Airbnb and nation’s largest apartment owners in discussions that could further expand online short-term rental market.
(Jan. 7, 2016) Three of the nation’s largest apartment owners have been in talks with Airbnb Inc. about a partnership that would allow tenants to rent their apartments via the website with the landlords’ blessing in exchange for a share of the nightly rate. Apartment dwellers who currently rent out their homes on Airbnb often do so in violation of their leases, and a deal with these apartment companies would be a significant growth opportunity for Airbnb.
The Wall Street Journal reported in December that Equity Residential, AvalonBay Communities and Camden Property Trust are considering a revenue-sharing model that would make it possible for tenants to rent their homes on the up-and-up. Landlords might even emerge as inventory managers for their properties.
Nationwide, the three publicly-traded companies own more than 800 properties with well over 200,000 apartment units. Equity and AvalonBay have 60 apartment complexes in the greater Seattle area and are aggressively developing and acquiring more. Equity alone has 1,800 new apartment units in development in Washington, including a 40-story apartment complex under construction at Second Avenue and Stewart Street in downtown Seattle.
A deal between these apartment behemoths and the largest player in the online short-term rental market could be a game changer for an industry that started less than ten years ago with couch surfing.
First launched in 2008 when the founders rented out their couches to convention goers who couldn’t find hotel rooms, Airbnb was valued at $22.5 billion in 2015. The fast-growing company lists about 322,500 accommodations in the U.S. and is expected to reach 80 million bookings in 2015, double the number it recorded in 2014.
Even when permitted by apartment owners, short-term rentals may still be in violation of local zoning, licensing and other laws in place to protect consumers and the safety and integrity of communities. For example, the New York State Attorney General found at least 72% of Airbnb listings in New York City are illegal under city and state law, and legal action has been taken against property owners in a number of cities for operating short-term rentals. Some market players in the short-term online arena are in fact significant commercial enterprises – indeed, illegal hotels and inns.
WLA and WRA have joined the American Hotel & Lodging Association in calling for all businesses that rent short-term accommodations, including those rented online, to be held to the same regulatory, licensing, insurance and taxation requirements.
Critics of Airbnb also warn that allowing apartments to be converted into what are essentially hotel rooms would exacerbate the housing shortage in cities like Seattle, San Francisco and New York.