Fiscal flip flops: Big hotels and taxes

For years, lobbyists for the big hotels have raised concerns about Airbnb hosts and guests not paying the same taxes as hotels. In 2014, Airbnb began collecting and remitting taxes on behalf of our community in a number of cities, and we have since partnered with local governments to expand these efforts to more than 230 communities, remitting $175 million to date. We’re in talks now with many more governments about how our community can pay our fair share. In 2017 alone, we have signed new agreements to collect and remit taxes in Arkansas, Colorado, Kansas and counties in Florida, New York, and California.

But the big hotels have flip-flopped and are now aggressively fighting our efforts to collect more tax revenue. Today, we’re launching a new online resource tracking the big hotels’ fiscal flip flop. Read on for more details.

Part one: Hotel tax concerns

As Airbnb grew, many in the hotel industry voiced their concerns about Airbnb hosts not paying the same taxes as hotels.

Part two: Airbnb works to collect taxes

Our community wants to pay their fair share and we want to help. Typically, hotel and tourist taxes were designed for corporations with teams of lawyers and accountants, not regular people who share the home in which they live. To help simplify the process, in 2014, Airbnb began collecting and remitting hotel and tourist taxes in a number of cities where our hosts share their space. In less than three years, we have remitted more than $175 million in hotel and tourist taxes to over 230 communities around the world. Much of this tax revenue has been collected through the establishment of Voluntary Collection Agreements (VCAs). Because collecting and remitting taxes can be a challenge for the regular people who host through Airbnb, we developed a tool, the VCA, to ensure that proper taxes are collected and remitted while relieving hosts of onerous tax filings and governments of the burden of collection and enforcement. When a jurisdiction signs a VCA with Airbnb, we collect appropriate local taxes from guests as part of their booking transactions and remit the tax revenue directly to the proper tax administrator on behalf of hosts.

The new tax revenue has the potential to support a range of progressive policies and services and many communities already have worked to put these resources to good use. Examples include:

  • Chicago, where a portion of the new revenue is going to support affordable housing and aid for the homeless, funding supportive services attached to permanent housing for homeless families.
  • Los Angeles, where a VCA executed in August 2016 has generated significantly more revenue for the city than anticipated. Mayor Eric Garcetti has expressed that the city plans to use this money in part to help with their serious homelessness problem via affordable and low-income housing initiatives. A vast majority of the funds collected so far have been used for “rapid rehousing” programs for the homeless.
  • And Portland, where Airbnb tax revenue has been dedicated to the city’s Housing Investment Fund, which was used to secure an affordable housing bond.

Some governments have considered using these resources to support tourism. In both France and Florida, tax dollars collected from Airbnb are supporting destination-marketing efforts and tourism infrastructure.

We want to expand this program to more communities. We also have supported legislation that would allow or require Airbnb to collect and remit hotel and tourist taxes. Last year, Airbnb’s Head of Global Policy Chris Lehane stood before the US Conference of Mayors and said: “Read my lips: we want to pay taxes.”

 

We also released a new report outlining the tremendous potential of this program. According to that analysis, if we were able to collect and remit taxes on behalf of our community in even just the 50 largest cities in the US, more than $2.5 billion would be generated for local governments over the next 10 years.

Part three: The fiscal flip flop

As Airbnb collected more tax revenue for cities, the big hotels changed their tune and began to aggressively fight our efforts to collect taxes and even opposed legislation that would have allowed Airbnb to collect and remit these taxes. Here are just a few examples:

CALIFORNIA

  • In Los Angeles, a lobbying group affiliated with the AH&LA and CH&LA opposed and then criticized the agreement to collect and remit taxes to the city. Despite their efforts, Los Angeles agreed to the deal and in the remaining half year Airbnb collected $13 million in tax revenue for the city.

 

“We want them to pay the same occupancy taxes and sales taxes that guests in our hotels have to pay.”

Barry Strenlicht, Founder of Starwood Hotels, October 2015

ARIZONA

The AH&LA criticized and opposed a statewide bill that provided legal mechanisms for Airbnb to collect and remit taxes. Despite their efforts, the Arizona legislation passed, allowing Airbnb to begin collecting taxes this year.

 

 

 

 NEW YORK

After raising persistent concerns about the Airbnb community not paying taxes, the media reported that our effort to pay hotel taxes would be “[met] with stiff resistance from the hospitality industry.” The Hotel Association of New York City said if there was a proposal to allow our community to contribute $21 million to New York they would “oppose it, certainly.” The Airbnb host community could have contributed $90 million to the City and State of New York in one year.

 

Looking ahead

As hotels continue to oppose our efforts to collect more tax revenue for more communities, we will update this post with additional examples and information. We will also continue our aggressive work to collect and remit taxes in more communities.