Hotel companies quietly seek government protection from Airbnb and others – analysis

By Kevin Mitchell
Chairman and founder, Business Travel Coalition

This week The New York Times published an article proving that the American Hotel and Lodging Association (AHLA) is the organization funding a “grassroots movement,” AirbnbWATCH, to frustrate the competitive success of short-term residential rental companies.

In internal documents obtained by the Times, AHLA points to success in restricting the business activities of Airbnb in several states. However, their campaign causes to harm to not just Airbnb, but also to HomeAway, VRBO and many other competitors as well as to homeowners and consumers. The mantra would appear to be “Stop Airbnb And We Will Stop Them All.”

Kevin Mitchell of the BTC
AHLA’s members include behemoths Marriott International (NASDAQ:MAR), Hilton Worldwide (NYSE:HTL) and Hyatt Hotels (NYSE:H). That troika uses its deep pockets to project political influence in Washington, DC and state capitals to crush those innovative technology companies to the detriment of home owners, travelers and communities that benefit from travel and tourism. AHLA also took credit for Airbnb becoming a Federal Trade Commission (FTC) target last summer after three Senators sent a letter to the agency seeking regulatory action. More recently, in Florida, they seek to undermine State Senator Greg Steube’s (R-Sarasota) Senate Bill 188 that seeks a single set of short-term rental rules at the State level.

This bill is important because there are millions of short-term rental listings across all U.S. jurisdictions. What might seem rational at a local level, with respect to regulations, becomes irrational and costly at the industry level, which supports the protectionist goals of the troika. With local jurisdictions establishing differing regulations, costs would increase for short-term rental companies and rental rates would soar harming hosts and small businesses that are currently beneficiaries of the industry. That’s why Senate Bill 188 represents fair and smart regulation.

For generations, affordably priced rental properties have financially supported property owners and provided travelers, especially young entrepreneurs seeking to establish relationships and grow their businesses, with the opportunity to travel more frequently and in doing so help support local economies. However, short-term rental alternatives also help all travelers - business and leisure - as well as the broader travel and tourism industry by helping prevent hotels from price gouging during peak times, which alarms the troika.

Indeed, a desire to prop up room rates is why the troika and AHLA are so aggressively endeavoring to harm the short-term rental industry, and they are saying so publicly. The Washington Post reported late last year on a then passed New York State law stipulating a fine of $7,500 for anyone who lists an apartment for short-term rental. Mike Barnello, chief executive of LaSalle Hotel Properties said that the new law "should be a big boost in the arm for the [hotel] business," "certainly in terms of the pricing.” Another hotelier in the same article stated that short-term rental companies have frustrated his company’s "ability to price at what maybe the customer would describe as sort of gouging rates."

Just as the airline troika of Delta Air Lines (NYSE:DAL), United Airlines (NYSE:UAL) and American Airlines (NASDAQ:AAL) do not speak for the entire airline industry in seeking government protection from the innovative, service oriented Gulf carriers, neither does Marriott International, Hilton Worldwide and Hyatt Hotels speak for rest of the travel and tourism community as they seek shelter from competition.

The more a given industry consolidates the more arrogant the larger remaining market participants can become, and the more of a concern it is for antitrust enforcers that tacit coordination on strategies and policies can go undetected.

Beyond tacit coordination, certainly, the FTC should investigate the legality of the communications and steps that these three massive hotel company competitors have taken in working together through their trade association to potentially raise the costs of new-entrant competitors and cause consumers long-term financial harm

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