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Report: Bulk of Phoenix Airbnb rentals are ‘illegal hotels’

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Arizona has been opening its arms to the sharing economy lately.

Since stepping into office, Arizona Governor Doug Ducey has been transparent about his support for sharing economy businesses like Uber, which he pushed not only in his most recent State of the State address, but also shortly after he began his first term as well.

The Arizona Legislature recently introduced Senate Bill 1350, which would essentially protect short-term vacation rentals like Airbnb from city, county and property owner restrictions.

And while the hospitality industry supports the competition from Airbnb, some of its leaders, as well as a new study, suggest that the sharing economy company is unfairly regulated, allowing the operation of “illegal hotels.”

Vanessa Sinders, head of government affairs for the American Hotel & Lodging Association, Professor and Director of the Center for Hospitality Real Estate Strategy at Pennsylvania State University Dr. John O’Neill, Marion Hook, owner of the Adobe Rose Inn Bed & Breakfast in Tucson, and head of the Tucson mayor’s task force on short-term rentals, and president and CEO of the Arizona Lodging & Tourism Association Kim Sabow held a press conference to present a new study, showing that a large portion of Airbnb rentals in Phoenix are running unregulated properties.

“This is a very different and disturbing trend,” said Sinders, who along with her colleagues stressed that the hospitality industry supports and embraces competition, but not a lack of regulation.

According to “Spotlight Report: Airbnb’s City Level Commercial Activity” for Phoenix, authored by Dr. O’Neill and Penn State doctoral student Yuxia Ouyang, 85 percent of of Phoenix Airbnb operators listed properties for rent for more than 30 days, and accounted for $41 million worth of revenue for Airbnb in Phoenix, accounting for the majority of the company’s revenue in the area.

More than 21 percent of Airbnb’s revenue in the Phoenix area comes from properties that are listed for rent more than 180 days per year, and more than 40 percent of Airbnb’s regional revenue came from multi-unit operators — the “illegal hotels.”

“This is not about short-term rentals or putting them out of business,” said Hook. “It’s about everybody playing the same rules.”

The speakers said that SB 1350 does not help even the playing field.

“A public policy response is needed,” said Dr. O’Neill.

The 85251 ZIP code in Scottsdale had the highest listing of properties on Airbnb in neighborhoods like Las Viviendas and the Waterfront.

The study also states that if Airbnb had the same tax regulations as other hospitality operators, they would have had to pay more than $5 million in taxes.

Similar issues have been happening across the country, especially in Airbnb’s home state of California.

Nationally, “nearly 30 percent of Airbnb’s revenue in 12 of the nation’s largest markets – $378 million – comes from full-time operators that listed properties for rent full time, or for 360 days or more during 12 months,” according to the report.