A quick check of the Airbnb.com website tells the story of the company’s explosive growth—including into towns and cities throughout South Carolina.
A private bedroom in a townhouse near the University of South Carolina is offered for $30 a night; a studio apartment in Mount Pleasant advertised as a $6 Uber ride to Shem Creek for $89 a night; a Hilton Head condo for $110 per night; and $100 for a private room in a lakeside cottage in Chapin.
It’s another chapter in the sharing economy. What Uber has done for transportation, Airbnb is doing for accommodations. It’s a business model built on allowing people to rent out rooms or entire apartments and cottages on a short-term basis.
The concept started in 2008 when two people had space to share and hosted three travelers looking for a place to stay. Now, according to Airbnb’s website, millions of hosts and travelers create free accounts to list space and book accommodations in 34,000 cities in 190 countries. Guests pay Airbnb when they book a room, and the company releases the money to the hosts 24 hours after the guests check in.
The rub comes in how the rentals are regulated and taxed, their affect on the neighborhood and whether it’s a level playing field for both the new, sharing economy renters and the traditional hoteliers and rental companies.
The key is to know your community. "The first step is to look closely at what the city’s current ordinances and regulations allow." said Melissa Carter, research and legislative liaison for the Municipal Association. "The next step is developing a decisive plan for how the city will regulate and tax accommodations businesses such as Airbnb. The accommodations sharing economy is not a flash in the pan. This is changing the marketplace."
Mount Pleasant’s Planning Director Christiane Farrell said her department started looking at changing regulations and making modifications to its zoning code in 2015, mostly to deal with tourist homes and bed-and-breakfast inns. Around the same time, Farrell said she started to hear about how cities around the country were dealing with the accommodations sharing economy, led by Airbnb.
"How to address these companies is unique to each community, and it really depends on the policymakers. You might have a community with low regulation or one with a high level of regulation," she said. "Mount Pleasant is probably in the middle."
The first thing to consider is what the municipality’s policymakers believe is best for their town. "There is not a uniform solution to the whole thing," said Farrell.
Some cities go to great lengths and regulate everything from the spacing between Airbnb rentals to allowing only a certain number in a neighborhood, while others are concerned only with ensuring business license, sales and accommodations taxes are collected appropriately and parking issues are addressed.
Often neighborhoods are split, with some people supporting the idea of using an extra room or two in their homes to make a little extra cash, while others are concerned about changing the character of their neighborhood and worried about who is staying next door.
"In Mount Pleasant, we are still feeling our way through it. Definitely some folks have raised some concerns, but from code enforcement, we don’t get a lot of calls or complaints about it," Farrell said.
The big question often revolves around the collection of taxes—which includes city and state taxes.
In 2014, South Carolina enacted a new law to crack down on homeowners who rent properties to tourists but do not collect accommodations and sales taxes. The Fairness in Lodging Act gave cities and counties additional enforcement authority to ensure homeowners renting homes through online sites, such as Airbnb and Vacation Rentals by Owner, are submitting state and local accommodations taxes appropriately.
"We anticipate legislation to be introduced this year that would require a third party—in this case Airbnb—to be responsible for collecting the taxes," commented Carter.