SPI President & CEO Mary Scott Nabers
The “sharing economy” is upon us – ride sharing, home sharing, car sharing and more.
Services like Uber and Lyft are available, and legal, in many major cities. Thousands of properties – homes, condos and apartments – are listed on Airbnb and HomeAway. Car rentals and pet kenneling are offered through individual exchanges.
In some cities, parking is related to another strange homespun enterprise. Individuals who are willing to park and hold spaces until there is a request to purchase the space are also reaching buyers through online connectivity.
This new trend has many names including the collaborative economy and the peer-to-peer economy. The second seems to be the most descriptive. Rather than relying on professional services and established companies, people are connecting online and then making purchases from lay enterprisers. Connectivity, as well as the ease and speed of access, has contributed to this disruptive trend…and it is definitely disruptive for numerous companies and many public entities.
The situation can be compared to a time in the past when discount and regional airlines began competing with legacy carriers. Lawsuits were filed and there were cries of “foul” because the established companies saw a discrepancy in regulatory requirements. The same thing is happening today and many established businesses are up in arms about their plight.
Late last year the New York, Attorney General Eric T. Schneiderman released a report stating that only a quarter of Airbnb rentals in the city are legal – the remaining 75 percent are in violation of zoning or other laws. According to the New York Times, less than two-thirds of the short-term rentals were being offered by residents. Once the trend caught on, commercial ventures moved in and began capturing more of the business. City officials have since cracked down on the short-term rental market by deploying a task force of officials from various regulatory divisions. According to city code now, renting an apartment for fewer than 30 straight days is illegal and renting must be done by residents.
In San Francisco, the city formally legalized Airbnb within its jurisdiction. However, numerous regulatory stipulations were placed on the short-term rental market. The new law places a 90-day cap on the number of days a residence can be rented using services like Airbnb. Further, the regulations specify that tenants cannot charge more than what they pay in rent. The law also requires that residents register with the city’s treasurer and tax collector and pay fees. HomeAway is said to have filed suit against the city for discrimination against its business model.
In other cities, the operations of ride sharing services have pitted taxi companies against lay drivers and citizens who like the convenience and low cost of getting a ride in a matter of minutes. Taxi drivers complain about being forced to comply with regulations such as the Americans with Disabilities Act (ADA), which drives up costs. And, they argue that ride-sharing services are in violation of stated regulations. On the other hand, ride-sharing firms point to subsidies taxi companies receive from city transportation services. The subsidies compensate for taxi firms to be compliant with ADA regulations and provide services to disabled city residents.
As connectivity gets even better, the trend will likely become more prevalent. Traditional businesses see this as another impediment to their success. It will be interesting to see whether the United States creates more entrepreneurs or firms that offer traditional jobs in the near future. A battle may be looming.