Home rental site Airbnb announced Tuesday its collection of a 14 percent hotel tax in San Francisco on behalf of hosts. It is the company?s move to counter critics claiming that they willfully dodge taxes to leapfrog its traditional competitors in the industry. Airbnb has grown up to command a potential $10 billion valuation from investors, which is why they want to play by the city?s rules.
Shared City Initiative
The company?s move follows its announcement last week that they have established a partnership with the city of Portland to work with the city?s bureau of tourism, settle transient lodging taxes, and offer guests the opportunity to donate to local causes. Airbnb hopes that the local governments will adopt the new Shared City initiative internationally. The company also said that if it were paying hotel taxes in New York, then it would generate over $21 million every year for the city.
In the case of San Francisco, the 14 percent hotel tax may generate up to $274 million in revenue this year for the city. These taxes would be charged on top of the guest?s bill, represented as an extra charge over the nightly rate as well as Airbnb?s fee.
Helping Homeowners Earn Income, Avoid Foreclosure
The popular home rental site also allows people to rent apartments, rooms, homes or other living space to be paid on a daily rate to tourists as an alternative to hotels. Most homeowners claimed that the website has allowed them to generate their much ? needed income, while some even thanked the site by helping them avoid foreclosure.
However, cities from New York to Los Angeles expressed their concerns on private homes being rented as hotels. Their concerns focus largely on the guests causing noise, traffic, crime or any other related problems. New York prosecutors said last year that they will investigate whether their business model complied with the state?s law.
David Chiu, San Francisco?s city supervisor, has been creating new regulations for short ? term stays on websites like Airbnb for over two years. The city?s regulations have been proven politically hard to update, given the issues on housing affordability in the city, concerns from neighbors, and zoning restrictions. The legislation will not override lease agreements. This means that tenants are required to abide by the landlord?s rules.