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Airbnb Gains Popularity In Madison

Online Hotel Alternative Sees Big Growth As City Struggles To Collect Room Taxes

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"Airbnb" sign
Public Domain

Statistics from Airbnb show significant growth for the house-sharing business in Madison. The number of guests booking rentals through Airbnb rose 111 percent between July 1, 2015, and June 30, 2016.

During that time, more than 14,000 customers booked private accommodations in Madison through Airbnb, an online marketplace. The biggest spike occurred in May, said Benjamin Breit, the Midwest spokesman for Airbnb.

“We expected with the university being such a strong part of Madison’s identity that that would play a role and sure enough it was during graduation weekend for the University of Wisconsin-Madison,” Breit said.

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About 300 Madison homeowners rent out space using Airbnb. Since 2013, Madison has classified these short-term rentals as tourist rooming houses, which means under state law they have to pay room taxes like hotels. Nicholas Zavos, an aide to Madison Mayor Paul Soglin, said compliance has been low, with less than two dozen registered with the city and paying room taxes.

“I don’t think there are a lot of people out there who (are) trying to skirt the system or get away with anything,” Zavos said. “I think there’s a lot of people who just don’t understand what the requirements are.”

Madison’s ordinance has no limit on the number of days a property owner can rent if they occupy the dwelling at the time. If the owner is gone, Zavos said the city considers the rental more like a hotel.

“And it’s there where city ordinance says, well if you’re going to do that, it can only be 30 days per year,” Zavos said.

A proposed state law would put fewer local limits on companies like Airbnb, FlipKey or HomeAway. Those lobbying in favor of the bill, such as the Travel Technology Association, say the state is sticking up for the individual property rights. Madison officials say it takes away local control. And Zavos said fewer restrictions for online, short-term rental companies such as Airbnb could reduce affordable housing.

“In San Francisco, for example, there are landlords who are simply taking their housing off the market as apartments because they can make as much renting it out as a short-term rental for a few weekends as they can renting it out to residents who need housing,” Zavos said.

The state proposal would bar local governments from enforcing ordinances regulating rentals lasting one week or longer. Airbnb’s Breit said the average stay in Madison is three nights.