Listings Climb on Lodging Sites While Questions on Insurance, Liability Remain

Marcus Ohanesian and Katie O’Connor’s apartment is in a “family-friendly neighborhood central to the middle of Worcester” and a short walk to excellent restaurants and bars. Their living rooms, with hardwood floors and walls painted in pastel yellow and orange are bright and inviting, decorated with posters, string instruments and a well-stocked bar. They have Netflix. Their kitchen is well-stocked with food, tea, coffee, beer and wine. And it only costs $60 per night to stay there.

Ohanesian and O’Connor list their apartment on Airbnb, a website that allows residents to offer up their homes, apartments, boats, igloos and just about any other type of domicile to guests looking to stay somewhere other than a hotel, motel or other traditionally operated lodging house. The company has become the poster child for the home-sharing economy, with more than 1.5 million listings spread throughout 34,000 cities across 190 countries, according to its website.

At Ohanesian and O’Connor’s Airbnb, guests sleep on a futon in a second bedroom that doubles as Ohanesian’s office. The couple provide spare toothbrushes and other toiletries if needed.

While the impetus to first list their apartment came out of a joke and some nice photographs O’Connor took of their apartment, they have made some serious cash since: $1,000 from 12 guests in less than seven months. (That money has been spent on an upcoming Cancun vacation.)

In Worcester and its suburbs, like the rest of the world, the number of Airbnb listings has steadily climbed. Recent searches of www.airbnb.com show nearly two dozen options in Central Massachusetts, from Sturbridge to Harvard. There’s a $65-per-night private room in a “gorgeous zen house” on Worcester’s West Side, and a private room with a queen bed and TV for only $25 per night in the Burncoat area – but it’s probably best if the renter is not allergic to dogs. Looking for something a little fancier? A Cape Cod home near the College of the Holy Cross has room for up to six people for $175 per night.

While Airbnb did not provide specific data for the Worcester area, in Boston the numbers are even more striking. A study released last December by Airbnb and San Francisco real estate and economic consultant firm Land Econ Group found that in one year Boston’s Airbnb community spurred $51 million in economic activity for the city and supported 490 jobs. The study also found that 33,780 guests used Airbnb in Boston from July 2013 to June 2014, instead of a traditional hotel or motel, more than double the number from the year before.

In Massachusetts, neither Airbnb operators nor guests are taxed, meaning that the $230 million the state collected through room occupancy taxes in fiscal 2015 did not include Airbnb transactions in the state. Airbnb itself takes very little cash out of its users’ hands. Ohanesian and O’Connor keep $58 of their $60 nightly rate.

As Airbnb, HomeAway and other vacation rental sites change the way visitors find and pay for temporary lodging, insurance agencies, landlords and municipal and state governments have reacted in disparate ways. Cities like Philadelphia and Jersey City, for example, have moved to legalize and tax Airbnb operations like hotels. In San Francisco – Airbnb’s backyard – a proposed ballot measure called Proposition F, aimed at limiting short-term home rentals and targeting sites like Airbnb with fines, failed last month by a vote of 56 percent to 44 percent.

Worcester – with its 6 percent room occupancy tax charged at hotels and motels – as well as surrounding towns have not acted on monetizing these short-term home rentals. It seems, at least, that local hotels haven’t yet put pressure on city officials to make any changes to current occupancy laws.

“We haven’t taken a position on that,” said Timothy Murray, president of the Worcester Regional Chamber of Commerce, who likens Airbnb’s rise to Uber’s disruption of the taxi cab industry.

Certain Cape Cod municipalities, however, have forced the state Legislature’s hand. After at least three communities came to the state with home-rule petitions that asked for the authority to collect taxes from short-term rentals as they would for hotels, motels, bed and breakfasts and other lodging houses, a number of bills have appeared in front of the state Legislature.

State Sen. Michael J. Rodrigues, D-Westport, chairman of the Joint Committee on Revenue, the subcommittee has been tasked with hashing a new law out of the five or six bills related to short-term accommodations in play this session at the Statehouse.

