January 13, 2017
Trump v. Airbnb: The Battle Over the Sharing Economy Gets Presidential
President-elect Donald Trump has made good on one campaign promise of late: He is leveraging his position to influence private industry to keep American jobs in the country.
After negotiating a controversial deal with Carrier to retain 1,100 jobs in Indianapolis in exchange for long-term tax incentives, Trump set his sights on a bigger target: the automotive industry’s assembly of vehicles in Mexico through the North American Free Trade Agreement (NAFTA), which he promised to renegotiate or withdraw from while in office if partner countries refuse to deal.
While the approach is questionable in terms of its long-term impacts on the American economy, it is effecting change within the corporations he has targeted to date, and it seems that he is just getting started.
So which industry is next?
What is Trump’s stance on Airbnb and the sharing economy?
In 2015, Trump’s stance on Airbnb was this:
“Well, you know, it’s a very interesting thing that’s going on. A lot of people do like it. A lot of people are happy with it. A lot of landlords are liking it a lot. And then of course, there are some groups—hotels in particular—that aren’t. As to whether or not it should be regulated, I don’t like regulation. I don’t like regulation. I’m not a person that believes too much in regulation. I think the concept is great for some people. I think it’s probably going to be very successful over a period of time. I will not let [people Airbnbing in my buildings] happen, but sometimes even if you say it can’t happen, you never know what people are doing behind your back.”
We already know, however, that Trump is quickly shifting his stance on many of his pre-election promises.
Given Trump’s vast hotel empire, his 50+ year real estate and hospitality career, the 7-figure financial backing he received from hospitality industry contacts like hotelier Phil Ruffin, and the political moves he’s already making to bolster his hotel interests’ value in the run-up to his inauguration, our “Hotelier-in-Chief,” will likely set his sights on cracking down on strict Airbnb regulation due to the threats that alternative accommodations pose to his empire and the hotel industry at large.
Let’s address the elephant in the Oval Office first: Trump’s hotels.
His hotel holdings include such properties as The Trump International Hotel in Washington, D.C. and Trump International Hotel & Tower New York. Furthermore, the Trump Organization is expanding its investment in hotels domestically and internationally.
Much of Trump’s wealth is tied up in hotels, and he has much to lose from the growth of Airbnb.
Morgan Stanley Research’s Brian Nowak wrote in a recent report, “While still small, we believe Airbnb has been almost double the threat to hotels in 2016 than previously believed, and the threat is growing.” That means the threat of Airbnb to Trump’s financial interests is growing as well.
The fact that Trump’s campaign promises were more focused on labor than capital should not dissuade one from thinking that Trump will target the sharing economy.
In fact, established, organized hotel industry labor’s interests only serve to bolster the case for Trump’s impending crackdown on Airbnb. In November 2015, hotel labor group The New York Motel and Trades Council reportedly contributed $100,000 to the Hotel Association of New York City’s “BNB Project” in hopes of slowing Airbnb’s impact on hotels and thus protecting the jobs of its members.
The fight has also expanded from primary markets like New York City and San Francisco to other cities.
Additionally, the American Hotel and Lodging Association has been pushing its anti-Airbnb agenda in Washington in recent months, and as a member of the AHLA himself, Trump will likely side with them.
The hotel industry has lobbied in opposition to Airbnb for years, and that activity will likely only increase with Trump and his peers controlling the executive and legislative branches.
What would a Trump crackdown on Airbnb look like?
1. Public Pressure
If we look to his recent corporate interventions, we can imagine the President-elect first providing public pressure on Airbnb to, in some material way, alter its legal framework that has enabled it to become the largest hospitality company in the world without owning a single hotel.
That is to say, Trump may pressure Airbnb to move from marketplace to hotelier. Whether Trump goes that far or not, he could certainly request that Airbnb further hamstring itself nationwide with corporate standards on rental caps, host and booking data exchanges with government, and cooperation with enforcement agencies as Airbnb has done recently in cities like San Francisco and New Orleans.
2. Legal Pressure
Despite his own public issues with discrimination, Trump and the Republican legislature could increase Airbnb’s costs of compliance by amending Title II of the Civil Rights Act of 1964, which enables small-time lodging entrepreneurs to discriminate against their guests, an issue that has plagued Airbnb in recent months and prompted Airbnb to draft its own Nondiscrimination Policy. One can envisage various controls that could torpedo the growth of Airbnb.
For example, a hotel industry accreditation requirement on hosts could choke off the majority of Airbnb’s supply through federal red tape. Trump could seek the extension of the Federal Hotel & Motel Fire Safety Act of 1990 to Airbnb inventory.
Those safety measures, such as requirements for costly fire suppression systems to be added to Airbnb inventory, would prohibit most residential owners from participating in the platform from a cost perspective.
Another lever Trump could pull lies with the Americans With Disabilities Act, which currently mandates new and renovated hotels provide access to people with various disabilities. Could it conceivably be extended to alternative accommodations? Such changes would simply not be possible for many residential properties on the platform.
Time will tell if Airbnb winds up in the billionaire President’s crosshairs, but the signs seem to point that way. While on a visit to Nashville in 2015, Trump was asked about the rise of Airbnb’s impact on the hotel industry, to which he replied, “I’ve never seen such change in an industry. It’s a very changing industry, almost as much as anything other than the Internet itself. But the one thing about that particular industry…it’ll all acclimate and it’ll all work out. It’s going to be very interesting.”
Do you think a Trump presidency will impact short-term rental regulation? Let us know in the comments below!