The "Sharing" Economy: Issues Facing Platforms, Participants, and Regulators A Federal Trade Commission Workshop #01142

Submission Number:
George Kopp
Initiative Name:
The "Sharing" Economy: Issues Facing Platforms, Participants, and Regulators A Federal Trade Commission Workshop
Thank you for the opportunity to comment on the "sharing" economy. I live in Joshua Tree, CA in the Mojave Desert. In addition to my primary residence I own a detached 2-bedroom cottage which I have listed on VRBO since 2012 and on Airbnb since 2014. The following comments pertain to the vacation rental industry. 1. Competition: Our region is a gateway to Joshua Tree National Park and attracts visitors from all over the US, Canada, and internationally. The Park Service predicts Joshua Tree will attract 2 million visitors in 2015. There are no 4-star or 5-star hotels within 50 miles, and the majority of commercial lodgings are 2-star motels. A stay at my rental, on the other hand, is $200 per night with a two-night minimum. Far from competing with local lodgings we are actually catering to an underserved high-end market segment. There are also under-$100 Airbnb listings available in Joshua Tree, but these too offer an experience which could hardly be called "competitive" with local motels. They frequently include outdoor showers, composting toilets, and no linens, towels, TV, or Internet. In general the vacation rental industry has greatly expanded the options for travelers, aiming at a completely different market segment than chains like Best Western or Motel 6. 2. Consumer Protection: Our business lives and dies by consumer reviews and referrals. We are careful to state exactly what amenities we provide our guests (such as free Internet) and what we do not (such as TV). If consumers felt they were in danger of being ripped off by vacation rental hosts, there would be no VRBO or Airbnb. In my experience (and I believe the experience of most travelers) the commercial lodging industry is far more prone to overselling, hidden charges, poorly maintained facilities, and other consumer-unfriendly business practices than VRBO-Airbnb listings. Unless there is a vast, unknown catalogue of documented instances of consumers being endangered by staying in vacation rentals, either physically or financially, there is no cause whatsoever for federal regulatory action. If consumers were routinely being victimized we would undoubtedly see filings of large class action lawsuits, yet I am unaware of any. 3. Economic Issues: There is no question that the vacation rental industry has been a financial boon to hosts and to local economies such as ours in Joshua Tree. Yet as in all sectors of our society, including our largest corporations and most powerful politicians, cheating exists. Not all hosts obey local business ordinances or pay all their taxes. As one who does, I would welcome better enforcement. Yet I cannot help feeling that local governments have brought many of these problems on themselves. In Santa Monica, for example, where the city council has just outlawed most Airbnb rentals, what has the record of local government been in protecting tenants over the years? What has been their record of building affordable housing, or protecting independent businesses from murderous competition from big chains? It is doubtful that consumers have been well-served by these policies overall. One possible area of concern (which I share) is whether hosts are adequately insured. The insurance industry has been insistent that vacation rentals require commercial policies rather than ordinary homeowners policies. These are generally two to three times more expensive and few hosts buy them. This problem demands a market solution, not a regulatory one. I have no doubt that once one insurance company realizes the profit potential in writing policies for vacation rental owners at affordable rates, others will follow. The FTC's primary focus is consumer protection, and the agency cannot and should not address local land use issues. Like many industries the vacation rental business is largely self-policing. Considering the number of guests served each year it would appear that the industry is doing a better than adequate job of protecting consumers.