Monday, May 5, 2014

Crony watch: The innkeepers gun for Airbnb

The "share economy" -- web technology that allows ordinary people to monetize their property, skills, or time -- proposes to achieve at least three things. First, it can raise the standard of living of such people by allowing them to earn extra income or liquidity. For example, people who rent out rooms via Airbnb, or who give rides via SideCar or Lyft, or who sell their junk on eBay or Amazon, make more money that they can then spend on goods and services or invest in another business. Second, it can raise the standard of living of customers by lowering their costs because they can, say, get a room in a distant city for less than Hilton would charge. Third, the share economy will generate new competition for businesses -- hotels, for example -- and force them to lower costs or improve service to survive.

For all three reasons, the share economy will lower prices for consumers and generate profits in the pockets of ordinary people, profits that otherwise would have gone to incumbent conventional businesses. If one believes that improving the standard of living of ordinary Americans is an important objective, the share economy in all its various forms would seem to be one of the solutions. If you are a newly-minted Piketty lefty, you might appreciate that the share economy at least appears to move income from "capital" to "labor," which you would think would be a feature, rather than a bug. If you are an accountability-conservative, you will admire how the share economy rewards enterprise and pluck in daily life.

Alas, the empire is striking back. The taxi regulators and the industry they protect have been gunning for Uber for at least two years, and now the hoteliers are trying to kill Airbnb in its crib:

The hotel industry is finally mustering its considerable public relations and lobbying muscle to tackle the topic of short-term online rental companies, such as Airbnb. In a message to its members yesterday, the American Hotel and Lodging Association (AH&LA), announced that it plans to work across the country to battle against the current practices of short-term rental companies.
The hoteliers hope to exploit the fears of local governments who worry that their fat hotel room taxes will dry up under pressure from the share economy. Of course, local politicians could come up with different taxes to impose if the economy becomes inhospitable to those already on the books, but they mostly do not want to be troubled to vote for new taxes.

In other words, we have to protect hotels from casual room-renting and prevent ordinary Americans from competing against Hilton so that politicians will not have to design new taxes to replace the taxes that might be lost if some of those hotels go out of business.

We note -- really as an idle musing -- that the political party that controls most of the big cities with high hotel taxes is also the party that positively weeps for the declining standard of living of the American middle class. We suspect, however, that when push comes to shove, most urban Democratic politicians will choose to protect their massive hotel tax revenues rather than permit ordinary Americans to earn money squeezing the margins of hotels, taxis, and other well-entrenched businesses. And that will be a shame.

2 comments:

"The Hammer" said...

Established business using government power to suppress competition? Why that's unheard of!

James Horner said...

That is the support of a bill to manage Airbnb all the more stringently, in a manner that would clearly be excessively oppressive for most mortgage holders Its suites will be recorded on the journey rental site, making it the at first overnight boardinghouse in the city.

James Horner,
Lilia Cortez

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