The Airbnb war in San Francisco is a direct attack on the free market.
Platforms like Airbnb, Uber, Kickstarter, Turo among others bring great value for users and providers.
The beauty of these platforms is they have the ability to send out price signals and allow the free market to work. What happens is if there is an increase in supply or demand, this platform makes that known. It is a symbiotic response for new participants to enter the market as providers or consumers.
There are enemies to this platform – the same enemies that oppose free markets and innovation.
Mariá Marty, the executive director of the Foundation for Intellectual Responsibility once stated, “You can tell how corrupt a city is by how vehemently it cracks down on the sharing economy.”
Is it really a crime for serving customers?
What happens when municipal and state officials sense that these platforms challenge and limit their power?
Well for those who are motivated by power, they take action against these platforms even when these platforms are successful.
For Airbnb, who offers 150 million users more flexible accommodation options this means they are now seeing a strange increase in crackdowns.
For example in New York in May of this year, a couple was fined $1.2 million and another man was fined in Asheville North Carolina $850,000 for serving Airbnb guests.
San Francisco is ground zero for the municipal government imposing fines.
This month it fined two Airbnb hosts $2.3 million, which the city spent two years investigating. The City Attorney Dennis Herrera afterward boasting its success and an end to “Unfair competition in the marketplace.”
The only crime the couple did was against the regulation that creates barriers that are inherently not in the best interest of the consumer.
San Francisco officials are constantly trying to address the shortage in available accommodations and rising rental rates.
San Francisco is considered to be one of the most unaffordable places to live across the English-speaking globe. It is not surprising that because of the lack of affordable housing, homelessness is also a huge problem in the city.
Many things need to be addressed including zoning laws that impede the construction of new housing units.
But San Francisco instead of dealing with this problem head-on has imposed a new tax this month, to help fund housing and homelessness services.
What did Airbnb do to address the homelessness in the city? They willingly committed $5 million of their own money to the cause.
It is not new news that San Francisco needs more houses and apartments. Airbnb was responsive to this problem and with market-driven prices; it was able to offer what was available to the needs of the city.
Airbnb made it a win for owners and visitors. Renters didn’t have to commit to a long-term contract, which they couldn’t afford. Others, who were in search of affordable housing in the city, could find it 40% cheaper at Airbnb, than your traditional hotels.
This made it very attractive to many.
But if you have a read at the San Francisco Airbnb law, you will read the city rent controls must be obeyed. This means if a provider does not follow the rules they will be subject to fines of $1000 per day. In the city you can’t rent an Airbnb for more than 90 days if the owner does not also live at the residence.
If you live out of town forget it, this is entirely banned.
All Airbnb is doing is allowing people in the city to help meet the market needs for a better housing market. It is a total reflection of the wishes from its users.
What needs to happen to ease the housing problem for San Francisco? Housing regulations need to be loosened and more construction needs to happen for starters.
Airbnb War in San Francisco
Sonia Rina Landry is a passionate entrepreneur, speaker, author, and personal development coach. She is an outspoken advocate of the free market economy and has helped countless clients identify their core values, envision and realize goals that resonate with those values. She oversees several businesses online and offline.