As Los Angeles lawmakers try to regulate the booming business of short-term rentals, they are trying to draw a line between what they see as “good” and “bad” rentals.
At City Hall, few see anything wrong with renting out an extra bedroom from time to time for added income, part of what Councilman Mike Bonin has dubbed “good short-term rentals.”
But the phenomenon of whole homes or apartment buildings becoming tantamount to hotels has stirred up alarm in tourist hot spots such as Venice and Hollywood. Housing, labor and community activists argue that such rentals disrupt quiet neighborhoods and take units off the market, a problem they say has surged with the explosive popularity of online platforms such as Airbnb.
Between those extremes lies a vast middle ground, including homeowners renting their entire house to visitors when they leave town and investors who have run beach cottage rentals for years.
The question facing City Hall is exactly where to draw the line. It’s a debate that has even caused a rift within the industry, pitting Airbnb against a vocal alliance of rental hosts.
Airbnb, the giant in the short-term rental industry, has cautiously welcomed a City Hall proposal that would allow people to rent out a home or apartment for short stays if it is their primary residence, but prohibit such rentals if it is not.
Bonin said that would stop “bad” rentals but make it legal for Angelenos to rent out part or all of their main homes day to day, even where planning officials say it is now prohibited by zoning rules.
The company says most of its Los Angeles hosts are listing their own homes or rooms inside of their homes.
Rita Harris, 75, an Airbnb host, said sharing her Hollywood home made her “an ambassador to the world,” welcoming international visitors such as a neuroscientist from Italy and a plastic surgeon from Singapore.
Shannon Shue told local lawmakers that booking guests in a second bedroom in her Leimert Park home had introduced her and her fiancee to amazing people and helped pay for their upcoming wedding.
“The thousands of Angelenos sharing their home while they’re away, or a guest house or in-law unit on their property, aren’t commercial operators — the vast majority are middle-class families,” Airbnb spokesman Christopher Nulty said.
But Airbnb faces persistent questions when it comes to “commercial” hosts who rent out multiple apartments or homes in which they don’t reside. Critics say these rentals are serious moneymakers for the company even as it tries to promote itself at City Hall as a service for the little guy sharing his home. Airbnb hosts who list two or more whole units provide 37% of the company’s revenue in Los Angeles, according to a recent analysis by the Los Angeles Alliance for a New Economy, an advocacy group that has been critical of Airbnb and is allied with the hotel workers union.
And at City Hall, Airbnb is jostling for attention with the Los Angeles Short Term Rental Alliance, an organization of owners and operators that includes seasoned professionals renting out multiple units.
The alliance has criticized the proposed regulations championed by Bonin as excessively harsh, arguing that people should be able to rent out a second home or investment property for short stays if they wish. Its director of operations, Robert St.Genis, says that professional operators are better equipped to handle neighbor complaints and provide 24-hour-a-day assistance.
But under the current proposal, St.Genis complained, “they have been made into the sacrificial lamb” by Airbnb and the city.
As the rental alliance speaks up for professional operators, some of whom have been doing business long before the rise of Airbnb and similar websites, “it creates a messaging challenge for Airbnb,” said Roy Samaan, a research and policy analyst with the Los Angeles Alliance for a New Economy. Every time the alliance “gets up and speaks, it reminds everyone in the room that the short-term rental industry isn’t just about sharing.”
Some alliance members have been directly targeted in recent protests by activists denouncing “Unfairbnb.”
And some have also been singled out by Airbnb too. In the plainest sign of tension between the alliance and the company, some alliance leaders say that they had dozens of listings stripped from the platform earlier this year. At the time, alliance co-founder Sebastian de Kleer argued that the platform cut him and other professionals loose because “it doesn’t match their PR story.”
For Airbnb to court investors who are skittish about legal uncertainty, “they have to start to show wins,” including regulatory approval from cities such as Los Angeles, said Sam Hamadeh, chief executive of PrivCo, a private research firm. On the other hand, “if they jettison the professionals, it hurts their business and shrinks it.”
The tension over such rentals surfaced on an August evening, when dozens of Airbnb hosts gathered in an artfully furnished Mid-City living room to hear about the company’s strategy at City Hall.
David Owen, the regional head of public policy for Airbnb, said polling had found that a strong majority of Los Angeles voters approved of Airbnb and other online platforms that connect travelers with hosts offering rooms or entire homes for short stays. Owen said the key was to make that loud and clear as lawmakers hashed out new regulations — especially in the wake of neighborhood protests and a rash of unflattering news reports about whole buildings becoming “rogue hotels” rented out nonstop to tourists via Airbnb and other platforms.
In reaction, several hosts asked Owen why Airbnb doesn’t boot the “bad” rentals — the commercial operators running lots of units — off its website.
Esquire Jauchem, 67, a producer and director who said he has no pension after years working as an independent contractor, has relied on renting out rooms at his Venice home for income. He praises the platform for bringing in tourists who shop and dine locally. But he worries about nearby apartment buildings being turned into “virtual hotel rooms.”
“Running an illegal hotel, that’s very different than someone renting out an extra bedroom in their house,” Jauchem said in a later interview.
Owen said the company had ejected some hosts from its platform. But its critics say that many others with multiple listings remain. Tom Slee, a researcher with a forthcoming book that is critical of businesses in the sharing economy, said that although Airbnb appears to have removed Los Angeles-area hosts with extremely high numbers of listings — 30 or more apiece — the number of hosts with at least 10 listings has actually grown over the past year.
In light of such statistics, some critics are skeptical that Airbnb is really at odds with the rental firms. “They’re saying the right things,” said Judith Goldman, one of the co-founders of Keep Neighborhoods First, a group concerned about commercialized short-term rentals. “But they’re continuing to let the commercial operators use their site.”
Nulty, the Airbnb spokesman, said the company shares the city’s concerns about “outlier cases where speculators abuse the system.” But in a statement, he sought to shift the focus to the city, saying that Los Angeles needed strong tools to prevent such situations “whether they involve short-term rentals or not.”
The city plans to hold hearings across Los Angeles about the issue before drawing up new regulations this fall.
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