SB 1350: A Plus or Minus?

PHOENIX – Short-term online home rental services such as Airbnb, VRBO and HomeAway previously have been restricted by Arizona local governments whereas progressive cities such as San Francisco, Los Angeles and New York City legalized the start-up services some time ago. Now a law, SB 1350 prohibits the banning of short-term rentals. Governor Doug Ducey recently signed this legislation that prohibits turning property owners into outlaws because they allow paying guests to stay in their homes.

The intent is to develop public policy that encourages a sharing economy in Arizona and advocates for some travel lobbying groups support the new law. Homeowners claim the new law will benefit Arizona’s tourism however, other Phoenix residents want to keep quiet neighborhoods from becoming raucous hotels.

How will these affect the hotel and real estate industries in the Valley? It seems reasonable that Airbnb will impact existing hotels in terms of curtailing the growth of average daily rates. The fluid nature of Airbnb supply suggests that historic price premiums realized during peak demand periods will be mitigated.

Bob Rauch is a hotelier and founder of hotel management company, RAR Hospitality, and a hotel guru who forecasts hotel/travel trends. RAR Hospitality manages five properties in Phoenix including Hampton Inn and Suites Phoenix/Tempe and Red Lion Inn Tempe – two branded hotels that attract corporate business travelers.

Rauch tells “Airbnb also impacts the housing industry, creating both a shortage of housing units and potentially an increase in rents from those units remaining in the normal apartment pool. Airbnb is a big business that in essence avoids the responsibilities of being in business and puts consumers at risk in regards to safety, background checks, and health or fire standards.”

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