> The VAT on most Airbnb stays can be as little as 0.6 per cent because the UK only levies the tax when businesses sell more than £83,000 per year — a threshold reached by very few Airbnb hosts. It is otherwise only payable on Airbnb’s booking and service fees.
So the problem is that many "small business" pay less taxes than big companies, which seems fair. The main difference is that thanks to Internet, those small business now can be aggregated into a platform while still operating independently, which is basically awesome.
http://www.telegraph.co.uk/travel/destinations/europe/united...
https://www.theguardian.com/uk-news/2015/jan/07/london-touri...
This is, as the local authority says, partly to clean and police and etc areas that are very popular with tourists.
(Though maybe you were adding information about hotel taxation without any thoughts about airbnb or how it relates.)
It is designed to screw over foreigners.
I read jdavis703's comment very carefully and I don't agree that this is the argument that poster was making!
They wrote
>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.
That doesn't have any indignation (unlike your comment). So it's certainly not precisely what was meant. I don't want to put words in jdavis703's mouth, I want to hear how they say this relates to airbnb or what the policy change should be.
I read their comment as being basically acceptant of high taxes (" If they ever get high enough that hotels can't book rooms, the businesses should lobby the government to lower them.") -- but it does't go on to say "For the same reasons, airbnb should also be taxed at a very high rate, and should also lobby to lower said very high rates only if they can't fill rooms anymore." (not a quote)
In fact it could say, "high hotel taxes are good for the locals, who are the ones who make these decisions." (not a quote) It could be read that they think airbnb should also have the same high rates. (But perhaps the correct reading is the opposite, that both hotels and airbnb should not have any high taxes.)
Anyway I'd like to hear it from them :) I like their analysis in descriptive terms and I'd like to hear from them how it applies to airbnb or what should be done to both hotels and airbnb, in their opinion.
(Side note: Usual "Google the headline" trick works on FT.com's paywall)
Up to 30USD of the 100USD I save compared to a regular hotel? PER NIGHT? In that price range, $30 are a mere tip.
> 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.
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 improving landlords protection from Airbnb renters, improving access to employment insurance and health care to self employed contractors, etc it's easier to blame tech billionaires for being greedy.
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?
Until they die in a fire in a building that doesn't follow fire code; or are seriously injured in a possibly uninsured Uber[1] car.
[1] Uber provides insurance to US drivers. I don't think they provide it anywhere else.
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?
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 that overregulation makes taxis, hotels, etc. so truly awful and then turn around and suggest that the solution is to also overregulate everyone else who managed to escape from that utility-sucking tarpit of bureaucracy and waste.
Even after fire escapes were mandated hundreds of people died in a factory fire ( see https://en.m.wikipedia.org/wiki/Triangle_Shirtwaist_Factory_... ). I hope you are wiling to concede that these regulations, while imposing a real burden on businesses and landlords, were designed to correct a real and very persistent problem. Is your position that we would be better to just ignore fire and other safety rules for all hotels?
In light of a clear rationale for such regulations, we must ask why one business should get to play by a different set of rules than another? Free market competition does not work if the only advantage is regulatory arbitrage. 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 only argument that I would concede is that perhaps AirBnB is closer to an actual bed and breakfast, so those regulations should apply, but I would guess that class of regulation is generally more strict than what they are subject to now.
"Airbnb has also bowed to pressure over planning concerns in residential areas, by agreeing to help enforce annual rental limits. But consumer protection is another emerging issue. David Weston, chairman of the Bed and Breakfast Association, criticises Airbnb for not ensuring compliance with fire regulations. “I think the public assumes some sort of checking if you are booking with a big global brand,” he adds.
"By contrast, members of his association with as few as three letting bedrooms have been required to install fully wired fire alarms and fire doors. “We have had instances of people having to spend thousands of pounds,” he says. “It is extremely galling to find that fast-growing competitors are not complying with anything.”
[...]
"Airbnb rejects criticism of its fire safety measures, saying the Chief Fire Officers Association has confirmed that the advice it offers hosts is proportionate to the requirements of a family home. It encourages hosts to install safety features and, for a limited period, has offered a single free smoke/carbon monoxide detector — although it does not oblige hosts to fit smoke alarms. Its website says hosts have the option to fill out a safety card detailing emergency exit routes and locations of fire extinguishers, but this is not compulsory."
"Proportionate to the requirements of a family home" and "the option to fill out a safety card" do not thrill me as someone who has been run out of a room by a hotel fire.
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.
And yes, Airbnb is skirting the law in the loaded sense of the term. They basically encourage illegal rentals and then refuse to police them until cities like NYC force them to. They might not be directly in violation of laws themselves, but they're definitely knowingly enabling their customers to do illegal things.
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 (which are big revenue sources for tourist destinations and have nothing to do with hotel safety) and bureaucracy. The claim that all regulations have something to do with safety is popular among proponents of a given regulation, but of course it's manifestly false.
> Safety and health regulations ensure that customers won't get injured or sick during their stay.
I think you're putting a bit too much stock in the effectiveness of regulation; in particular, municipal health authorities taking your money does not make you immune from disease. I'm also quite capable of looking at something and telling if it's dirty, which is the process I use both for my own household and for AirBnBs. It seems to work quite well (and inexpensively).
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.
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 clear where the difference is going. Resort taxes, occupancy taxes, inspection and certification fees, etc. For all their costs and alleged benefits, they don't actually manage to make the hotel experience any better or safer than staying in an AirBnB.
As a tourist, there's no reason I should have to provide an inordinate level of support to the regional regulators. I'm happy to pay sales tax like everyone else, and the costs of property and utility taxes are already built into the cost of my stay.
> And things like proper safety and fire regulations
Residences already have to obey regional safety and fire code.
> All of those things cost money.
That's true, but you're already paying for that in an AirBnB, because as I said, it also has to follow regional fire code.
You seem to be under the false but unfortunately common impression that all, or even the majority, of regulations have anything to do with improving consumer safety.
> It took a string of deadly hotel fires in the 70s to get regulation up to speed.
The false premise here is that residential building code is not already "up to speed".
So restaurants that don't charge the extra foreigner-tax are destroying the city infrastructure? Or are their regular taxes expected to cover it?
Why not with hotels? Why can't they simply be assessed the real cost of supporting their usage?
If there was a cost associated with hosting an out-of-town guest, why is it a percentage of the room rate? Of course, the answer is "because it can be." Takers gotta take.
> Hotel taxes [also support ...] 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.
No. The room rates support that. The hotel doesn't keep the taxes so none of the taxes go to helping make the hotel safer.
> AirBnB offers none of those things.
Neither do a newspaper's classified ads.
Whose laws should they support? The guests? The hosts? The country the servers are in?
Should the newspaper have a similar burden? If I sell a car should they have to inspect the car first to make sure I'm not trying to pass off a lemon?
As usual, the truth is somewhere in the middle.
Of course they are. And Uber has been fined/sued/charged hundreds if not thousands of times for doing just that. The penalties have proved insufficient to deter them from their illegal racketeering operation, however.
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.
Hotels also have a lot of empty rooms that cost money to maintain whether they are occupied or not.
Hotels employ staff, not all of whom are fully productive 100% of the time.
Before a hotel takes my money I actually know where it is. The hotel is governed by local legislation so I have redress if something goes wrong.
I may have some redress with Airbnb but I wouldn't like to bet on it.
Is AirBnB still pushing the "spare room" thing?
