Airbnb to Tack on Hotel Tax for San Francisco Guests

If you're used to traveling to San Francisco and saving on hotel bills by renting accommodations through Airbnb, time to start preparing for an increase. The online home rental service has agreed to pay San Francisco's 14 percent hotel tax, addressing at least one concern of critics who say the company is flouting regulations. Under the plan, Airbnb would collect taxes directly from guests as an extra charge on their bill.

The San Francisco-based company, which connects travelers with people renting out their homes, said it will begin remitting taxes to the city by the summer. Out of the 32,000 cities worldwide where Airbnb operates, San Francisco and Portland, Ore., would be the first ones where it collects hotel taxes. The company agreed last week to collect taxes in Portland. The company is also in negotiations over collecting taxes with New York state.

"We have repeatedly said that we believe our community in San Francisco should pay its fair share of taxes," David Hantman, the company's head of global public policy, wrote in a blog post. The move could potentially add millions to San Francisco coffers and help Airbnb avoid conflict with regulators — especially if the company seeks to go public.

Airbnb has been criticized by city officials, landlords and hotels, who say it ignores local regulations, including the hotel tax and a ban on renting residential spaces for less than 30 days. San Francisco's treasurer ruled in 2012 that the online home rental services like Airbnb are subject to the tax. At the time, the company strongly resisted. "Laws (like San Francisco’s hotel tax) were written long before the Internet or any of these activities were conceived," an Airbnb spokesperson said after that ruling. "Innovative new models that allow San Franciscans to generate additional income should be addressed by innovative laws and policies -- not stifled by 40-year-old regulations."

Marina Franco, an attorney at a law firm that represents property owners, told the San Francisco Chronicle that the tax alone would not satisfy landlords. "Our concerns are the liabilities of having strangers in our buildings, the fact that (tenants) are renting rooms for more than landlords are entitled to charge and that they don't have conditional use permits to run hotels," Franco said.

The Chronicle said that an Airbnb host who was briefed on the plan said the company plans to keep hosts anonymous when it remits the tax.

Some San Francisco landlords have been trying to evict tenants who use their rentals to host Airbnb guests. "Landlords are pissed off that tenants are profiting off their properties," Delene Wolf, executive director of the San Francisco Rent Board, told the Chronicle in March. "It makes them crazy: They're rent controlled, and the tenant is making more off their property than they can make."

San Francisco Supervisor David Chiu is working on legislation that would establish a framework for the company's operations. "Now that they are doing the right thing and remitting taxes, I'm looking forward to moving forward on legislation to regulate shareable housing," he said.

As with those other fast-growing stalwarts of the "sharing economy," the ride-service firms UberX and Lyft, Airbnb has caused all manner of consternation in the well-regulated business that preceded it. Across the country, local taxi companies have adamantly opposed the ride services; and the "hospitality industry" has likewise gone to war with Airbnb. In New York City, the hotel industry has been especially critical of the company. Airbnb said recently it's in discussion with New York state over a subpoena of information on 15,000 Airbnb hosts.

Last October, Airbnb co-founder and CEO Brian Chesky wrote, in a blog post on the New York battle, that he believed hosts should pay tax. "Our hosts are not hotels," he wrote, "but we believe that it makes sense for our community to pay occupancy tax, with limited exemptions for those who earn under certain thresholds."

The San Francisco agreement comes on the heels of a recently launched Airbnb initiative called Shared City, intended to "help civic leaders and our community create more shareable, more livable cities through relevant, concrete actions and partnerships." Fortune described the plan as "somewhere between Jane Jacobs meets Richard Florida with a 2014, shareable-economy twist."

The Wall Street Journal reported last month reported that Airbnb is "close to becoming one of the world's most valuable startups" after engaging in "advanced talks" for another round of financing worth $400-$500 million. That could leave the company worth about $10 billion, the Journal said.

Airbnb CEO Brian Chesky sat down with Scot Shafer on KQED Newsroom in January.