Airbnb and VRBO customers have fewer options in Philly as new laws take hold
A summer crackdown on unlicensed short-term rentals is having its intended effect of driving operators from the market.
![Under its new short-term rental regulations, Philadelphia has delisted more than 1,850 hosts from platforms like Airbnb and VRBO.](https://www.inquirer.com/resizer/EPXSEVdZKA1-AH4vgXd-12u4vi4=/760x507/smart/filters:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/pmn/NXKADUPRD5PFQ5BR2LBAZYHM4M.jpg)
Philadelphia’s effort to regulate the short-term rental industry is shrinking the number of available offerings on platforms like Airbnb and VRBO.
The firm Deckard Technologies, which tracks the short-term rental industry nationally, found that roughly 1,000 hosts in Philadelphia had switched from short- to long-term rentals at the beginning of the year when new city regulations went into effect. Hundreds more made the move away from the short-term industry after the city began to seriously enforce the new law in July.
“We are seeing a lot of hosts in August and September beginning to go offline or have their listings shift to long-term rentals,” said Nick Del Pego, CEO of Deckard Technologies. “We expect the October numbers to dip further before the market stabilizes. Our conclusion is that there has been an effect of the new law and the recent enforcement.”
Philadelphia’s Department of Licenses and Inspections reports that since the crackdown on unlicensed operators began in July, more than 1,850 hosts have been delisted from platforms like Airbnb and VRBO.
“It was immediate, you just see that you are no longer on the Airbnb platform, you’ll see that it’s unlisted, and all the pages were basically blocked,” said Tal Tigay, who has been dropped and is in the midst of trying to get a hotel license. “It is devastating for me as a small-business owner.”
The new laws reinforce a long-standing, but little enforced, regulation requiring a hotel license for properties operating short-term rentals where the owners don’t reside. That’s illegal in most of the city, requiring operators — many of whom have been in business for years — to go to the city’s Zoning Board of Adjustment to make the case that they should be allowed to get the necessary permit anyway.
Philadelphia’s stepped up enforcement comes in the context of a larger tightening of the regulatory environment, as cities across the United States have become increasingly strict about the short-term rental industry.
New York and Washington, D.C., have also adopted more stringent regulations on the industry in recent years, and large companies like Airbnb and VRBO have been cooperative in the enforcement efforts — leaving local groups of rental operators to organize resistance.
Short-term rental owners say that local policymakers are caving to the interests of the hotel industry and short-term rental companies like Sonder that develop their own properties, and that there won’t be enough options to meet demand. Some experts argue that while mass delisting may work for now, in the longer term new, less-established short-term rental options may open up and potentially cause new problems.
“The question is really whether this stops people from renting, or if it just forces them to go underground and do this via some other platform that is not one of the big players,” said Pam Knudsen, an executive at Avalara, which works with short-term rental companies. “There’s a bunch more out there that people could list on. The city is not going to know all of those.”
Cities were slow to respond to app-based rentals
Like most cities, Philadelphia did little to respond to the emergence of app-based short-term rental companies like Airbnb when they burst on the scene over a decade ago. Laws that were passed went unenforced, and thousands of operators flooded into the market.
But during the pandemic, policymakers were increasingly pressured by community groups to do something about “party houses” — where owners rented to rambunctious crowds for a night — and other rogue operators.
“A well-run and regulated short-term rental can exist in a neighborhood such as ours without much notice, but that is not what’s happening,” Joseph Baker of the Franklin Bridge North neighborhood association said at a City Council hearing earlier this year. “Loud parties spill out into the street in the early hours of the morning, screaming fights, cars racing the wrong way and, at least three times, gunfire.”
City Council began working to beef up the regulations, led by Councilmember Mark Squilla, whose district includes parts of South Philadelphia, the River Wards, and Center City. The legislation that eventually passed reinforced the hotel license requirement and required those who operate short-term rentals out of their homes to get a “limited lodging operator” license. Since July, hardly a day goes by when someone doesn’t request such a permit.
Industry proponents argue that the new regulations are byzantine and hard to follow, even for those who want to comply. That’s partly because smaller business owners with less technical sophistication struggle to navigate the city bureaucracy and often can’t afford the lawyers needed to smooth the way.
But it’s also because wait times at the Zoning Board of Adjustment have ballooned since the pandemic, so that it can take six months or more to get a hearing — and if opposition is intense, a case can last longer than one session.
“People need to be in compliance, but they need to be able to get in compliance as well,” Knudsen said. “You need to have a mechanism for them to get there relatively quickly because [small business] people can’t afford to wait in a lot of cases.”
That’s why Squilla repeatedly delayed the enactment of his own law, pushing its implementation back by almost two years to give people time to try to get their licenses.
But he’s also said that part of the motivation for the new rules was to get some of the housing used for short-term rentals back into the traditional housing market.
“Every building unit that becomes a short-term rental property is one less home ownership or one less long-term apartment available for use,” Lewis Baum, of West Philadelphia’s 46th Ward Democratic Committee said at the City Council hearing. “This lowers availability and raises prices.”
A University of Pennsylvania study found short-term rentals are often concentrated in areas where rental housing is dominant. It also found that each 1% increase in Airbnb listings in a zip code creates a small increase in rents and house prices.
Industry advocates, however, note that Philadelphia’s short-term rental industry is not big enough to have much of an impact on the larger housing market.
“There’s 3,000 short-term rental properties in Philadelphia at this point, and there are over 720,000 properties in the city,” said Theron Lewis, founder of the lobbying group Philadelphia STR Association. “Short-term rentals are not the thing that’s going to affect the housing market.”
Philly is preparing for a surge of visitors
For Philadelphia, the idea is to tame the industry before 2026 — when major events like the World Cup and the 250th anniversary of the signing of the Declaration of Independence are coming to the city — so as to ensure stronger oversight ahead of a flood of visitors.
The regulatory push was meant to encourage large-scale operators like Sonder or the short-term rentals in the Public Ledger building — operations that are often in larger buildings along thoroughfares with lots of tourists where they will cause less disruption as opposed to in rowhouse neighborhoods.
That pains operators like Tigay, who may have their livelihoods tied up in a business model that is no longer certain, but which they say brings vitality to residential neighborhoods and business to local restaurants and shops.
Del Pego of Deckard Technologies said that while Philadelphia has made progress, regulating short-term rentals is a constant struggle. While Airbnb and VRBO, which control 98% of the current Philadelphia market, are cooperating, other companies will likely emerge.
“It’s like Whac-a-Mole,” Del Pego said. “In the short-term rental world, they’ll pop up on a different hosting platform. I watch over 10,000 different websites renting property in the U.S. constantly. These aren’t 7-Elevens you can shut one down and it’s gone and you can drive by and make sure they didn’t open for business tomorrow.”