Rodrigues, an open supporter of Airbnb’s business model, said government needs to be “careful to do it in a way not to stifle the industry.”

He believes any bill from his committee regarding short-term rentals should establish a statewide policy, eliminating a town-by-town approach. Additionally, he said legislators have been meeting with all the professional associations involved in this debate, from the Bed and Breakfast Association to Airbnb itself.

“They all pretty much want to capture the lost revenue from the way business is changing,” the senator said.

The co-chair of the committee, Rep. Jay R. Kaufman, D-Lexington, took a different tack, saying at least one of the bills “raises questions of whether or not the state should really be in this business at all.”

For example, he said, major changes to room and home rental transactions may require changes to health inspections and other oversight usually left to local governmental control. As for the taxation mechanism, Kaufman wondered if the rules currently in place already apply and just need tweaking to “fit Airbnb into that framework.”

“Some of the bills were filed because some neighbors are objecting to the fact that there are properties out there not turning over and not being sold to new families because they’re now being used as rental properties,” he said. “It’s not clear to me that it’s the state’s responsibility to weigh in on that.”

Like cities and their legislators, landlords have also had to adapt to the idea that every tenant is now a potential unlicensed hotelier. Ohanesian and O’Connor expressed some reservation about their landlord discovering their infrequent overnight guests, and they emphasized that they were very selective when approving Airbnb guests. Many guests, they say, have been in town for reasons related to local colleges or the American Antiquarian Society. Also somewhat tempering their fears, the couple have renters’ insurance through AAA, and Airbnb offers its own insurance policy. Aside from sending a link to a blog post from its chief executive officer CEO, Airbnb did not respond to questions sent via email.

The couple said that they’ll likely seek Airbnb guests more frequently when they move to O’Connor’s childhood home in the Tatnuck neighborhood later this year, because they’ll own it.

Cases around the world have already proven to be legal pitfalls for Airbnb, insurance agencies, property owners, landlords, renters and guests. Who’s liable if an Airbnb provider’s dog attacks an Airbnb guest? What happens if an Airbnb guest causes damage?

“I assume most people are not putting their Airbnb income on their taxes,” surmises Doug Quattrochi, executive director of Masslandlords.net, a Worcester-based statewide association with 1,000 members. “That’s a little unfair.”

Quattrochi points out that buildings with four or more units rented to non-family members of the owner should pay commercial taxes. If an Airbnb rental puts a house over this threshold, he said, then that is a business.

When it comes to liability, Quattrochi said, his membership also has questions. Since landlord-tenant rental agreements allow for visitors, does this cover Airbnb guests?

“The intent of the landlords with whom I spoke, they don’t want to allow Airbnb without explicit permission,” Quattrochi said. “But they’re not sure if their leases will hold up in court.”

On the flipside, he said, landlords have learned to adapt.

“I’ve spoken to landlords who are constructing specifically for Airbnb,” he said, especially in Boston. “They make more money than they would on a regular rental.” Plus, since no furniture moves in and out, there’s little wear and tear on the buildings.

But for Ohanesian and O’Connor, their Airbnb experience has little to do with money. As Murray of the Worcester chamber hypothesized, the people staying in Airbnb’s in Worcester are not the same clientele seeking out rooms in the city’s Beechwood Hotel, Hilton or Courtyard for business trips and conventions.

“(Guests) want to meet new people,” Ohanesian said. “There’s a social aspect to it that’s like a side bar.”

“`It’s cool to hear peoples’ stories,” O’Connor said. They shared a drink at their living room table with a Kentucky horse breeder who worked for the prime minister of an Arab country. Another memorable guest arrived from India to take a medical exam at the University of Massachusetts, but dovetailed his trip with a wrestling match at the DCU Center. He arrived at their door wearing a wrestling T-shirt that read, “Here’s the belt,” with an arrow pointing to his waist. He was one of their favorite guests.

“We had that nice hippie couple,” O’Connor added. “I wish we had started a guestbook.”