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'Illegal Hotels' Targeted By Chicago Airbnb Opponents

By Ted Cox | May 10, 2016 12:14pm | Updated on May 11, 2016 10:59am
 The porch of a Wrigleyville property listed on Airbnb looks inviting, but it is paying city hotel taxes?
The porch of a Wrigleyville property listed on Airbnb looks inviting, but it is paying city hotel taxes?
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CITY HALL — Hotels and bed & breakfast owners called Tuesday for the city to crack down on "illegal hotels" springing up as "commercial properties" to get in on the home-sharing game of Airbnb.

"Airbnb competes directly with real B&Bs," said Kapra Fleming, owner of the House of Two Urns in Wicker Park.

The American Hotel & Lodging Association issued a report Tuesday called "From Air Mattresses to Unregulated Business: An Analysis of the Other Side of Airbnb" suggesting that $48 million, or 96 percent of Airbnb's business in the metropolitan Chicago area, came from the 75 percent of Airbnb operators listing their properties more than 30 days a year.

 Downtown Ald. Brendan Reilly wants his existing ordinance to be enforced or, at very least, for Mayor Rahm Emanuel's compromise to be strengthened.
Downtown Ald. Brendan Reilly wants his existing ordinance to be enforced or, at very least, for Mayor Rahm Emanuel's compromise to be strengthened.
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DNAinfo/Ted Cox

A "deep dive" into Chicago data said $29 million, or 58 percent of Airbnb's Chicago-area revenue, came from properties available more than 180 days a year. Properties listed 360 days a year generated $12 million, or about a quarter of Airbnb's revenue in and around Chicago.

Vanessa Sinders, spokeswoman for the national hotel association, insisted it was not out to crack down on homeowners doing vacation rentals while they're away.

"Home sharing and occasional home rentals have been going on for decades," Sinders said on a media conference call concerning the new study Tuesday. "That practice is not our focus."

She repeated calls for homeowners using Airbnb to simply register with the city, while "commercial properties" where the homeowner didn't live would need to be licensed.

Fleming, who said she lives in her B&B, but licenses it as a business, added, "To me, this is really about everyone playing by the same rules."

She said, "I have seen a dramatic decrease in occupancy," down 25 percent with the increase of Airbnb properties in Wicker Park, and "Chicagoans who value our neighborhoods should cringe."

"This is an area that impacts every neighborhood, every community," Sinders said, adding that commercial operators were "flouting zoning laws" and serving to "undermine the social fabric."

Marc Gordon, head of the Illinois Hotel & Lodging Association, took an even stronger position on the conference call, saying, "Bad actors use Airbnb with impunity to dodge regulations" that hotels follow.

Gordon echoed calls from Downtown Ald. Brendan Reilly (42nd) to enforce a 2011 ordinance he sponsored requiring all rental properties to be licensed with the city.

"In six years, it hasn't happened," Gordon said, adding the law "has literally been ignored, and the city has not enforced it." According to Gordon, only 200 of Airbnb's 6,000 Chicago listings are licensed with the city.

Mayor Rahm Emanuel this year proposed setting a 90-day-a-year cutoff for whether Airbnb rentals would need to be licensed or, if not rented that much, simply registered with the city.

According to Gordon, licensing those commercial rentals alone would raise $2 million.

Sinders and Fleming seemed prepared to accept such a compromise, even as Gordon wanted the existing law enforced. Sinders called for "strong regulation that reins in those illegal hotels."

Reilly was joined Tuesday by Aldermen Michele Smith (43rd), Brian Hopkins (2nd) and Tom Tunney (44th) in demanding that Emanuel's proposal be toughened before being adopted.

The Emanuel administration said Tuesday it was still under negotiation.

"The administration continues to talk with aldermen and stakeholders about the proposed ordinance in an effort to institute reasonable regulations that will protect consumers while preserving the quality of life in Chicago neighborhoods," said mayoral spokeswoman Shannon Breymaier.

Yet Airbnb spokesman Christopher Nulty lashed back that the study was "factually inaccurate," calling it "the latest example of the industry’s attempt to mislead and manipulate instead of accepting that an increasing number of consumers and cities are embracing the tremendous benefits of home sharing."

Nulty insisted that 92 percent of Airbnb hosts in Chicago are sharing their primary residences, and that Airbnb has been paying city hotel taxes since February 2015.

Matt Kiessling, head of the Travel Technology Association, agreed with that stance, calling the study "a transparent and desperate attempt to denigrate the short-term rental industry in hopes of convincing city officials to eliminate short-term and vacation rental options for Chicago visitors."

Kiessling endorsed Emanuel's compromise as is, saying, "Chicago officials should embrace the future of the travel economy and no longer allow themselves to be held hostage by the local hotel industry. After all, visitors to the Windy City are increasingly seeking short-term rentals, and adopting legislation that benefits everyone — homeowners, community members, business owners and travelers — just makes sense."

Gordon called for some sort of action to be taken by the City Council, saying, "Nothing happening is unacceptable."

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