Denver rejects deal with Airbnb
Denver officials rejected a proposal from Airbnb this week on how to remove inactive and illegal postings from the site, according to documents obtained by The Denver Post — the latest development in the drawn-out negotiations between the city and the company.
Airbnb had proposed to cooperate as long as its deal with the city was kept secret and the company was offered the most favorable terms in town, according to the document.
The proposal was untenable, Molly Duplechian, of Denver’s Department of Excise and Licenses, wrote to Airbnb officials.
“As we have expressed, we welcome the dialogue but require all businesses in Denver to comply with the rules without special preference or protections,” said Duplechian, the department’s deputy director of policy and administration.
City officials charged with regulating Denver’s short-term rental market are frustrated as negotiations continue slowly, Duplechian continued.
Company officials have negotiated in good faith with the city’s staff and remain committed to finding a solution for Denver, said spokesperson Sam Randall.
However, Eric Escudero, a spokesperson for the department, has said the company has dragged out the negotiations since 2018.
The approach appears to match the company’s behavior in cities such as Los Angeles, Boston, San Francisco and New York. In some cases the company has filed lawsuits over the disagreements before ultimately settling and agreeing to cooperate with local regulations.
“This tactic may have worked elsewhere, but it will not work in Denver,” Escudero said in an email. “Our hope is that all home sharing platforms will comply with local laws and not request illegal and secret agreements in exchange for making partial commitments to comply with the law.”
Even more stalling can be expected from the company because cooperating with the city quickly would decrease Airbnb’s host market, cutting profits, said Karen Xie, a business professor at the University of Denver who studies short-term rental markets.
The problem is that inactive and unlicensed short-term rentals pepper Denver’s market — of which Airbnb controls 93% — often netting unsuspecting new property owners citations and forcing city officials to investigate the illegal postings that Escudero said the company could find and remove quickly.
The department repeatedly has asked Airbnb to remove inactive listings and to require hosts to
submit short-term-rental license numbers, which are needed to rent a property legally on the platform, Escudero said.
“We have been met with much resistance to this idea and have even been told it is a resource issue,” Duplechian wrote in another email to Airbnb officials last July.
“This has been a constant request from the Short-Term Rental Advisory Committee over the last 18 months, and they are starting to grow frustrated at the lack of progress and the non-answers we have been getting,” she continued.
That email and others obtained by The Denver Post through open records requests note that Airbnb has found common ground with other cities but not Denver.
Randall pointed to more December and January emails from Airbnb officials to the city as a sign of active cooperation.
In those months the company sent a draft memorandum of understanding to the city, but Escudero said in an email it was never seriously considered.
The proposed agreement “and all discussions and negotiations related to it will remain confidential to the extent permitted by
Colorado law,” the draft says.
That stipulation alone was enough to kill the deal, Escudero said.
“Denver does not sign secret agreements with businesses allowing them to continue illegal activities,” he said.
But Randall said that in two months of discussions, city officials did not share that sentiment with the company.
Another unacceptable provision was a requirement for Denver and Airbnb to “go to ‘abitration’ if Airbnb violates the law,” Duplechian wrote.
Much of the enforcement responsibility under the proposal would remain with the city. Denver officials would have to find and document illegal postings and email them to the company, which would then deactivate them quarterly.
In addition, Airbnb would be required to comply with the agreement only as long as competing platforms followed similar terms.
If competitors received more favorable terms, Denver would be required to notify Airbnb and apply those terms to that company as well.
Responding to Duplechian’s rejection email, Laura Spanjian, senior public policy director for Airbnb, committed to keeping an open line of communication with the city. She also noted that the city appears to have changed its position on whether a memorandum of understanding, or MOU, is necessary.
“While we welcome your official response now, we believe frustration levels would have been lower for members of the public if the City had responded in a timely way to the proposed MOU so that we could explore alternatives and/or edits to the MOU and get you the tools you have requested,” Spanjian wrote.
The company will go back to the drawing board to find a solution, Randall said.
Xie said the proposal appears standard and if Denver officials are unsatisfied — as they clearly are — then they should negotiate further.
Airbnb has had similar conversations with other cities across the country, she noted, and cooperating in Denver wouldn’t be a large technical hurdle. The company likely hesitates, she said, because helping the city enforce its laws could discourage people from using the platform.
Host registration requirements vary across the country, Xie said. Airbnb pays close attention to those laws and “works diligently to clearly communicate this expectation with its hosts.”
But the company is also particularly sensitive to attracting new clients and retaining old ones at the moment because an initial public offering is rumored to be in the works, she said.
“Unfortunately, the city regulations have the consequences of shrinking its client base, which means lost revenue and less goodlooking numbers to the public market,” Xie said.