Running an Airbnb in Los Angeles has never been more profitable.
As the city tries to crack down on illegal listings and advocacy groups complain about the company's effect on Los Angeles' housing crisis, hosts are charging higher rates than ever and reaping ever-larger payouts.
But don't expect them to talk about it.
The data shows that a large number of homes operate without active registration, which is required by the city to operate a short-term rental. Several of these hosts spoke to The Times anonymously for fear of being fined by the city or, worse, having their listing shut down by Airbnb.
“This is my main source of income,” said one host who operates three different listings. “I can finally make a decent living doing this. A list alone would not be enough.”
Since 2020, host income has steadily increased well beyond pre-pandemic levels. Median income rose to $17,654 in 2022, up more than $4,000 year over year, and the numbers are on a similar pace for 2023, according to data from short-term rental analytics company AllTheRooms.
In total, Los Angeles hosts earned a combined $375 million last year, an Airbnb spokesperson said.
Some factors contribute to the increase. For one thing, Airbnb daily rental rates have skyrocketed over the past four years, going from $152 in 2019 to $244 in 2023. It's a trend happening across the short-term rental industry, as companies Hotel and VRBO rates have increased steadily since the COVID pandemic. -19 pandemic too.
Basic supply and demand is another factor. Barring a dip during the early months of the pandemic, Airbnb occupancy rates have remained largely constant, with the average rental occupied more than 40% of the time. But the number of ads has decreased dramatically.
As of August 2019, there were 16,973 Airbnb listings in Los Angeles. Currently, there are 7,360.
Supply has slowed for now, but advocates worry that if incomes continue to rise, more owners will convert their properties into Airbnbs.
Much of the drop was due to the pandemic, but supply has not increased since 2020, in part due to the city's enforcement of its Shared Housing Ordinance, a law that went into effect in 2019 and limits Angelenos to host only short-term rentals. in their main residence: homes where they can demonstrate that they live at least six months a year.
Los Angeles and Airbnb have worked together over the years to enforce the law, and in 2020 launched a system that streamlines the process of identifying and removing illegal short-term rental listings.
It has been effective; The number of short-term rental unit listings across all home-sharing sites has fallen more than 70% over the past four years, falling from about 36,600 in November 2019 to just under 10,000 in June 2023, according to the city planning department.
But there are many left.
The Times previously reported that thousands of accommodations violate the law, and last year, a report claimed that 22% of Los Angeles accommodations welcome guests more than 180 days a year.
“I can't afford to rent my house only six months a year. I would lose half my income,” said one host who rents a two-bedroom apartment in Hollywood through Airbnb.
Two other Airbnb hosts hung up the phone mid-interview when asked if their listing was their primary residence or if their registration number was valid.
“It's a system of don't ask, don't tell. “I can’t afford to have my business threatened by a registration number,” said one of them.
The average daily rate for an Airbnb in Los Angeles increased to $244 in 2023.
(KC Alfred San Diego Union-Tribune)
As of August, there are 4,293 active home-sharing registrations, according to the city's planning department. But on Airbnb alone, there are currently 7,360 rental listings.
“Los Angeles has a pretty big rental problem on its own, and then you get a rogue industry that swarms the city and starts taking rental properties off the market,” said Peter Dreier, a professor at Occidental College.
Dreier worked with the team that drafted Measure ULA, a new tax that funnels money toward affordable housing initiatives, and said the short-term rental industry is contributing to both the housing crisis and the homelessness crisis. home.
“When units are taken off the market and rented to tourists, one consequence is that more people fight for fewer units. And that leads to higher rents,” he said.
The planning department is preparing a report with other departments looking at the implementation of the Shared Housing Ordinance. It will provide recommendations to the City Council on how to improve the program.
Meanwhile, more ads generate more tax dollars. Los Angeles charges a 14% transient occupancy tax, often called the “bed tax,” paid by guests of a hotel or short-term rental such as an Airbnb.
In the 2021-22 fiscal year, the city collected $33.88 million in transient occupancy taxes, according to the planning department.
It's a considerable amount, but a report by McGill University urban planning professor David Wachsmuth suggests the city could be raking in even more by fining illegal short-term rental listings.
The study claimed that 45% of all short-term rental listings are illegal in one form or another, and that the city could have imposed between $56.8 million and $302.2 million in fines in 2022.
“I have never paid a fine, but my guests pay the tax. As long as the city gets money from somewhere, they will be fine,” said the Airbnb host in Hollywood.
Randy Renick, an attorney at Hadsell Stormer Renick & Dai LLP, serves as executive director of Better Neighbors LA, a coalition that includes hotel employees, tenants' rights groups and housing advocates. He co-founded the group in 2019 as a public education campaign to emphasize the impact short-term rentals have on communities.
He said rental hosts break the rules in several ways. One strategy is bait-and-switch, where a host will advertise that a property is somewhere near the Los Angeles border, such as West Hollywood, and therefore not subject to Los Angeles' strict rules. But when the tenants show up, the property is actually in Los Angeles.
Others give false registration numbers, some more cleverly than others.
“1234567 was popular for a while,” Renick said.
Some simply use expired registration numbers and others used one active registration number but for multiple properties.
The organization's website maintains a hotline for Angelenos to call and report illegal listings in their neighborhood, and Renick said they receive multiple calls per week.
From there, they urge the city to take action on issues both small and large. Sometimes it's a call for a fine to be applied to a certain property, and sometimes it's a campaign about how short-term rentals can increase long-term rentals in an area by taking houses off the market and renting them out to tourists.
“We try to show the impact of short-term rentals and how it contributes to the housing and homelessness crisis,” Renick said. “Strict enforcement will result in thousands of units being returned to long-term rentals.”
He pointed to Santa Monica and New York City as two cities Los Angeles could follow. Santa Monica has a robust law enforcement system, including full-time staff focused on interviewing homeowners and imposing fines on illegal listings.
The coastal city only allows short-term rentals (less than 30 days) if the host lives on the property during the visitor's stay. New York City adopted a similar rule last year, and enforcement begins Tuesday.
Although there is a long way to go, Renick said Los Angeles has raised the bar on the proof required to prove that a listing is the host's primary residence.
Frank Tai, owner of a luxury beachfront rental in Playa del Rey, has seen that process firsthand. He only has one listing and makes sure to renew his license every year, but the process has become more laborious over the years as both the city and Airbnb look to detect illegal listings.
“I am complying, but it is a lot of work. “I complete a 40-page application each year and submit property tax returns, utility bills and other documents,” he said. “Every year, something recovers. “They’re trying to stay on top of things.”
Tai said the process is worth it. Renting it is very profitable; It is booked out all summer long and nightly rates double during the holiday season. He didn't even experience a slowdown during the pandemic, just a shift from out-of-town customers to Los Angeles locals looking for a staycation.
“I don't get into the system, but I guess people do it because it's very profitable,” he said.
