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Ground Up

The Daily Record's real estate blog

Airbnb urges ‘lighter touch’ as Baltimore considers regulations

Airbnb wants Baltimore to consider a “lighter touch” as its lawmakers debate regulating the short-term rental market.

The Baltimore City Council is considering a bill subjecting transactions via Airbnb and similar companies, to Charm City’s 9.5 percent hotel tax. The legislation, sponsored by Councilman Eric Costello and co-sponsored by nine members, also requires hosts renting space through short-term rental services be licensed with the city. The council’s Taxation, Finance and Economic Development Committee held a hearing on the bill Thursday at City Hall.

“We appreciate the City Council listening to the thoughts and concerns of our Baltimore hosts, the majority of whom share the home in which they live and use their Airbnb income to make ends meet,” Crystal Davis, a spokeswoman for Airbnb, said in a statement. ‘We believe a lighter regulatory touch for home sharing is best for our community and the city, and look forward to further conversations on this issue.”

Rising along with other disruptors, such as ride-share service Uber, in the so-called “sharing economy,” Airbnb has increased in popularity as a cheaper way to stay in cities for visitors. It’s also been adopted by property owners to generate additional income from unused space. While other companies, such as HomeAway and VRBO have entered the market, San Francisco-based Airbnb remains the most popular of the services.

Last year in Baltimore there were 75,800 guests who used the service, which generated $11.3 million in host income, according to statistics from Airbnb.

The firm’s success during the weekend of the Preakness Stakes provides a good indicator of its growing popularity. Between Thursday before the race and the Sunday after, the company anticipated hosts earning $372,000, which was a 60 percent increase from the week before. There were 2,320 guest arrivals booked via Aibnb the Saturday of the race, with 970 residents using the service to rent space.  About 5 percent of those residents were first time Airbnb hosts, 62 percent were women, and 13 percent were at least 60 years old.

Thursday’s hearing generated a large turnout, according to posts on social media, and opponents of the bill dressed in orange T-shirts filled the room and provided interviews with television crews in front of City Hall prior to the meeting.

Baltimore’s hospitality industry has pushed the city to adopt the measure. Industry advocates argue the lack of regulation and taxation give Airbnb users a competitive advantage by allowing short-term rentals to offer lower prices. Other jurisdictions throughout the country, including Montgomery County, have already extended their hotel tax to short term rental.

According to a Department of Finance analysis, there are 1,263 active short-term rental hosts in Baltimore providing 2,105 rental units, with an average daily rate of $120, and the city assumes Airbnb has 95 percent of the market share. If the legislation passes, according to the department, it could generate roughly $1 million a year in revenue.

The Baltimore Development Corp. and Visit Baltimore, the city’s respective quasi-public economic development and tourism agencies, individually sent letters supporting the legislation. Visit Baltimore receives 40 percent of hotel tax revenues to support its promotion efforts. Both agencies argued for regulations that would allow for short-term-rentals to thrive in the city as alternatives to hotels.

“Visit Baltimore believes (the legislation) is a step in this direction and encourages continued dialogue among all stakeholder groups –the local host community, the hotel industry, the broader tourism community and city agencies – around the proposed legislation,” Al Hutchinson, president and CEO of Visit Baltimore, wrote in his letter to the council.

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