D.C. City Council Will Vote to Ban Some Airbnb Rentals Today

Hotels are trying to stop competition from Airbnb, but they're doing just fine.


Tom Williams/Roll Call/Newscom

A longtime resident of the Hillcrest neighborhood in Washington, D.C., Rashida Mims wonders why hotel lobbyists are taking such an interest in her short-term rental income.

After all, there are no hotels in Hillcrest, a roughly mile-wide triangle filled with tangles of residential streets along the far southeast edge of the nation's capital. Mims makes a few thousand dollars off her Airbnb rentals each year, hardly enough to threaten the bottom lines of the hotels chains that are thriving in Washington. Those guests help Mims, who is retired, live a little more comfortably and bring an economic boost to her neighborhood.

But the Washington D.C. City Council is aiming to strike a blow against short-term rentals. A bill sponsored by Council Chairman Phil Mendelson will be given a vote on Tuesday. It would ban residents from renting their space for more than 90 days per year and would ban all rentals of secondary homes—that is, homes that are not occupied by the landlord listing them on services like Airbnb or HomeAway.

It's the latest showdown in a city-by-city struggle that's playing out between powerful hotel chains that see Airbnb as unwanted competition and residents like Mims who make a little extra cash by offering their extra bedrooms and second homes to tourists who want to see a different side of cities.

"The hotel industry wants to thwart any attempt to offer an alternative to staying at a hotel to protect its profits and will work to cut off D.C. residents from earning extra income through our homes to do that," wrote Mims in The Washington Post last week, urging the city council to oppose the effort to restrict short-term rentals.

It's not as if hotels in D.C. need protection. Both the supply of and demand for hotel rooms in D.C. are growing, according to an August report from BizNow, which tracks commercial real estate. There are more than 3,000 hotel rooms under construction in the D.C. area and another 6,000 in planning, which shows that investors are not worried about the long-term viability of the market.

Home sharing competes with hotels, of course, but it's wrong for policymakers to view it as a zero-sum game. Hosts on platforms like Airbnb are responsive to market conditions. They "expand supply as hotels fill up, and keep hotel prices down as a result," report economists at Harvard and the Massachusetts Institute of Technology. That allows more people to travel, generating $276 million in surplus bookings in America's 10 largest cities during 2014 alone, the researchers found.

This is particularly true during times of extremely high demand—in a city hosting the Super Bowl, for example, or on New Year's Eve. Hotels used to be able to charge significantly higher prices on those occasions, but the advent of home sharing has increased the elasticity in a region's supply of sleeping accommodations, allowing additional tourists to visit.

That provides opportunities to residents like Mims. Opportunities that the D.C. city council might revoke on Tuesday.

Last year, Councilman Kenyan McDuffie proposed a stricter Airbnb bill with a 15-day limit on rentals. While Mendelson's current proposal is less severe, it still amounts to revoking the agency of residents, like Mims, who want to earn extra money by renting their private property.