U.S. Hotel Industry Locks Horns With Airbnb

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Airbnb Inc. and the hotel industry have waged a shadow war in cities and states across the U.S. that are grappling with how to regulate the popular short-term rental market.

The stakes are high: Closely held Airbnb has a $31 billion valuation, according to people familiar with the matter, and has more than doubled its world-wide listings over the past two years.

The industry stands to lose market share as Airbnb continues to grow. A Morgan Stanley report last year found that nearly half of Airbnb users surveyed had substituted Airbnb for a traditional hotel during their travels in the past year.

While many hotel executives have sought to play down the threat, the industry’s lobbying group has sharpened its attack and developed campaigns with affordable housing advocates and other neighborhood groups. Meanwhile, Airbnb has organized residents who show up at hearings, where they stress how it provides supplemental income.

“As far as the resources going toward this issue, I’ve never seen anything quite like this,” said Los Angeles City Councilman Marqueece Harris-Dawson.

Los Angeles is the latest battleground, with its city council expected to begin crafting regulations this fall that could limit the number of days Airbnb hosts can rent out homes. Mr. Harris-Dawson has been impressed with how Airbnb has organized hosts, who he said approach him at events to discuss rental rules.

Airbnb Watch is an example of a hotel industry-funded effort that doesn’t look like one. Internal board meeting documents from the American Hotel & Lodging Association last year say the trade group “stood up” Airbnb Watch as a way of “gathering stories of short-term rental’s harms” and “highlighting Airbnb’s lack of transparency.”

Another AHLA document from August, reviewed by The Wall Street Journal, outlines a strategy for the next year intended to create partnerships with “groups, think tanks and other credible voices to weigh in on this issue.”

On its website, AirbnbWatch advertises itself as a project of American Family Voices, a communications firm that wants to “fill gaps in the progressive movement.”

Mike Lux, a former Clinton administration staffer who is president of the group, said he has often opposed the hotel industry on wage and workplace issues, but “on this particular issue, they obviously are in alignment.”

Troy Flanagan, vice president of state and local government affairs for the American Hotel & Lodging Association, said its relationships with local advocates are “partnerships in a coalition setting,” while Airbnb’s approach is to flood city and state government with professional lobbyists.

The hotel industry, along with hotel workers’ unions, have also funded organizations such as Keep Neighborhoods First in Los Angeles, as well as Share Better, which has chapters in New York, Los Angeles, San Francisco and Washington. Airbnb, meanwhile, is helping fund the Checks and Balances Project, a “public watchdog blog” that has gone after the industry, particularly when it funds research about short-term rentals. After the site said it would accept funding from Airbnb last fall, the group filed an ethics complaint against John O’Neill, a Penn State professor who was analyzing data on Airbnb hosts and had accepted funding from American Hotel & Lodging Association.

A Penn State spokeswoman said an investigation concluded he was “in compliance with university policy.” Mr. O’Neill said the research was presented at a hospitality academic conference this year.

The group similarly targeted a professor at Florida International University who was considering a grant from the hotel association to study safety issues in short-term rental properties. Mike Hampton, dean of FIU’s hospitality school, said the university decided not to pursue the study because of disagreements about the grant contract, but he viewed the group’s campaign as “an intimidation process” to “stall or stop the study.”

Scott Peterson, the executive director of Checks and Balances Project, didn’t respond to requests for comment, but his site acknowledges it accepts funding from Airbnb.

Airbnb spokesman Nick Papas said the company has “absolutely been public” about its support of Checks and Balances and efforts to “expose secret relationships between academics and the big hotel industry.”

He added that the platform’s approach is through lobbying and campaign expenditures, as opposed to funding pseudograssroots efforts that can’t be tracked through public records.

—Greg Bensinger contributed to this article.

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Airbnb spent at least $1.5 million lobbying state governments across the U.S. including California, Florida and New York last year, up from roughly $800,000 in 2015, according to data from the National Institute on Money in State Politics.

Hotel industry associations, corporations and hotel unions spent at least $2.8 million on state government lobbying last year, but industry officials point out the short-term rental issue is just one of many industry priorities.

Airbnb has also poured significant resources into lobbying cities that are considering new restrictions. Over the past year in Los Angeles, Airbnb has spent nearly $1.9 million on lobbying there, compared with about $288,000 for a coalition of hotel industry groups, labor unions and other groups.

Airbnb’s growth has slowed over the last year as some major markets have tackled short-term rentals, and its big spending has had mixed results. In 2015, the company successfully lobbied against a voter initiative in San Francisco that would have restricted short-term rentals, outspending opponents 16 to one.

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