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by Cheryl-Anne Sturken | September 01, 2016
Embracing disruption: Joe D'Alessandro, president and CEO of San Francisco Travel, helped forge a promotional partnership with Airbnb.
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The exponential growth of the sharing economy is in full swing as more consumers effortlessly hail Uber rides, book Airbnb rooms and vacation in home rentals via the likes of HomeAway and FlipKey. The unprecedented success of these services has left many cities struggling with how to regulate them, while local hospitality and taxi companies cry foul. Now, the pushback that began as a homefront battle at the city level has morphed into an unfolding global confrontation. Among some recent developments:

 In May, Berlin outright banned Airbnb and any other short-term home rentals in an attempt to protect affordable housing.

 Also in May, at the Global Sharing Cities Roundtable held in Amsterdam, Netherlands, mayors from many major destinations -- including Amsterdam; Athens, Greece; Barcelona, Spain; New York City; Paris; Seoul, South Korea; and Toronto -- met as part of an effort to discuss more than 50 sharing-economy initiatives. An objective was to find common ground on how to regulate the likes of Airbnb and Uber, which are encroaching on local business.

The mayors agreed that a standard rules playbook would give cities a common framework and more leverage, rather than individual destinations approaching the issue on an ad-hoc basis. "Having the 20 or 30 biggest urban markets of the world operating under entirely different rules doesn't do much good for anyone," Wiley Norvell, New York City Mayor Bill de Blasio's communications adviser for housing and economic development, told Bloomberg News. "We want consumers and tourists to have some consistency, city to city." The group of mayors expects to publish its first white paper on the subject this October.

 In France, Uber drivers have faced rioting during taxi strikes, and this past June a French court fined two of the company's top executives for running an illegal transport service using nonprofessional drivers.

 In China, following a series of protests by taxi drivers and several well-publicized raids of Uber offices in several cities by police, who accused the company of operating unlicensed taxi services, the Chinese government in late July issued its first rules for ride-hailing companies. Guidelines were established for registration, fares, driver employment and payment.

Back in the U.S., similar controversies and actions are roiling the ground-transit and hospitality sectors.


A battle takes shape
Earlier this year, residents of Austin, Texas, overwhelmingly voted to drum Uber out of town, because the company refused to comply with city regulations requiring fingerprinting and background checks of its drivers. Uber subsequently threatened to pull out of Houston if the same regulations were enacted there.

New York and San Francisco, however, are arguably the two U.S. cities where anti-Airbnb sentiment continues to play out the loudest. In the Big Apple, two leading groups -- the 270-member Hotel Association of New York City and the larger and better-funded Washington, D.C.-based American Hotel & Lodging Association -- have kept up a steady barrage of attacks on the home rental company, which is now valued at $25 billion. Each association has commissioned separate reports in the past year to bolster its cause, while intensifying lobbying efforts in the halls of city and state government to push for regulation.

In October 2015, the HANYC released a report it had commissioned, titled Airbnb and Impacts on the New York City Lodging Market and Economy, conducted by Mineola, N.Y.-based HVS Consulting & Valuation. It pegged Airbnb's negative impact on the city's lodging industry at $2.1 billion, and claimed the city had lost out on some $450 million in lodging tax revenue as well as $226 million in tax revenue for local, state and federal governments during the 12 months from Sept. 1, 2014, through Aug. 31, 2015. Airbnb struck back at the report, insisting that because of New York State's "outdated" laws, the lodging service did not have the authority to collect and remit taxes, something it is now doing for multiple cities around the world, to the tune of US$88 million in 2015.

This past January, AH&LA took a different tack, releasing a study it had commissioned at a cost of $100,000 that found nearly 30 percent of Airbnb's revenue, some $116 million, in 12 major U.S. markets was generated by illegal rentals -- hosts operating as full-time commercial landlords who skirt city-mandated fire and safety regulations and take affordable housing out of already tight housing markets.

As Paul Sacco, president and chief executive officer of the 1,600-member Boston-based Massachusetts Lodging Association, puts it, "We have the toughest fire, health and safety regulations of most of the states in this country, and we adhere to them, and these folks do not. If you act like a lodging establishment, then you should function like one."

However, in July, just days after saying he would sign a state senate proposal to apply hotel taxes to online lodging services like Airbnb, Massachusetts Gov. Charlie Baker (Rep.) changed his mind and said the proposal was too broad, and that it conflicts with his no-new-taxes goals.

Troy Flanagan, vice president of state and local government affairs for AH&LA, says the escalating pushback is in response to Airbnb's evolution from spare-room rental platform to major hospitality player. "Many cities, counties and states are taking a look at the growing trend of this new lodging platform and trying to figure out what it means to their community," he notes. "And wrapped up in that is tax collection, affordable housing and the impact on jobs."