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VOL. 9 | NO. 49 | Saturday, December 3, 2016

Editorial: Traveling the Revenue Stream In the New Economy

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The new economy is here. And it is challenging the role of government in regulating businesses.

How much regulation is necessary to protect consumers is a question that predates Airbnb, Uber and Lyft. It’s a recurring issue at the intersection of business and government, and it should never be considered settled.

Rarely does government responsibility for the public’s welfare travel alone. Its traveling companion is the revenue stream, usually attached because regulation should pay for itself, shouldn’t it?

But the revenue stream is the guest that elected leaders never want to see check out.

Airbnb regulations recently approved by the Memphis City Council began as a new fee or tax on hotel guests, with the revenue going toward paying for increased marketing by the Memphis Convention & Visitors Bureau.

It didn’t take long to reach that point in all such matters where those in charge had to determine what the definition of “rental room” or “hotel room” should be. The conventional hotel room boundary, with extended-stay hotels and weekly rental rooms that serve as long-term housing for some, soon became a boundary that took in Airbnb.

In return the CVB’s marketing efforts will include pitches aimed at those renting rooms through the Airbnb system.

And CVB president Kevin Kane is among those who believe the Airbnb is here to stay in some form for quite a while.

In some ways, the question of who pays the fee kept the focus on who should be regulated and how much. And it was probably more prominent than it would have been if the issue had been simply how to set standards – safety and otherwise – for something that is a part-time business for many Airbnb hosts but a business nonetheless.

At a time when the continual remaking of Memphis has gone beyond Downtown and we seek scales of development that recognize the uniqueness of those areas, local government has a role in setting ground rules.

But it doesn’t take very long to lose that focus in the dollar figures.

This bears watching, and no regulation should become a barrier that protects businesses from having to adapt.

The tendency could be to let this issue take on a life of its own because the fee is paid by visitors.

These fees have a way of avoiding scrutiny. The city’s mixed-drink tax went unnoticed for years until the Wharton administration discovered the nest egg during a search for additional money and proceeded to put it to use.

Kudos to the council for dropping the permit board that was to police the Airbnb short-term rental fee and impose a level of bureaucracy that all sides in the negotiations – hotel owners, tourism officials and a short-term rental association – had agreed to. The council can always revisit this if warranted.

But the question with fees shouldn’t be the cost of jumping through government hoops.

PROPERTY SALES 79 321 2,586
MORTGAGES 90 426 3,033
BUILDING PERMITS 153 796 6,864
BANKRUPTCIES 37 213 2,000