April 28, 2017
Miami is in trouble and it’s not because the Heat didn’t make the playoffs or because the Zika virus is causing mayhem again. No, this time the culprit is Airbnb.
Airbnb is a massively successful company that allows private homeowners to rent their residences to travelers for a significantly lower rate than hotels.
The San Francisco-based business started in 2008 and has since become the largest home sharing network with over 3 million listings worldwide. Homeowners have the option of either vacating their property and turning the entire place over to the client or simply renting out a room while still living at home.
The convenience of the application is attracting millions upon millions of users as Airbnb is in over 65,000 cities and over 191 countries.
All this success is causing serious distress among the Miami hotel industry due to the notable decline in hotel revenue.
Alarmingly enough “Miami-Dade County’s hotel taxes have been on a six-month decline unlike anything the county has seen since the Great Recession” according to The Miami Herald, thus translating to loss of income for the city.
The home-renting platform reported that about 176,000 clients visited miami last year alone, unsurprisingly, as Miami-Dade is Airbnb’s fourth largest market in the nation.
Airbnb, however, strongly disagrees with the idea that they’re the cause for the plunge and is firmly against the steps Miami is taking in regards to handling the situation.
Miami is widely renowned for their beautiful scenery and spectacular nightlife. Miami is also known for the infamous Ultra Music Festival which attracts over 100,000 party-crazed individuals from all over the world each year.
Miami Mayor Tomás Regalado has been cited saying how “For the last three years, we have had complaints from condos in downtown because of Ultra. There are people that decide to just go away the week of Ultra and they rent their condos for thousands of dollars and then you’ve got 20 people living there and they create problems.”
Unfortunately, cases arise where guests don’t necessarily respect the homes and the neighbors of those properties to the extent they should; as locals have gone on to say how “the transient renters often leave units in disrepair, pose unsafe conditions for nearby residents and use the rentals as party houses.”
As the growth of short-term rentals continues to skyrocket, hotels are also continuing to panic. They are concerned that Airbnb has a massive advantage over the hotel industry by not being required to follow the same codes that they do.
President of the Greater Miami and the Beaches Hotel Association, Wendy Kallergis, demands that Airbnb vendors must abide by the same health codes, federal disability regulations, and to acquire business licenses just like that of hotels which would virtually dismantle Airbnb entirely from Miami.
Miami’s tourism sector just wants to be on an even playing field with everything, including the paying of taxes, and the great city of Miami is standing behind them the entire way.
Hotels have actively expressed their objection towards the unfairness Airbnb poses and the Miami-Dade Mayor Carlos Gimenez agrees with their views, saying he hears them “loud and clear.” These views, in fact, are a contributing factor for Gimenez wanting to pursue his tax agreement.
Gimenez has urgently been pushing his plan for Airbnb to start paying resort taxes which Airbnb has finally agreed to. This deal, if approved by the county, would bring in around $6 million of revenue a year for Miami-Dade according to Gimenez.
While Regalado is against Airbnb and how it’s detrimental to quality of life in residential neighborhoods, he disagrees with the tax plan and requested the ability to opt out of the agreement calling the plan an “illegal tax.”
Gimenez responded to the Miami Mayor with a letter reading “I have to ask why you would want to give Airbnb a competitive advantage over the hotel industry by not collecting taxes” further proving the point that the hotels fully have the support of Miami-Dade behind them.
This encouragement should be comforting to those in the hospitality business. Airbnb’s success shouldn’t deter anyone from investing in the South Florida hotel market as it’s continuing to perform strong as well as growing at a rapid rate.
Miami, who’s opposition towards Airbnb and similar platforms is well known, held an ordinance on March 23rd with hopes to make rental lengths shorter than 30 days in residential neighborhoods illegal.
Parts of Miami Beach have already deemed renting your home in restricted areas illegal, resulting in fines of $20,000 for each violation. Since March 2016, Miami has accumulated $5 million in total fines.
70 people spoke at the March 23rd ordinance resulting in a 10-hour long discussion regarding the ban of short-term rentals. Numerous home owners who use Airbnb attended the meeting to voice their opinion and disapproval of what the city is trying to achieve.
These individuals were targeted by Miami as City Manager Daniel Alfonso stated that they “are now on notice for people who did come here and notify us in public and challenge us in public.” This targeting dramatically developed into a 44-page lawsuit filed Friday by those who spoke out claiming that Miami violated their First Amendment rights.
The lawsuit read that “Airbnb stands together with its Miami hosts in opposing the city’s unlawful efforts, and in particular stands with the brave individuals who have come forward and seek to protect their rights as individual plaintiffs in this action.”
The David vs Goliath battle will continue but it looks like Miami has the upper hand as it’s laying down the law, literally, to make sure Airbnb is faced with as many roadblocks as possible. Hotels and hotel investors alike should have peace of mind knowing that the city is fighting for them and ensuring a level playing field.
If you’re interested in bringing your business to South Florida, Metro1 is leader in analyzing commercial real estate trends and is confident that not only is the market strong, but their Hospitality Division will handle all the challenges associated with creating a new development. Contact Metro 1 and let them do what they do best.