Is Airbnb ‘Homesharing’ Or A Business? Tennessee Laws Could Depend On The Answer

One of the sticking points in Tennessee’s struggle with Airbnbs and other short-term rentals is a question of how to define them. Are they part of the so-called “sharing economy,” or a new wave of commercial businesses?

Some clever data analysts think they have an answer — and it could influence local and state regulations.

View WPLN’s
ongoing coverage of short-term rentals.

The question surfaced last week when state lawmakers
convened a hearing on short-term rentals, which have exploded in popularity. Because the rentals are typically enabled by online booking — directly between host and guest — the arrangement draws comparisons with other peer-to-peer networks.

But Troy Flanagan, a vice president with the American Hotel and Lodging Association, cautioned that there’s a gap between perceptions and the data on short-term rentals. He said it’s a “convenient narrative” that most short-term rentals are “mom-and-pops.”

“The occasional rental of a primary residence, the true spirit of the ‘sharing economy,’ is the type of activity that generates positive benefits for tourism,” Flanagan said. “However, we are concerned about the growing number of commercial operators that use short-term rental websites to essentially operate multi-unit, full-time lodging businesses.”

Flanagan said the numbers show how that in many cities, the majority of short-term rentals are of entire homes (not spare rooms) and they’re booked at least half the nights out of the year, without the owner present.

“It’s clear, that’s not homesharing,” he argued. “That’s a business.”

Two independent data analysts have similar findings — including for Nashville.

Diving Into The Data

By scraping info from Airbnb’s website, Murray Cox, founder of ”
Inside Airbnb,” finds that 73 percent of available Nashville rentals are entire homes (2,389 listings).

And he sees another sign that people are running Airbnbs like a business: Nashville has an abnormally high number of operators who rent multiple properties — 43 percent of the city’s listings.

“That’s a very clear indicator of commercial activity,” Cox told WPLN.

The operator with the most listings in Nashville, he found, has 59. And nine hosts had at least 10 listings.

(A
WPLN

analysis of owners registered with Metro found far fewer with multiple listings. Officials estimate that potentially thousands of properties have not obtained permits. Nashville’s permit data is updated each day in
the Open Data portal.)

Cox, who lives in New York City, says he began providing data to cities because he wants to see informed decisions about regulations.

“I would argue that most people still think of Airbnb as people renting out spare rooms, whereas the reality in most cities is people renting out whole homes,” Cox said. “The data is neutral.”

Technology writer Tom Slee, of Ontario, Canada, has reached similar conclusions. Across roughly a dozen cities, he found that about a third of Airbnb listings are run by operators with multiple listings.

“It’s a gray area: What’s a commercial activity and what’s not?” he said.

Slee’s research also examines how short-term rentals concentrate into pockets of cities.

“You come down to individual tourist neighborhoods and that’s where it can really make a difference,” he said.

In parts of Lisbon, Portugal, for example, one of every four rentals is now short-term, he said.

The geographic differences have challenged Nashville policymakers, who have debated how to apply rules across the county. And state lawmakers have raised the same question while deciding whether a regulation could be carried out statewide.

Policy Talks Continue

As lawmakers consider the scope of short-term rentals, they’re deciding whether the properties should be regulated like hotels when it comes to taxes, inspections and zoning.

Or, as Sen. Bo Watson, R-Hixon suggests, they may represent something different.

“As these new technologies allow new economies to develop, new definitions of business activities are going to continue to emerge,” he said. “And we’re going to have to struggle and wrestle with those.”

Watson said new business models are arriving faster than ever — posing a challenge for policymakers. In last week’s hearing, they asked what types of regulations have been passed in other places.

In New Orleans, short-term rentals are capped based on the number allowed per city block. That differs from Portland, which limits the number of nights that a property can be rented per year.

Nashville’s choice — which faces a legal challenge — has been to allow unlimited short-term rentals in which the owner resides on site, but to cap non-owner-occupied units based on census tract.

After a year under this policy, the cap could be further tightened. That’s under discussion by members of the Metro Council, and faces resistance from proponents of short-term rentals.

This story has been updated to clarify that property management companies — “operators” — often oversee listings for owners of individual properties.