Reason.com

Free Minds & Free Markets

Why Does Maryland Hate Airbnb?

Home sharing competes with hotels, of course, but it's not a zero-sum game. Hosts on platforms like Airbnb are responsive to market conditions.

When Marriott International Inc. was considering relocating its global headquarters from Baltimore to Northern Virginia in 1999, Maryland handed over $44 million in grants to keep the hotel chain in the state.

In 2016, after Marriott again made noises about moving out of Maryland, Gov. Larry Hogan, state lawmakers, and local officials coughed up another $62 million in taxpayer subsidies to support the construction of new headquarters in the affluent D.C. suburb of Bethesda.

But even that wasn't good enough. After padding the bottom line of the world's largest hotel chain, Maryland lawmakers are now trying to protect it from competition from home-sharing options like Airbnb and HomeAway.

A bill given serious consideration in Annapolis this spring would require platforms like Airbnb to collect detailed information about hosts and guests, retain it for up to four years, and turn it over to the state government if requested. Failure to comply with any of the rules would result in $500 fines for individual hosts, with each further violation adding another $500 to the tab. Critics say the privacy concerns and escalating fines are clearly meant to deter would-be hosts from renting out their spaces.

The bill's sponsor, Del. William Frick (D–Montgomery County), hails from the district that not-so-coincidentally contains Marriott's new, state-subsidized corporate headquarters.

The legislation empowers local governments to pass restrictive rules, such as the one already on the books in Frick's home county prohibiting more than six people from occupying a rented home overnight for virtually any reason, says Romina Boccia, a research fellow at the Heritage Foundation who testified against the bill this year. Better, she says, to follow the model pioneered by Arizona and some other states, which allow local restrictions on short-term rentals only for health and safety reasons.

Home sharing competes with hotels, of course, but it's not a zero-sum game. Hosts on platforms like Airbnb are responsive to market conditions. According to economists at Harvard and the Massachusetts Institute of Technology, they "expand supply as hotels fill up, and keep hotel prices down as a result." 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 a 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.

Restrictive rules designed to block home sharing would be "a loss in terms of income for the hosts, but also restaurants, the Uber drivers that take them to places they want to visit, any shopping they do," says Boccia. "The local communities suffer so that Marriott can charge a little bit of a higher price by killing their competition."

And no doubt they'll keep taking tax dollars from Maryland residents while they do it.

Photo Credit: Joanna Andreasson

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • loveconstitution1789||

    A bill given serious consideration in Annapolis this spring would require platforms like Airbnb to collect detailed information about hosts and guests, retain it for up to four years, and turn it over to the state government if requested.
    Further evidence that most government regulation is worthless and has zero to do with some public safety regulation standard that voters might accept as necessary.

    There is no good reason to retain any business information about guests and hosts for 4 years.

  • tlapp||

    Not only Marriott but Choice Hotels is also located in Maryland. That's a lot of money and clout to fight competition.

  • Juice||

    Marriott and Air B&B don't even cater to the same customers in the DC area. Marriott caters to conference goers and business trippers whose companies or organizations pay for their stay. Those people aren't going to use Air B&B for that.

  • Sevo||

    Dunno about Maryland, but in SF, the hotel workers are all SEIU members; the SEIU is one of the largest contributors to D politicians, so the D politicians are all about keeping Air B&B on a very tight leash.

  • I am the 0.000000013%||

    I think this might be a good idea though before it's implemented there should be a smaller test to see how it works.

    How about we implement it by tracking all 'guest' information of all Maryland public officials. Who checks in to which motel room with who, who books a room for somebody to be a guest of a public official, etc...

    Let's try that out for 5 years and see if we like it, then we can move ahead with a broader scoped version of the law.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online