When the Hotel Industry Places a Hit on Airbnb, Politicians Happily Take the Contract

Government is a weapon old industries use to squeeze out entrepreneurs.


New York officials are on the job, protecting the world from the likes of Hank Freid and Tatiana Cames by slapping the two with a combined total of $17,000 in fines.

What threat to life, liberty, and property did this dastardly duo pose?

They were renting rooms to willing customers, the bastards. Fried and Cames were slapped for violating laws prohibiting apartment owners from renting rooms for less than 30 days if they're not living on the premises, and a further law passed last year that banned advertising such rentals. It's a direct strike at innovative home-sharing services like Airbnb and the people who use them that parallels similar attacks around the country.

"The law signed today will provide vital protections for New York tenants and help prevent the continued proliferation of illegal, unregulated hotels, and we will defend it," New York Attorney General Eric Schneiderman (D) trumpeted last October.

Maybe I'm the suspicious type, but I think those "vital protections" Schneiderman refers to are against competition to the established old-school hotel industry. Just last summer, the Office of the New York State Comptroller fretted that the hotel business in New York City wasn't doing as well as hoped. "Despite impressive gains, the average room rate (i.e., the average cost of renting a hotel room) has not yet reached its prerecession level" and, in fact, "room rates declined slightly in 2015." This bums officials out, because "New York City collected a record $1.8 billion in tax revenue from the hotel industry in fiscal year 2015" and officials want to keep scooping up that revenue and maintain close, personal friendships with the people who generate that kind of cash.

Tellingly, the comptroller's report cautioned that "The growth of nontraditional competitors, such as Airbnb, that match people looking for lodging with owners or renters of private apartments, presents a challenge for the industry."

You don't say.

New York's home-sharing restrictions "should be a big boost in the arm for the business, certainly in terms of the pricing," Mike Barnello, chief executive of LaSalle Hotel Properties, told shareholders in a conference call last October. "You got to thank all of our friends at AHLA [American Hotel and Lodging Association] for working as hard as they have been to push legislation across the country really in all these key cities." He added, "registration and limitations would go a long way towards curbing the hosts who are actually operating basically illegal hotels."

Obviously, New York officials aren't alone in preferring their crony capitalist pals over innovative services and budding entrepreneurs. Last year, Chicago was one of those "key cities" that adopted restrictions on home-sharing that the Chicago Tribune described as "dizzyingly complex, setting various kinds of limits and ways to get around those limits for different types of residences in neighborhoods around the city."

"If the guiding principle were to protect the community from danger, there would have been no need to include a 4 percent tax on top of one of the highest hotel taxes in the country," added Illinois Policy. "Mayor Rahm Emanuel and the aldermen saw a potential cash cow and didn't hesitate to throw visitors under the bus to protect the hotel industry."

The measure also allows for warrantless searches of rental properties—often people's homes, remember—by city officials.

The Chicago law has been targeted in lawsuits by Keep Chicago Livable, an organization of Airbnb hosts, and in a separate effort by Arizona's Goldwater Institute with the Chicago-based Liberty Justice Center.

"Chicagoans should not have to ask the government for permission to have sleepovers in their own homes," said attorney Shorge Kenneth Sato, representing Keep Chicago Livable. No, not even if the guests offer their hosts money instead of a plant or a bottle of wine.

Such shenanigans aren't confined to comically corrupt jurisdictions like Chicago and New York. In 2015, Sunny Santa Monica, California passed its own law outlawing home and apartment rentals of less than 30 days. The rules wiped out an estimated 80 percent of listings in the community, leaving old-school hotels with less competition to worry about.

That's after "Responsible Leadership for a Better Tomorrow, a political action committee headed by Councilmember Terry O'Day and largely backed by hotel owners and prospective hotel builders, spent $95,307 on the council race' more than any other outside spenders," according to the Santa Monica Daily Press. Tenant advocates, who think they can lower rents by choking off a competing use of properties, also spent heavily.

Local officials subsequently went after rental owners with criminal charges. They successfully prosecuted Scott Shatford last summer for operating a business without a license and failing to comply with citations—or for trying to make a living by dealing with willing customers, as other might put it. Shatford has "since left Santa Monica for the more Airbnb-friendly city of Denver, Colorado," reports Reason's Zach Weissmuller, who has his story here.

Airbnb isn't alone in upsetting traditionally cozy relationships between old industries and politicians. When Austin put a high-profile squeeze on Uber and Lyft last year with voter-approved regulations on ride-sharing services, city residents may have thought they were making a populist strike against evil corporations, but they were just whacking upstart businesses on behalf of older competitors. City councilmember Ann Kitchen, who led the charge for the regulations, was a major recipient of taxi industry largesse.

"Overall, Kitchen, a former state representative, appears to have received more campaign cash from taxi companies than any other council member who was elected last year," reported Austin Inno.

That looks an awful lot like a hit, paid for in advance.

That's exactly the analogy that Reason's own Nick Gillespie used in 2014 when he wrote "The government is a hit man" about growing efforts by government allies of established firms to hobble innovative new operations. "Market entrepreneurs make their money by offering customers a good or new service at a good or new price. Political entrepreneurs make their money the old-fashioned way: they use the government to rig markets and kneecap real and potential competitors."

