Airbnb Regulatory Fixer to Depart, Leaving Controversial Legacy

Airbnb CEO Brian Chesky knew what he was getting when he hired Chris Lehane in 2015 to spearhead the company’s global face-off with regulators, and to lead communications. 

A political operative in the Clinton White House dating to the Monica Lewinsky blowup and press secretary for the Gore-Lieberman Democratic ticket in 2000, Lehane told Skift, after the news broke Wednesday that he’d be leaving Airbnb in February for a crypto venture fund, “what has been foundational to the policy and comms work has been the actual campaign model that we designed for the policy and comms work.”

What he meant was that whether it was in Boston, Jersey City, New Jersey, or New York City, and numerous other locales, Airbnb has mounted political-style campaigns, some very pointed, to oppose what it saw as detrimental regulations.

A 2019 Wired story detailed Airbnb’s alleged guerrilla war against local governments, and how the company initially argued it was up to hosts, and not Airbnb, to collect occupancy taxes, and filed numerous lawsuits, as did competitors, fighting restrictions on short-term rentals.

The Wired story cited a member of a consultancy that helps cities tighten the screws on short-term rental operations as saying that Airbnb mounted “a city-by-city, block-by-block guerrilla war” to thwart regulation, adding “They need to essentially fight every one of these battles like it is the most important battle they have.”

To be sure, some things have changed since the early days, and Airbnb has entered and been dragged into many efforts around the world to collect and remit local occupancy taxes, and to facilitate the licensing of local hosts in agreements with local governments.

Asked about his accomplishments at Airbnb, Lehane, Airbnb’s senior vice president of policy and communications, said in a text Thursday that he credits “the team, the company and the entire Airbnb community” for whatever gains were made during his tenure.

“Today, over 80 percent of the top revenue markets have a regulatory framework,” Lehane said. “To the best of my knowledge Airbnb, collects and remits more tourist taxes globally than anyone.  And Airbnb is a noun and a verb, with more than 2 million articles written on Airbnb in just the last four years.“

Among other contributions, Lehane cited “legitimizing the business so the business model could be allowed to operate across the world,” and mainstreaming the homesharing concept to consumers.

But at least one industry veteran, who follows regulatory matters and declined to be identified, wondered whether Lehane’s and Airbnb’s efforts were often counter-productive.

Acknowledging that Lehane “is good at what he does,” the industry veteran said Lehane’s “disposition is to fight political campaigns.” 

“The verdict is out on whether the industry needed a statesman or a campaigner” like Lehane, he said, contending that building relationships with cities can bear more fruit than “confrontation and aggression.”

One enduring legacy, the source said, was that Airbnb, before it began expanding beyond urban apartments and began adding vacation rentals to its own roster, advocated to cities that primary homes like urban apartments, not second homes like vacation rentals, should get cities’ regulatory blessings. In Los Angeles since 2018, for example, only certain primary residences are permitted as short-term rentals.

Airbnb frequently runs aggressive campaigns against government officials — which is its right to do — when confronted with disadvantageous referendums or regulations.

In 2018, for example, in the run-up to the establishment of short-term rental regulations in Boston, Airbnb went after city council member Michelle Wu, who today is Boston’s mayor.

“The home-sharing giant Tuesday e-mailed a broad swath of its Boston customers urging them to e-mail City Hall to oppose ‘unreasonable restrictions’ it said Wu has proposed on short-term rentals, including a 30-day cap on stays when the unit’s owner is not home,” according to a Boston Globe story at the time. “And it accused Wu of being ‘aligned with big hotel interests against the interests of regular Bostonians.’”

The American Hotel & Lodging Association has never been an Airbnb fan. “From its inception, Airbnb has been laser focused on dodging its tax and regulatory responsibilities in the American localities where it operates,” said an American Hotel & Lodging Association spokesperson Thursday. “The result is a system where, unlike every other U.S. business, Airbnb pays taxes on an ‘honor system,’ without any compliance or audits. That means state and local government officials, as well as taxpayers, have no way of knowing if the company is actually paying its fair share. We hope Lehane’s successor will work with local leaders and communities to ensure Airbnb is meeting its tax and regulatory responsibilities rather than bullying state and local officials in an attempt to minimize these obligations.”

For better or worse, San Diego might be an apt illustration of what might be called “the Airbnb factor” when it comes to local regulations. Airbnb rival Expedia Group negotiated a tentative agreement in 2020 with the local hotel union to have the city council cap the number of permissible vacation rentals in exchange for heading off efforts to outlaw them outright.

