Airbnb, an online marketplace that has successfully managed to house over 150 million travelers as well as simplifying access to over 190 different countries. Little had the gigantic hotel industry known that something as small as this short-term rental service had the capacity to cause grave losses for these giants.
Until recently, the American Hotel and Lodging Association (AHLA valuing $1.1 trillion) managed to locate their most formidable foe.
According to the lawmakers
The FTC decided to investigate into Airbnb’s contribution to increased housing expenses in 2016. Within a few days, the New York Governor Andrew M. Cuomo passed a new form of fine on anyone who is using the Airbnb hosting service without following the local housing criteria.
Besides, AHLA still continues to lobby against Airbnb and this year they are likely to pay $5.6 million every year from this day onwards. Primary locations of concern are San Francisco, Los Angeles, Washington D.C, Boston, and Miami.
Airbnb in defense
Airbnb, on the other hand, shared something truly shocking through its blog post. These stricter regulations against Airbnb will,
“punish the middle class,”
“keep price gouging consumers”
Airbnb further indicated to the following data:
Furthermore, the blog post also added a statement taken from a CEO of a Hotel,
In an earnings call in July 2015, Pebblebrook Hotels CEO, Jon Bortz, said his company used to have an “ability to price at maybe what the customer would describe as sort of gouging rates,” but, because of Airbnb, hotels have “lost a lot of that ability at this point.”
Hotels used to make massive revenues during holidays; however, experienced loss throughout the rest of the year. As you have already seen above, the great extent to which Airbnb reduces profit margin for the hotel owners during the peak seasons.
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