How New Legislation Could Affect the Airbnb Experience

What is Airbnb?
A decade ago, if someone planned a trip—for business or pleasure—they usually booked a room in a hotel. At the most, a family or group of friends would rent a beach house for the week and split the cost equally. Now, however, the world of travel is changing.

Travelers seek unique experiences, from far-flung breweries to Instagram-worthy restaurants. Similarly, travelers want a unique lodging experience that lets them get to know the cities they visit on a more personal level.

Enter Airbnb, an online marketplace that connects individuals who wish to rent their homes with travelers who are looking for short-term lodging. Founded in 2008, Airbnb is part of the growing shared economy, also known as “collaborative consumption,” in which consumers can rent rooms, cars and other goods directly from one another through a coordinating entity.

How does it work?
Travelers visit www.airbnb.com, where they can quickly input their desired location and dates of stay. They are then given an extensive list of possible rentals, from single rooms to whole houses to even castles, if they desire. A quick search on the website on May 1 revealed 92 rentals available in the Lynchburg and surrounding areas for college graduation weekend. Some of the rentals even noted their proximity to Liberty University and availability for graduation.

Click on a rental that interests you and you are directed to a description of the property, photographs, amenities, “house rules,” a description and rating of the owner, and more. Because of the variety of rentals available, travelers can select what best suits them based upon the size of their party, length of stay and desired cost.

Airbnb is not just for the vacation crowd.

Originally, Airbnb attracted tourists who were seeking more economical lodging options, a unique experience, or both. In recent years, however, Airbnb has been attracting a larger market of business travelers. According to airbnb.com, employees from more than 240,000 companies in over 230 countries and territories are now using the service for business travel. With business-friendly receipts, filter options to find ideal accommodations, and a third-party booking tool, we can expect continued growth in this area of Airbnb’s market.

New Virginia Legislation
Not everyone, however, is in favor of this new travel experience. Hoteliers and owners of smaller bed-and-breakfast outfits pay substantial taxes on the services they provide.

Private property owners who rent their space on Airbnb, however, are not subject to similar taxes and regulation. This conflict has lead to recent efforts to determine how best to regulate this new sharing economy.

On March 24, 2017, Governor Terry McAuliffe signed legislation that will empower local governments to regulate short-term rentals like those offered on Airbnb. Senate Bill 1578, sponsored by Senate Majority Leader Thomas K. Norment, Jr., R-James City, allows localities to require those who use short-term rental sites like Airbnb to pay a fee to register their property annually and to require a fine up to $500 for those who fail to do so. The legislation further provides that a local ordinance may prohibit an operator of a short-term rental from continuing to rent the property unless and until any fine owed is paid. Additionally, property owners who wish to use short-term rental services like Airbnb must obtain a bed-and-breakfast ABC license if they wish to serve alcohol to guests.

Norment’s bill was one of three proposals submitted to regulate this industry. One of the bills, pitched by Airbnb itself, proposed that the company would directly provide localities with the names and addresses of renters, coordinate tax collection and payouts to the localities, and provide a mechanism for localities to subpoena Airbnb to cross-check their registries with Airbnb’s data. The other proposal was a bill from Senator Bill Stanley, R-Franklin County. His bill would require homeowners to register with the state Board of Health, notify their neighbors of their intent to rent their property, seek permission from the locality in which the rental would occur, and obtain a $500,000 liability insurance policy. The penalty for renting where it is not permissible to do so? A whopping $10,000.

Ultimately, Virginia lawmakers preferred Norment’s bill, which will take effect July 1, 2017. Thereafter, expect localities to begin work on their own regulations in an effort to level the playing field between short-term renters, hotels and bed-and-breakfast operations.


By Catherine J. Huff

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