The consumer loses when Big Business and government team up against the new guy on the block

 

A new alternative for tourists looking to stay in New York City while on vacation is popping up more frequently around the city: New York homeowners are now renting out their homes and apartments to visiting tourists at very reasonable rates.   The biggest company providing this service is Airb&b.  This innovative and inventive company is providing a viable option for tourists looking to stay in New York City without dipping too much into their wallet. One would think this idea would be championed by the city and our mayor who looks for every opportunity to bring revenue and tourism into our city. However, the opposite is in fact happening. The NYC Office of Special Enforcement, which is supposed to focus on quality of life complaints, has been utilized by the hotel industry to investigate “illegal hotels”.  The hotel industry views these rented-out apartments as “unfair competition” but what exactly is unfair about these companies?

The main issues that the hotel industry and the city have with this “shadow industry” are that the apartment-renters do not pay taxes; even though they have provided no proof of this claim.  Anyone who has visited Airb&b’s website, can clearly see that the company is the entity that handles the exchange of money and keys.  If any of the hotel industry’s claims are true, the IRS or NYS Department of Tax and Finance would easily be able to verify tax cheats. 

The hotel and the city have also indicated that the rentals of these apartments violate public safety laws. The city argues that hotels have set evacuation plans and protocol for handling emergencies that these problematic “illegal hotels” do not.  However, the city overlooks the fact that the whole reason for evacuation plans in a hotel is due to volume of people who are unfamiliar with the premises.  In an apartment rental, you are not dealing with the same volume of individuals.  Furthermore this problem can easily be rectified by mandating evacuations plans with each rental thereby alleviating the City’s fear of evacuation plans.     

As the hotel industry seeks to bring down these rental companies, one must consider who is really in the wrong. Is it right for the city to hinder the success of new businesses simply because the monopolist hotel industry feels threatened? Or should the city look to write legislation to support this budding, innovative industry? 

 

http://www.crainsnewyork.com/article/20130819/HOSPITALITY_TOURISM/130819909