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Airbnb Tax Airbnb/for PhillyVoice

City Hall passed legislation in June that, as of July 1, makes Airbnb lodging legal and subject to the city's 8.5 percent hotel tax.

July 23, 2015

Philly hotels: 'We're not threatened at all' by Airbnb

How Philly's hospitality scene is reacting to Airbnb

Between Airbnb recently announcing it would rake in revenue of $900 million this year alone, and the June legalization of the service in Philadelphia, you'd think the city's hotels and bed and breakfasts establishments would be at least a little shaken up.

Not quite.

"We actually think there's a place for [Airbnb] in our industry, and we're not threatened at all from a business standpoint," Ed Grose, executive director of the Greater Philadelphia Hotel Association, told PhillyVoice. "We’re two different products. One is renting someone’s home, and the other .... there’s just different service touchpoints."

Despite the easy comparisons to be made, it's hardly a dukeout kind of narrative.

"It’s not the battle like it is with the cabs and Uber," Grose insisted. "That’s not the impetus behind this.”

Grose said that the association's push to get Airbnb to pay the city's 8.5 percent hotel tax (not to mention state sales tax and rental license requirements) came from a place of "fairness," rather than hostility. The gist of Grose's argument of why Airbnb isn't a direct competitor for hotels is that hotels offer touchstone services that Airbnb hosts don't: food, conference rooms (essential for traveling businesspeople), strategic proximity and a fully loaded arsenal of other amenities that attract everyone from airport workers to conventioneers.

Moreover, Airbnb rolled over and accepted the hotel tax in Philadelphia -- welcomed it with a blog post, even. Likely because Airbnb services in Philadelphia have doubled in the past year, and the legalization of the service that comes with the tax -- just in time for the Pope's visit -- gives it legitimacy when it matters most.

But while Airbnb might not be a threat for Philly hotels, could it be one for Airbnb's namesake? 

Again, not quite.

University City Cornerstone Bed and Breakfast owner Chris Spaeth said that many bed and breakfasts in Philadelphia were equally frustrated with the service before June's legislation, but that Airbnb has the potential to do wonders for bed and breakfasts by encouraging healthy competition in an industry desperately in need of change.

"The biggest challenge to the bed and breakfast industry is the people who run it themselves," he told PhillyVoice.

Spaeth described bed and breakfasts as falling behind, mostly managed by Baby Boomers who aren't always in touch with tech trends and the needs of casual, fast-paced travelers. He mentioned that some owners he's encountered -- in Philly and through conferences -- still wait for their guests to arrive well into the late-night hours (rather than set up an alarm code), lack quality WiFi service (or service at all) or set specific early morning times for breakfast (complete with a 7:15 a.m. wake-up call). They also, he said, tend to lack the technical know-how to include their lodging on listing sites like Expedia or Priceline, or tailor a web page for Google search results.

"I think Airbnb is a good thing for the industry," he said. "It will make [other owners] sort of step their game up."

Of course, it could also be a great thing for a city that continues to grow its prestige as a travel destination.

Philadelphia as a lap of leisure 

The big picture is that Airbnb is but one small sliver of the large and ever-rising pie that is Philadelphia travel.

Visit Philly CEO Meryl Levitz told PhillyVoice that adding Airbnb lodging services -- and services like Airbnb -- helps cater to a growing market of visitors in Philadelphia that hotels are sometimes unable to reach. (Of note, Visit Philly receives 1.38 percent of all collected hotel tax.) It's not necessarily that Airbnb is stealing from an existing market; in a way, they're creating a new one.

For the following reasons, she argued, Airbnb's now-legal existence is poised to be a positive contributor to the city's travel growth:

It meets the needs of leisure travelers. From 1997 to 2014, according to PFK Consulting, overnight visitors from leisure travel increased from 7.3 million to 13.9 million. Put simply, leisure growth has far exceeded business growth, and hotels bring in more travelers on business than any other category of traveler. She also noted that many returning travelers may be more likely to explore "off the beaten path" -- which is where Airbnb and bed and breakfasts start to look extra appealing.

It has a mutually beneficial relationship with the city. Airbnb, she said, is now part of a larger ecosystem that creates a "reciprocal" relationship between it and marketing organizations for the city -- including VisitPhilly and the Philadelphia Convention and Visitors Bureau. The city benefits from the existence of the lodging as much as Airbnb hosts benefit from the attractions of the city. She said to expect Airbnb to be roped into future Visit Philly marketing pushes.

It allows for exposure to bed and breakfasts. By nature of what Airbnb is, Levitz said that the advent of marketing from Airbnb has drawn more attention to traditional bed and breakfasts -- particularly beneficial for Philly's sometimes overlooked countryside lodging.

It ushers in neighborhood tourism. As neighborhoods grow, so too does traveler interest in them. "We're finding that people are expanding what they consider a comfortable, intriguing or well-located place for an overnight stay," Levitz said. Visitors to Philadelphia, she explained, are increasingly requesting an experience that involves seeing the city through the lens of a local. Because Airbnb (and bed and breakfasts in general) are largely integrated into satellite neighborhoods of Center City, it allows for travelers to experience popular but sometimes hard-to-access neighborhoods and, more importantly, gives those travelers reason to spread the word after the fact. (This neighborhood growth might also explain why boutique hotels are popping up in places like Fishtown). 

Rachel Hewitt, who's been hosting on Airbnb in the Fairmount neighborhood of Philadelphia since February 2013, echoed many of these same sentiments. Many of her guests -- who've ranged from cellists auditioning at the Kimmel Center to cancer researchers from Hong Kong -- are coming to her because of the affordability of her service and the accessibility to neighborhoods that are either not well-covered by hotels or might be too expensive.

It's also a boon for business outside of the hospitality industry, she argued.

"The great thing about Airbnb, I think, is the diverse locations in the city and how that helps local cafes and shops," she told PhillyVoice. "For example, I'll be asked, ‘What are your favorite places to get breakfast?’ And as Philadelphia develops, it will take a while for hotels to spread out -- there’s just so much happening, but also so much to see and experience in Philadelphia."

"Philadelphia," she added, "is so much more than just a few blocks."

So, is Airbnb really a threat to Philadelphia's existing hospitality industry? That, in truth, remains to be seen -- and may depend on what happens when (or if) hotels start springing up in neighborhoods, or how bed and breakfasts embrace change. For now, consider Airbnb just another example of evolving how we do business around here -- one more signifier of growth in a city riding a tsunami of momentum as a travel destination.

And, as they say, a rising tide lifts all boats.