting the codes.
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