Grand Rapids — One of the biggest drivers in Michigan’s tourism industry right now is a search for authenticity and as travelers try to live, eat and drink like the locals, it’s creating a “perfect storm” for peer-to-peer sharing sites like Airbnb.
“It’s authentic. It’s social. It gives us a chance to interact with locals,” said Dan McCole, an assistant professor of commercial recreation and tourism at Michigan State University. “It’s something we’ve always desired in travel but we haven’t had an authentic way to do that.”
Airbnb, which has drawn scrutiny across the country over safety and tax regulations, was a major topic of conversation at the Pure Michigan Governor’s Conference on Tourism here. The website provides a platform for hosts to rent out some or all of their homes to visitors looking for cheaper lodging or a more authentic living situation than what a hotel could offer. Hosts are asked to provide identification when they register and guests are usually asked for ID prior to their stay. Beyond that, potential hosts heavily on self-marketing and user reviews.
David Owen, Airbnb's regional head of public policy, spoke Tuesday at the conference during a spirited give-and-take with hotel, motel and bed and breakfast owners who say their businesses are being hurt by sites like Airbnb.
Michigan has more than 1,000 hosts on the site — a small number when compared with many other states. Last year, those hosts collected nearly $4.5 million by renting out their homes, Owen said.
Those in the hospitality profession charge that hosts on sites like Airbnb dont’t pay the lodging taxes they do and are freeloading the marketing services the taxes provide.
Communities in Michigan are just starting to consider laws that would require peer-to-peer owners pay taxes.
“We recognize the importance of the tax to the state governments, convention and visitors bureau, the county governments,” said Owen. “Where the law applies and it’s clear, we inform our users of the tax obligations and are working with them to remit those taxes.”
Not a new concept
In some cities, like Portland and San Jose, Airbnb actually collects taxes from their hosts and remits it to the governing authority there. He said it is a matter of working out the issues and waiting for the government to catch up to the technology.
Peer-to-peer sharing isn’t a new concept: eBay was really the first company to achieve success by using the Internet to match up buyers and sellers. Travel services like Airbnb is an extension of that, which really took off during the Great Recession, when homeowners were looking to leverage their existing spaces to make a little extra cash.
To a certain extent, Airbnb is a complement to existing lodging options in Michigan, said Puneet Manchanda, a professor of marketing and chair of the department at the University of Michigan. It has to do with the seasonal nature of tourism in the state.
“The quality and quantity of hotels, formal lodging, is not perfectly matched with demand because we have spikes,” said Manchanda. “Airbnb has the ability to soak up all this extra demand, but if there is no demand, nobody loses anything, so to speak.”
Embraced by San Francisco
One city that stepped up to work with Airbnb and put regulations and taxes in place is San Francisco.
Jon Ballesteros, vice president of public policy for the San Francisco Travel Association, who also spoke at the conference Tuesday, said the city hasn’t built a new hotel since 2008, but the demand for lodging continues to grow. And as room rates increased, there was a risk of visitors seeing San Francisco as too expensive. Airbnb provides a solution to that, he said.