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Report shows growth of short-term rental company in competing with commercial lodging industry

The hotel industry is starting to fight back against growing competition from Airbnb.

A national hotel trade group released a report last week documenting the dramatic growth of Airbnb operations, with data from 13 of Airbnb's top markets, including Portland. The data showed a substantial increase in Airbnb hosts operating multiple units and renting out entire houses.

The study found there were 5,635 Airbnb hosts operating in the Portland market, renting out 7,798 total units.

The data shows Airbnb and similar companies are not competing on a "level playing field," with the hotel industry, said Greg Astley, government affairs director of the Oregon Restaurant and Lodging Association. Airbnb and other short-term rental companies are only lightly regulated in Portland, he said, and "they're not following the laws and regulations that are in place."

Laura Rillos, Airbnb press secretary for Portland, said the data in the study was misleading. "The vast majority of our Portland hosts are regular people sharing the homes in which they live to make ends meet," she said.

The study, by CBRE Hotels' Americas Research, culled data from research firm Airdna. It found that hosts operating multiple units account for nearly 40 percent of Airbnb's national revenues. Those are the operations the hotel industry is most concerned about, because some hosts are operating small-scale lodging companies using multiple homes, buying up properties to use as Airbnb rentals.

"Once upon a time Airbnb might have simply been a home-sharing company, but this analysis shows that's just a fairy tale now," said Katherine Lugar, chief executive of the American Hotel & Lodging Association, in a prepared statement.

Total revenues from Airbnb rentals in Portland grew 97 percent in the 2016 fiscal year, according to the report. The number of multi-unit hosts here grew more than 80 percent in the last fiscal year.

Rillos says those numbers are exaggerated.

"As the (American Hotel & Lodging Association) already knows, many of their member inns, motels and hotels list rooms on our platform, so these are included in the very data on 'commercial' listings the big hotels seem so concerned about," she said. "Additionally, this report does not reflect listings removed from our platform after we instituted our One Host, One Home policy in the City of Portland, which limits users to advertising listings at a single address."

Hotels and other commercial lodging operators are free to list their vacant units on Airbnb or any other place they want, noted Mike Liefeld, enforcement program manager for the city Bureau of Development Services. However, those hotels are operating under commercial licenses and city zoning requirements, quite different from the more lenient conditions imposed on hosts renting out space in neighborhood homes, condos and apartments.

The city ordinance allows hosts to "hire out" managers of their Airbnb operations, so long as the hosts still are the primary residents of their homes. So it's permissable for entrepreneurs to list multiple homes, Liefeld said.

However, if the primary resident isn't living in the homes at least 270 days a year, that's a violation of the city ordinance.

Most hosts out of compliance

More than two years after the city legalized short-term rentals, it has issued only 792 permits, Liefeld said. That means probably less than one in four have been inspected and obtained licenses as required by the ordinance, despite a city requirement that Airbnb and other companies refuse to list homes that don't have permit numbers.

Astley applauded Airbnb for its new initiative to prevent hosts from advertising multiple homes in Portland. However, he wonders how well it will be enforced. "They don't have a really good track record of doing what they say they're going to do," he said.

The growing phenomena of Airbnb hosts renting out entire homes is also a concern to the hotel industry, because it essentially turns homes into vacation rentals.

The study found that more than 3,300 people — 60 percent of local hosts —were renting out their entire properties in the Portland market, supplying nearly 77 percent of Airbnb's revenue here.

Hosts in Portland are permitted to rent out their entire homes if the residents live there at least 270 days a year, Liefeld noted. So a teacher could convert their home into a de facto vacation rental while traveling during the summer.

However, the city ordinance limits hosts to renting out no more than two bedrooms under the standard permit, to minimize impacts on neighborhoods. Many Airbnb and other hosts are still advertising they have seven bedrooms or space for 16 guests, Liefeld said.

Such operations would need to get a different permit, which is akin to the more commercial permits that standard bed-and-breakfast operators get. Fewer than 20 such permits have been issued in Portland, Liefeld said.

Impact on housing supply

The growing practice of renting out entire homes also raises concerns about reducing the local housing supply and driving up rents. Even setting aside a single spare bedroom for Airbnb rentals could remove what otherwise might be an affordable long-term rental unit from the market.

"This report confirms a devastating national trend that is exacerbating the affordable housing crisis in cities across the country," said Peter Cohen, co-director of the Council of Community Housing Organizations, in a statement accompanying release of the national report.

Rillos said there are 2,976 entire-home Airbnb listings in the city of Portland. Airbnb notes that's only 1.1 percent of the city's housing units, as if to buttress its contention that its operations have a negligible affect on the overall housing market.

Astley disagrees, saying that results in nearly 3,000 homes taken out of the rental supply. "We're concerned about housing affordability and availability as well," he said, because those lost units makes it harder for restaurant and lodging workers to find homes near their jobs.

Fines going up

Starting March 31, the Bureau of Development Services will commence a tougher enforcement approach to short-term rental hosts who are flouting city rules. Fines will start at $1,000 for those who failed to get city inspections and permits.

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