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Airbnb promises crackdown on party houses, but some are skeptical

  • Nov 25, 2019 | Jennifer Sokolowsky

crowd at house party

Airbnb has vowed to fight “party houses” among its rentals after five people were shot and killed at a party held at an Airbnb on Halloween. It’s a new approach to self-regulation for the company, and some Airbnb hosts and experts are skeptical about whether the short-term rental platform can effectively ban these types of gatherings.

The host of the Halloween Airbnb rental in Orinda, California, said the guests told him they were hosting a family reunion for 12 people. Instead, more than 100 people showed up at the house for a party, which ended in gunshots and five dead. Two weeks later, police arrested five suspects in connection with the case, but declined to charge them with any crimes.

After the shooting, Airbnb CEO Brian Chesky announced that the company would crack down on unauthorized parties.

“We are redoubling our efforts to combat unauthorized parties and get rid of abusive host and guest conduct, including conduct that leads to the terrible events we saw in Orinda,” he tweeted.

These efforts include working with former police chiefs to develop protocols for a hotline that neighbors can use to register concerns about Airbnb properties. The company plans to launch that by the end of the year and expand it globally in 2020.

The company also plans to create a party house rapid-response team and begin manually reviewing high-risk bookings, such as potential guests booking a house in the city where they live for one night. The company says it will use predictive analytics and machine learning to identify signals that will help the company flag suspicious activity.

Even so, some hosts and experts question whether Airbnb can effectively monitor all its listings to prevent unauthorized activity — and respond in a timely manner across the globe.

“Airbnb claims to be devoting additional resources to fight this, but given the sheer scale of Airbnb's listings across the U.S., and the world, this is going to be extremely challenging for the company to enforce," Makarand Mody, an assistant professor of hospitality marketing at Boston University, told USA TODAY.

Cities taking own measures

Meanwhile, Orinda’s City Council has passed an "urgency ordinance" requiring hosts to be on premises during all short-term rentals and mandating two-night minimum stays. The new law will take effect on January 3, 2020.

In Nashville, Tennessee, the City Council passed a measure on first reading that would require owners to be present during the stay of their short-term rental guests. Owners would be allowed to leave the premises for no longer than 15 consecutive hours within any 24-hour period while short-term guests are renting the property. The bill must go through two more readings before it can be approved.

Fighting host fraud

Airbnb has also promised to verify all 7 million of its hosts by the end of 2020. A recent story in Vice revealed a common Airbnb scam in which hosts use fake profiles and fake listings to lure guests, then switch them to lower-end accommodations at the last minute.

Along with its verification efforts, Airbnb will be offering a money-back guarantee to guests. If guests check into an Airbnb without an accurate listing or host, Airbnb promises to provide a 100% refund or book the guest into a different listing.

Some hosts have complained on social media that Airbnb’s current rules favoring guests can contribute to bad guest behavior. Even if guests break house rules, they can leave negative reviews that effect a property’s rating, hosts say, so they often don’t report bad guests for fear of retaliation. They also said that Airbnb’s instant Book feature stops hosts from fully vetting their potential guests.

Driving toward more self-regulation

Airbnb’s promises to regulate its listings to prevent party houses is a change of direction for the company, which has often used the argument that it’s merely a platform for transactions and that it holds little responsibility for monitoring listings.

For example, in legal cases in Santa Monica, California, and elsewhere, Airbnb has fought efforts by cities to prohibit listings of illegal short-term rentals on its site. In the Santa Monica case, Airbnb argued that the city ordinance violated the Communications Decency Act, which offers websites immunity from liability for content that users post on their sites. A judge ultimately ruled against Airbnb, validating the city’s requirement for Airbnb to monitor its site and take down listings for illegal rentals.

For years, Airbnb has waged legal battles against local government efforts to require the company to ban listings of illegal rentals, share data on hosts for enforcement efforts, and collect lodging taxes. Recently, however, Airbnb has ended several of these suits with settlements in which it agrees to work with local regulations.

In Hawaii, for example, Airbnb agreed to share short-term rental host data with state tax officials in order to enforce tax laws. In Florida, both Airbnb and HomeAway have made agreements with Palm Beach County to require short-term rental hosts to obtain and use tax identification numbers. Airbnb has also made deals with the cities of Miami Beach, Florida, and Portland, Oregon, to provide host information and delist non-compliant properties in order to help the cities enforce vacation rental laws.

In Boston, Airbnb settled its lawsuit against the city over the city’s strict short-term rental law, agreeing to rules requiring short-term rental hosts to own the properties that they rent out. Airbnb now offers hosts a way to add registration numbers to their listings. Hosts must register by December 1 or Airbnb will remove their listings.

And in New York, where Airbnb has been embroiled in legal proceedings with the city for years, the company agreed to supply partially anonymized data for more than 17,000 listings that were the subject of a subpoena the city issued to Airbnb in February. Airbnb also agreed to share de-anonymized data upon request from the city for listings that look like they may be illegal based on initial review.

Although Airbnb is still fighting efforts to restrict short-term rentals or require it to help government enforcement efforts in many locations, the recent settlements, and the promise to prevent party houses, may signal a new strategic direction for the company, which plans to go public next year.

Do you have tax questions related to your short-term rental? Drop us a line and we’ll get back to you with answers.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.
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