Finding a way to kneecap government officials—their power at least–in return might be the only way to prevent them from rigging the system to favor their buddies. Until then, politicians will continue to stroke their friends and conspire against innovators, entrepreneurs, and the great many people who benefit from a dynamic world.

Check out Reason TV's "Santa Monica Evicts Airbnb: The War on Homesharing" below:

NEXT: Calif. Officials Deny Reports on Dam Safety Warnings, Trump and Trudeau Trade Valentines, Dems Don't Think They Need Changes: P.M. Links

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  1. Welcome to New Somalia. I’m sorry only that AddictionMyth could not be here with us to share the joy of your arrival. 🙂 🙁

    1. Eh? Wassup with AddictionMyth?

      1. What the hell, why are you responding to it?

        1. Sorry, I see what I did there, and apologize for not keeping up with all the changes. I’ve been dealing with mud and flatlanders who think GPS rerouting over single lane dirt roads is the way to get around mudslides which cover the entire freeway. But there is some emotional compensation for hauling rocks to fill in the 2 foot deep potholes they make when they have to get out in the deep red mud to fill in the hole so they can turn around and get back out … and watching them get back in their expensive SUVs all muddy and such. I can’t imagine that red stain ever getting cleaned up. Tsk tsk.

          1. AddictionMyth == dajjal == Palin’s Buttplug == shreek.

            Get it now?

      2. Mary/Tulpa/Daijal/Kizone/etc. forgot her ‘AddictionMyth’ password and has been using one of her other accounts to desperately squeal for attention for a spell now.

        1. That twitter discussion below is “Crazy people stuck in a room with ENB, and she’s trying not to make any sudden movements.”

          1. Well, she knew the job was dangerous when she took it.

        2. No, it’s shreek.

    2. Somalia? Isn’t that the country that was famous for not having a government for a number of years? Which means they would not have rules like this?

  2. Taken down in #SloopysMom dragnet.

  3. Two 2Chili articles in a row? Reason does love us!

  4. One thing that really pisses me off is that in a proper world there would be mass outrage among local voters and politicians would issue tearful apologies before resigning. But no …. that’s not the world I live in. In the world I live in you issue tearful apologies if you have the audacity to defend peoples right to wear a Halloween costume. Our culture is rotten from the inside out. Sure on the outside it looks like a shiny waxed apple but pierce the skin and putrid black goo oozes out.

    1. Whither thou, R. Budd Dwyer?

      1. Hey, I like this guy, he’s chasin’ kids off his lawn while wearing garter socks and boxers.

  5. AirBnB CEO: “We want to provide a home sharing platform for peeping toms, urophiles, kleptomaniacs, and those banned from room rental chains around a globe.”

  6. So would a Europe-loving American who’s into piss porn be a Europhilic Urophile, or a Urophilic Europhile?

    1. I knew there was a reason I was Pro-Brexit…

      1. “Voting for Brexit” is my new go-to euphemism for taking a dump.

        1. A Brexshit? in the drunken vernacular

  7. “but I think those “vital protections” Schneiderman refers to are against competition to the established old-school hotel industry”


  8. Wow, all this after airBNB spent five million dollars on their smug better-than-you virtue signaling Super Bowl ad. (hell, I didn’t even know what they were selling until someone told me it was airBNB). Oh well, if you lie down with Progs, you wake up with fleas (and a sore ass).

    1. I just figured they thought (incorrectly, obviously) that if they virtue signal hard enough maybe the proggie hordes would leave them alone and go after Uber for the “crime” of helping people get to JFK airport while taxi drivers were too busy virtue signaling over Trump’s “Muslim ban” to bother doing their fucking jobs.

  9. Funny how you don’t see NY pols crowing about the “impressive gains” that apartment rentals have made in recent years. It almost makes you think they’re pandering to specific sets of voters. Nah.

    1. Those gains don’t count unless the local government is getting its cut.

      1. Oh, they get their cut, trust me. In fact, they apparently have so much money lying around that they just announced they’re going to throw some of it at, get this, lawyers to defend poor renters against evictions.

  10. If you buy this penny whistle from me for one hundred dollars, you will become my friend.
    I allow my friends to visit me for the night even when I am not home.
    Tax that!

    1. Even better would be to incorporate into a nonprofit tasked with providing affordable access to low income tourists.

  11. Two Tucille articles in one day? Nice!

  12. This bums officials out, because “New York City collected a record $1.8 billion in tax revenue from the hotel industry in fiscal year 2015” and officials want to keep scooping up that revenue

    So wouldn’t the logical thing be to declare “Air BnB is legal In New York and is subject to a tax rate of X%”.

    Then NYPD can go ahead and kill black people for renting “loose” rooms for a night.

    That is a governmental win-win.

  13. So you see, Senator Avidlife, there’s really no need for your wife to ever see this security video footage if we can count on your vote on this Milk The Visitors bill…

  14. It’s tough for the politicians since AirBnb is now in bed with the Trump haters and refugee lovers – strangely, like Reason magazine. All I can suggest is open your own homes.

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  17. It’s strange that the tourist industry does not oppose these bans and regulations. Less money spent on lodging means more for restaurants, night clubs, bars, amusements, car rentals, tours, sports activities, and lots more. Perhaps they are not as organized as hotels.

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