Anytime a disruptive technology emerges, we see pushback from the affected industry followed by scary tales and later on regulation.
Such was the case with rideshare services Uber and Lyft that offer an alternative to overregulated taxi monopolies. The rideshare services responded with self-regulation in hopes that their efforts would not result in government putting an oppressive hand on their operations.
In the case of Delaware, state government encouraged the entry of Uber and Lyft, thanks to evidence that their entry in other areas reduced the number of drunk driving cases. Ground rules were set and problems have been minimal.
More problematic are app-based lodging services, Vrbo, Airbnb and others that are portrayed as a way for small landlords to rent out a room or vacation property. The Airbnb folks churn out press releases on the millions of dollars in income that go to landlords.
The reality is a little different in Delaware and elsewhere.
Lodging operators believe that a segment of the app-based market is operating illegal hotels. In popular locales, landlords have driven up apartment rents by converting to Airbnbs that command premium prices for short stays.
There is also Airbnb Watch, which chronicles abuses but goes overboard in failing to mention that some of the problems mentioned afflict all types of lodging establishments.
A year ago, I strumbled across a social media site in northern Delaware that seemed to show a landlord who had assembled homes and apartments for use as Airbnb-Vrbo prospects.
Using the approach, the owner escapes the health and safety standards that come with a hotel. Owners also evade a room tax in Delaware that ranges between eight percent (state) to 10 and 11 percent in New Castle County.
Regulation could be difficult since overlapping LLC’s etc. would make enforcement of health and safety issues difficult. A complicating factor comes from rental taxes charged by beach towns.
Still, a tax on all Airbnb, Vrbo transactions would level the playing field to some extent and might pave the way toward sensible regulation.
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