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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

#71

Post by okreallywtf »

stuckagain wrote: post #30
wyager wrote: post #25

Earlier quoted context omitted.

> 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 residence…

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 and many other not-even-close-to-current-code issues that were 100% legal due to it being grandfathered in. When doing renovations (prior to being an AirBnB) a lot of these issues were fixed 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.

Unfortunately it varies it seems whether or not BnB's (air or not) are subject to extra regulation, even if its not the same as a large hotel.

[1] https://en.wikipedia.org/wiki/Knob-and-tube_wiring

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

#72

Post by stephengillie »

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…

You're right those taxes make no direct difference to the accommodation. They're not supposed to. The taxes pay for the city and public amenities, like the street outside the hotel, and maybe the city's stadium and sports teams. How do the AirBnB's neighbors feel about having renters use their streets without paying? Or about enjoying the prestige of being in a city with multiple pro sports teams, without helping with that bill?

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

#73

Post by wyager »

ec109685 wrote: post #65
wyager wrote: post #40

Earlier quoted context omitted.

> Most of those regulations were put in place to protect communities and customers I don't have much of an issue with communities using zoning rules to prevent AirBnBing. That's a separate issue from top-down hotel regulations. The cost of "protecting" me from hotels is several orders of magnitude higher than the value I get from these "protections". Of course, most of the cost of hotel regulation is hotel taxes (whi…

It would be helpful to cite some of the things you are arguing. What basis do you base your opinion that hotel protections are several orders of magnitude than the value?

Out of curiosity, what do you expect me to do here? Would you like me to research your regional tax code and break down exactly why hotels are more expensive? Have you ever stayed in a hotel? They'll usually at least break out the obvious things like occupancy taxes.

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

#74

Post by scarmig »

rayiner wrote: post #61
dmix wrote: 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…

> And customers love those services. All else being equal, customers love paying less for the same thing. But they don't necessarily like the implications at scale. E.g. would New Yorkers vote to raise property or income taxes to make up for the $1.8 billion that would be lost from hospitality taxes?

Even that's not as simple, though: if hotels all failed, they would be replaced by something else (maybe AirBnBs, maybe other things, probably a mix) that would generate economic activity and tax revenues.

Certainly adding up to less than what's lost in hospitality taxes, but it does counteract the loss to an extent.

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

#75

Post by jghn »

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.

Right. When I started using Uber, back when it was just "Uber" and w/o the various levels, it was cost-wise on par with local cabs but I always used it. The ability to get a decent experience, when I wanted it and with the online capabilities was a huge win over taxis.

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

#76

Post by wyager »

okreallywtf wrote: post #71
stuckagain wrote: post #30

Earlier quoted context omitted.

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 residence…

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 universe where rennovations didn't involve bringing buildings up to code, AirBnBs would be unsafe? That's true, but irrelevant. We don't live in that universe.

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

#77

Post by okreallywtf »

wyager wrote: post #66
adamsea wrote: post #57

Earlier quoted context omitted.

Just want to point out that the parent post cited specific evidence, with links to a fairly reputable source (wikipedia), to support their claims, which your counter-post lacks.

What is your point? I'm making an argument that can stand or fall on its own. Dropping links that don't add any semantic value is a cheap trick to buy the appearance of a strong argument, but doesn't change the meaning of anything in the post. The GGP post just added some links to stories about historical building fires, which we all already knew existed and added nothing of substance to his argument, but it still ma…

> I'm making an argument that can stand or fall on its own.

Not when your argument depends on that 90% number being correct. Some people might read that and say "wow really, 90%?" and that might actually persuade them. When you make a quantitative statement that has no backing its not up to you whether it stands on its own or not - if your numbers are not correct then it does not. You could say "some" instead of 90%, but you can't even say "most" without some kind of proof to back it up but you don't even do that, you just pick a really high number that would be very persuasive to anyone who doesn't question whether or not that number is true. Its lazy at best and intentionally misleading at worst.

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

#78

Post by nathannecro »

stale2002 wrote: post #26

.... So, ONLY a third? That leaves two thirds left, thats not due to that. That is still a big difference.

Hotels have to comply with other regulatory mandates like health insurance for the workers, worker's comp, pension/retirement plans, in some cities - unions, etc.

You may also be forgetting the other amenities that hotels may provide: the additional cost of common area facilities (exercise rooms, breakfast areas, pool, etc) the hotel provides for the guest. Room service, turndown service, and daily cleaning also play a huge role.

There's also a huge amount of space that's used for things like lobbies, front desks, back of the house offices for the accounting/managerial/etc staff that keep not only your one room operating, but provides the flexibility to rent 100, 200, 300, 400 rooms.

Then of course, you have the construction + regulation that goes into a hotel. Guestroom entry doors must meet a specific fire-rated standard (greater than those normally found in residential homes). In the United States and in Europe, each guestroom is designed to maximize the protection of the occupant from environmental threats. Fire alarms and sprinklers are regularly tested, every entry door has a lock whose key is tightly controlled. HVAC systems are constantly maintained so that dust and mold don't build up inside.

And so on, and so forth.

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

#79

Post by dmix »

digitaltrees wrote: post #29
dmix wrote: 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…

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 and pigeon-holing them onto tech companies. Or punishing workers with labour and social welfare laws from a past time when everyone was in an employee/employer relationship rather than contractors.

Grey markets are almost always a reaction to inefficient, out of date, or unintended side effects of state intervention. India's economy crashing after removing the currency is a perfect example of this, it exposed a massive grey market which existed due to their famously heavy handed government policies [1] [2]. Or when anatomy research was exploding in popularity in the 1890's and access to cadavers was limited by government policy to the bodies of prisoners and orphans, leading to a massive black market of grave diggers and murders, which only stopped when the policy was updated, despite broad enforcement effort [3].

Sometimes grey markets are good for society while slow moving regulatory and judicial systems catch up to modern economic reality. Sometimes they're disastrous (see: drug war). But you can't put the rabbit back in the basket, so the sooner common ground is found the better.

[1] https://www.youtube.com/watch?v=hVwIZzGHxwc

[2] http://www.bbc.com/news/world-asia-india-35610332

[3] https://en.wikipedia.org/wiki/Burke_and_Hare_murders#Anatomy...

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

#80

Post by cheath »

wmeredith wrote: post #20
dmix wrote: 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.

I don't think this is necessarily true. Much of the VC dollars Uber has are currently being used to enter new markets. It's primarily used as growth dollars, as it should be.

They lost $1.2 billion this year and spent $1 billion on trying to capture the India market alone. In several other markets they were taking a similar strategy.

My suspicion is that as a rider in a primary market, you are paying a "sustainable" (for the rider) rate. Maybe not so much for the driver. But that's a different topic.

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