Airbnb Is Pairing Up With Mom-and-Pop Investors to Win Its War—but Is It Too Late?

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When New York City banned short-term rentals (under 30 days) under Local Law 18 in September 2023, 15,000 landlords suddenly found themselves without income, many struggling to pay their mortgages. Those that continued to operate under the radar were hit with heavy fines, while hotels, lacking competition, charged record rates. Meanwhile, unregulated underground sites attempted to take up the slack, often scamming visitors.

It’s estimated that cities worldwide have lost $2.4 billion in tourism taxes, with the U.S. contributing $2.2 billion alone. New York City is set to lose $1.1 billion in tax revenue as tourists skip the Big Apple. This presents an opening for short-term rental sites to fight back.

Airbnb and other short-term rental sites, such as VRBO, have decided to take their fight to the streets, not with legal appeals, which have proven largely unsuccessful, but with lobbyists and activist landlord groups like Rent Responsibly, the national network for short-term rental host groups that Expedia, the owners of VRBO, funded. A grassroots coalition of landlords has emerged, forming a potent force for mom-and-pop property owners in their fight against state lawmakers and the hotel industry. 

Vermont and Colorado Claim Big Wins for STR Landlords

These activists have been so successful that a Vermont bill proposing a short-term rental registry was vetoed. Across the country, defiant landlords have protested at state houses and swarming community meetings. 

“The professionalization of host advocacy efforts is really leading to a turning of the tides in a lot of communities,” Noah Stewart, head of U.S. advocacy at Expedia Group, told the Wall Street Journal.

The Colorado Lodging and Resort Alliance, or Clara, initially launched in 2019 as a community information-sharing resource for small landlords. It later joined with the Vacation Rental Management Association and hired a lobbyist to help defeat proposed short-term rental regulations. Citing economic impact studies, the group held meetings with lawmakers who had introduced a new bill through the Colorado Senate to quadruple property taxes on short-term rentals. The bill died in committee.  

The Battle Lines Are Drawn

The pushback couldn’t come at a better time for small landlords who have relied on short-term rentals to generate extra income. 

On one side is the powerful coalition of hotel companies, unions, and neighborhood groups worried about a shortage of rental housing with rising rents, seeing neighborhoods transformed into transient areas filled with party houses. On the other side are small, mom-and-pop landlords who contend the short-term rental industry promotes tourism, creates jobs, and generates tax revenue while enabling homeowners to pay their bills.

More Hosts Means More Power

As evidenced by the slate of cities poised to close their doors to short-term rentals, the fight has thus far largely been one-sided. However, despite the bans, the number of hosts in the U.S. has continued to rise. 

According to vacation rental data and analytics site AirDNA, the STR market reached $64 billion in revenue in 2023, with over 2.4 million listings and 785,000 individual hosts. The loss of such a sizable revenue stream can’t be lost on city accountants, desperate to fill a revenue shortfall amid the loss of office workers and empty downtown commercial spaces.

Airbnb’s Charm Offensive

To counter claims that increased short-term rentals deprive cities of rental accommodation, Airbnb recently announced that it is advocating for long-term renters to share their space to earn supplemental income to meet the rising cost of rents.

The company said on its website: 

“Going forward, Airbnb will work with cities and states to advocate for short-term rental rules that allow renters to share their home. A number of cities have led on this issue by passing renter-friendly short-term rental policies, including Raleigh, NC, San Diego, CA, and Tulsa, OK. 

Earlier this week, Virginia’s governor signed into law a statewide bipartisan bill that requires all localities that issue short-term rental permits to property owners must issue the same permit to tenants with permission of the property owner.”

The caveat is that tenants must also pass on some extra revenue to their landlord when they host guests.

The Achilles Heel for Short-Term Rentals

Although most short-term rental businesses transact business without incident, when there are issues of crime, it grabs headlines and galvanizes cities to legislate against it. 

For example, in 2022, after a fire and shooting in an Airbnb that left two dead in an up-and-coming Pittsburgh neighborhood, the city quickly moved to introduce legislation restricting Airbnb in the city. The legislation has not yet been passed. In June 2022, Airbnb announced that it was permanently banning parties at its properties worldwide, using artificial intelligence (AI) to help it do so.

Short-Term Rental Sites Are Using People Power Rather than Corporate Clout

“If Airbnb walks in the door, no one is going to support them,” Julie Marks, a Vermont short-term rental activist, told The Wall Street Journal. “But if Julie Marks and her three friends, who are also Vermonters, walk through the door, they’ll listen.”

Homestay giants have achieved their goals by staying in the background and providing short-term landlord advocacy groups with the funding to press their cause.

“They speak authentically because they’re not hired consultants, they’re not PR agencies,” said Jay Carney, global head of policy and communications at Airbnb. 

Final Thoughts

There are dozens of short-term rental advocacy groups throughout the U.S. that offer invaluable reports and resources to landlords. Though funded by big money, these groups largely comprise mom-and-pop businesses that use short-term rental income to help pay the bills. 

However, they have the advantage of having the STR tech housing juggernauts contributing money to promote their agenda. This backing doesn’t make their argument—to be allowed to rent a room or second home without restrictions—any less credible.

In their sweeping legislation, many cities fail to consider that not all Airbnb hosts are the same. Sure, there are large-scale operations that own large apartment buildings and rent them in their entirety to short-term residents at the cost of a city’s long-term renters. Many landlords, however, desperately need the money their rental unit, spare bedroom, or basement earns and offer a good service for a reasonable price for visitors who are prepared to spend money when visiting these cities.

Therefore, a distinction should be made that allows mom-and-pop landlords to remain financially solvent while limiting landlords with a certain number of units, in the same way that tax credits are given to developers who agree to make some of their units available for affordable housing. Why does it have to be one or the other? It seems hard to believe that a compromise can’t be reached that satisfies both a city’s agenda and that of its property owners struggling to make ends meet. 

I own Airbnbs and can appreciate that renting to full-time tenants can often be a pain, especially in cities where evictions take a long time and “professional” tenants can wreak havoc on a landlord’s bottom line. Small landlords shouldn’t be forced into a corner, gasping to survive. A city should care about all its property owners, big and small.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.