Airbnb didn’t immediately back the agreement, which was endorsed by a local coalition, was unhappy with how many vacation rentals would be banished, and floated talk about a referendum to oppose it.

In July 2020, Brigette Browning, president of the union, Unite Here Local 30 in San Diego, told Skift: “Airbnb continues to demonstrate bad faith discussions and actions when related to short-term vacation rentals in our community. Our MOU (Memorandum of Understanding) with Expedia is fair, finally establishes regulations, and allows for appropriate growth in a transparent manner. We will not support Airbnb’s attempt to hijack this process.”

The San Diego City Council ultimately adopted the measure, albeit allowing a larger number of vacation rentals than the initial Expedia-brokered agreement envisioned. So some of that Airbnb pressure seems to have benefited vacation rental owners —including those using both the Vrbo/Expedia and Airbnb platforms. The law is scheduled to go into effect in July. 

“When Chris formed Airbnb’s Policy and Communications team in the fall of 2015, Airbnb did not have workable regulatory frameworks in any of its top revenue markets, was not collecting and remitting travel taxes anywhere except for Portland, and was considered a niche consumer product,” said Airbnb spokesman Christopher Nulty. “Today, more than 80 percent of Airbnb’s top revenue markets have regulations in place, the company has collected and remitted more than $4 billion dollars in tourist taxes, the brand has become a noun and verb around the world, and is exiting the pandemic as a global leader in travel.”

Last summer, 80th District California Assemblywoman Lorena Gonzalez complained about a meeting she had with Airbnb representatives about Senate Bill 555, which would allow the state’s cities and counties to opt into a statewide occupancy tax collection portal.

During a California Assembly session in July, Gonzalez characterized her earlier meeting with Airbnb as “quite shocking,” and said the answers she received from Airbnb representatives were “pathetic.”

“I don’t understand how we are allowing a company to help its — I guess you would say — clients avoid local laws,” Gonzalez said.

However, if you listen to Steve Shur, who heads the Travel Technology Association, which counts Airbnb as a member, then a new era of collaboration among short-term rental platforms and local governments is already here.

“Chris led Airbnb’s policy and communications efforts during a transformational period for short-term rental regulations,” said Shur, association president. “Platforms are now working with cities as partners to help them achieve their objectives while balancing the rights and needs of all stakeholders including homeowners, platforms, travelers, and communities. Collaboration is the new mantra and it works.”

Another regulatory policy wonk, who declined to be identified, said you have to admire Lehane’s contributions toward building the Airbnb brand.

In earnings calls, Chesky has cited the immense number of news articles about Airbnb as a key factor in its ability to build a household name brand.

Airbnb fact bout its PR: @bchesky: 'We got more than 0.5 million articles in last year, in 2020, and we had as much share of voice as most of the other major travel companies combined. And that's how we really built the brand of Airbnb more than anything, probably, is PR.'

— Dennis Schaal (@denschaal) February 26, 2021

In an earnings call in last February, Chesky said: “We got more than half a million articles in last year, in 2020, and we had as much share of voice as most of the other major travel companies combined. And that’s how we really built the brand of Airbnb more than anything, probably, is PR (public relations.)”

Of Lehane’s latest tally this week citing 2 million news articles as having been written about Airbnb in the last four years, what percentage were positive, the policy expert wondered.

Of course, having such a dominant “share of voice,” as Chesky put it, has its own benefits even if many of the news stories are negative.

“You need to appreciate the role he’s played at building their brand, but from a policy standpoint short-term rental issues persist in local governments,” the policy wonk said.

No one — not even Lehane or Airbnb — is arguing that the short-term rental industry’s regulatory problems are resolved as a backdrop to Lehane transitioning out and over to a crypto investment fund.

For example, a move to ban short-term rentals in residential areas in Honolulu is moving through the city council, and New York City is seeking to tighten restrictions on short-term rentals of fewer than 30 days.

The list of affordable housing advocates and jurisdictions challenging the short-term rental industry is daunting.

It wouldn’t be surprising if Lehane takes his many advocacy talents and lends a hand — and some campaigns — toward generating more crypto acceptance.

Meanwhile, there’s plenty of regulatory interference to run over for Lehane’s successor at Airbnb — and for the rest of the short-term rental industry.