Airbnb loses Virginia legislative battle as it seeks statewide recognition across U.S.
Washington Post | Fenit Nirappil
March 11, 2016


When Anna Currence decided in 2007 to turn her Richmond fixer-upper into a bed-and-breakfast, she spent nearly six months getting permits from city hall, securing an alcohol license for wine and cheese nights, and even submitting floor plans to figure out the proper location for smoke detectors. She collected $7,000 in taxes last year from guests and paid $3,100 for insurance.


The same rules don’t apply to her neighbors who rent out rooms on the online hosting platform Airbnb.


That’s why the lodging industry helped gut legislation that would have made Virginia among the first states in the nation to recognize the short-term rental industry and insulate it from efforts by local communities to ban it. Instead, the General Assembly essentially postponed debate until next year.


“Every time we try to go up against an establishment industry of some type, there’s tremendous pushback,” said Del. Christopher Kilian Peace (R-Hanover), who carried the Airbnb-friendly bill in the House. “They want the government to protect their market share.”


Lawmakers amended the bills to require stricter tax collection and penalties for noncompliance, but the laws will not take effect unless revisited and approved again by the legislature in 2017. The bills also require a study of the short-term rental industry, mirroring the state’s approach to regulating the ride-booking industry.


Representatives of the hotel industry acknowledge that they can’t stop the rise of Airbnb, and it’s unclear whether they’ve lost revenue as a result. But they want a level playing field.


“Airbnb is here to stay,” said Eric Terry, president of the Virginia Restaurant, Lodging & Travel Association. “It’s something the consumer is interested in and wants to do. We welcome Airbnb, but we just think they should be subject to the same requirements that a bed-and-breakfast or a hotel has to go through.”


That’s been the focus of statehouse battles as Airbnb tries to establish uniform standards at the state level rather than deal with a hodgepodge of local regulations and negotiations. The company, based in San Francisco, has retained at least 33 lobbyists or firms in a dozen states, records show.


In Virginia, lawmakers introduced some of the most Airbnb-friendly bills in the country — proposals that would have legalized the business and established a statewide mechanism to collect taxes from guests.


Airbnb has already reached deals with several cities — including the District, San Francisco and Portland, Ore. — to collect local taxes on behalf of hosts, while guests pay state taxes in Florida and Illinois. The Virginia proposal was unique in creating a statewide system for Airbnb to collect and distribute taxes to local governments.


“We were making an effort to put Virginia on the map as being proactive, welcoming and embracing the new economy,” said Sen. Jill Holtzman Vogel (R-Fauquier), one of the sponsors and a candidate for lieutenant governor in 2017.


But local governments and hotel groups objected, saying the legislation would have hamstrung local laws and that it lacked teeth to enforce tax collections.


[Airbnb starts collecting taxes in more major jurisdictions]


They said their biggest concern was not people renting out spare rooms but owners of apartment complexes illegally listing every unit on home-sharing platforms, although Vogel’s and Peace’s bills do not address that issue.


“We recognize that people have personal property rights to do as they please with their own property, and we don’t want to discourage that, but neighborhoods have property rights as well,” said Neal Menkes, director of fiscal policy at the Virginia Municipal League.


Opponents of the Airbnb bill found a powerful ally in Senate Majority Leader Thomas K. Norment Jr. (R-James City), who represents the tourism-rich Williamsburg area and has interests in two hotels.


Currence, the ownere of the bed-and-breakfast, said she’s not worried about competition from Air­bnb but believes that her industry suffers when standards are lowered. Any bad press about Airbnb could hurt her business, she said.


“Anytime the words ‘B and B’ are in the press, and there’s any bad connotation, it’s bad for all of us,” said Currence, 66, a former Barnes and Noble executive.


McAuliffe hasn’t weighed in on the issue and can still propose changes to the legislation.


Airbnb officials declined to be interviewed but expressed disappointment in the final bill. “We were hopeful that the Governor would seize the opportunity for the Commonwealth to be a national leader when it comes to the role home sharing can play in generating more wealth for the common man,” Airbnb spokesman Nick Papas said in a statement. “We will continue to work with a number of other states who are excited to use home sharing to address economic inequality.”


In Arizona and Wisconsin, bills have advanced in recent weeks to limit local restrictions on room rentals. The Louisiana State Legislature approved a bill to expand the state’s 4 percent sales tax to Airbnb rentals.


Matt Kiessling, who leads the short-term rental division of the Travel Technology Association, says that statewide successes are essential to the industry’s stability.


“This isn’t going away, and states should be figuring out how to embrace it,” he said.