The City of Los Angeles, led by alt-left progressives, has declared war on AirBnb stays by imposing an $89 per year fee for all hosts — That’s ON TOP OF the already absurd 14% tax on all revenue generated by hosts. And they imposed an $850 penalty on any host who rents out more than 120 days per year. As icing on the cake they banned anyone from hosting a stay that isn’t their primary residence. That means entrepreneurs can no longer host more than one stay by subletting apartments, or buying homes and then renting those out on Airbnb.
The thinking is that this will create more permanent housing and thus reduce skyrocketing rents in Los Angeles. First of all, is this really a ‘problem’? Not everybody can afford to live in a major metropolitan cities, just as not everyone is smart enough to get into an ivy league school. That’s just life.
If you choose to accept that high rent is a ‘problem’ then is this really an Airbnb problem or a case of not enough hotels being built? Why are we punishing hosts because the hotel industry isn’t building fast enough? More hotels are in fact being built especially in cities like Hollywood, where Airbnb stays are numerous and fully booked.
And finally will declaring war on Airbnb actually increase the supply of permanent housing? And are there other unintended consequences that will hurt the city?
Think about this — If you put the entrepreneurs with multiple Airbnb units out of business, then a void has been created for other individual hosts. You simply fragmented the business and the supply of Airbnb stays may not actually be decreased as anticipated.
Now what about putting a cap at 120 days per year before imposing an $850 fee? Same deal. This could simply fragment the business. More individual hosts pop up to take advantage of the void left by hosts who decide to close up for the year after they reach 120 days.
And what does all of this do to tourism? If I’m a host paying an extra $89 per year along with giving away 14% of all receipts in taxes, then I’m going to raise my prices! And if I decide to cap my number of rented stays at 120, then I can more comfortably raise my prices in order to increase my profits and to attract higher quality guests. My higher prices will scare off would-be guests, but I have all year to book 120 nights. No pressure. No incentive to keep prices low.
Higher Airbnb prices can only drive up hotel room rates as well.
Higher prices due to government intrusion via added taxation can only reduce tourism. In creating more affordable housing, you reduce tourism. It’s simple supply and demand. Higher prices means less people will decide to visit Los Angeles. That means less revenue coming into the City of Los Angeles.