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Short-Term Rental Update: WeWork nixes Seattle WeLive location; Booking.com shakes up short-term rentals with new star rating system; 9th Circuit affirms Santa Monica's short-term rental regulations

Welcome to the latest of edition of our Short-Term Rental Update. You may have heard that Garvey Schubert Barer merged with Foster Pepper effective October 1st. We are pleased to continue to deliver the latest short-term rental (STR) industry and legal news to you from our larger Foster Garvey platform.

Also, last Thursday, October 24, I was in San Francisco moderating the “Alternative Ways to Stay” panel at Bisnow Bay Area Hospitality Summit. Please feel free to reach out to me if you have any questions about the panel discussion.

A few STR news highlights to note below:

WeWork Nixes Seattle WeLive Location
("WeWork Nixes Planned Seattle WeLive Location," Bisnow - Seattle on Oct 15, 2019)
Seattle would have been the third WeLive location nationwide, but WeWork announced this week that it will not open as planned. The project was slated for Martin Selig’s 36-story tower under construction in the Belltown neighborhood at Third Avenue and Lenora. The company’s WeWork spaces in the Seattle market have, thus far, been unaffected by the company’s recent woes as it refocuses on its core business of co-working spaces.

Booking.com Shakes Up STRs with New Star Rating System
("Booking.com’s New Star Ratings for Short-Term Rentals Shake Sector," Skift Travel News on Oct 15, 2019)
Booking.com is now applying star ratings to its listings of short-term rentals on a one-to-five star scale. Booking.com’s move is considered bold because the travel agency giant is rating the properties itself. Until now, STRs have gone unrated, which put vacation homes and apartments out of sync with hotels. As property tech revolutionizes the hospitality industry, we expect to see further blurred lines between traditional and innovative hospitality products.

Ninth Circuit Affirms Santa Monica’s STR Regulations
("Ninth Circuit Upholds Santa Monica Ban on Airbnb-Type Rentals," Courthouse News on Oct 3, 2019)
Earlier this month, the U.S. Court of Appeals for the 9th Circuit affirmed the district court’s dismissal of a putative class action against the City of Santa Monica and Santa Monica City Council alleging that the City’s short-term vacation rental ordinance violates the dormant Commerce Clause. This is concerning news for Airbnb and other STR platforms that were hoping for relief from the appellate court.


Other news:

Industry News

Austin-based Rastegar Property proposes Dallas tower with 270 short-term rental units
Biz Journal - Accounting News on Oct 16, 2019
A small Uptown block will eventually be home to a multi-story residential tower, but instead of condos, the property will initially host 270 short-term rental units. Austin-based developer Rastegar Property Co. is behind the proposed project, called 1899 McKinney.

In a crowded market, full-service is the future of vacation rental management
Biz Journal - Southwest News on Oct 16, 2019
In 2019, the consumer market for short-term rentals is predicted to grow to $115 billion. The U.S. alone has more than half a million properties available for short-term rental through online marketplaces like Airbnb and Vrbo.

Airbnb Homes In on Professional Vacation Rentals in Resort Areas
Skift Travel News on Oct 16, 2019
The online juggernaut isn’t satisfied with dominating urban markets. Airbnb wants to take the beaches and the mountains, too, in the battle for short-term rental bookings. So the company is becoming savvier in how it approaches local property managers.

Marriott Drives Deeper Into Luxury Short-Term Rentals as a Loyalty Play
Skift Travel News on Oct 14, 2019
Airbnb has nothing to worry about. Marriott is mainly interested in using rentals as a tool to build brand loyalty. So the Bethesda, Maryland-based hotel giant won’t threaten the established players in short-term rental booking.

Furnished Monthly Rentals—Redefined
RIS Media Real Estate News on Oct 8, 2019
HouseStay is changing the temporary housing industry as we know it. For Manu Bhagatjee, founder and CEO of HouseStay, an extensive travel schedule that found him living in hotels for months at a time had him longing for a home away from home every time he hit the road.

Corporate Housing Startup Zeus Living Expands to New York
Commercial Observer on Oct 8, 2019
Yet another short-term rental startup is trying its luck in New York. Corporate housing startup Zeus Living is expanding into the New York metro area, its fifth market thus far, the San Francisco-based company has announced. Zeus, which was founded in 2015, manages a portfolio of furnished homes that it rents to businesses, or directly to transient workers looking for short-term rentals.

Regulation & Legal Developments

Hearing on Toronto’s short-term rentals rules set to wrap Tuesday
Toronto Star - Business News on Oct 15, 2019
A hearing on the future of Toronto’s rules covering short-term rentals like Airbnb is set to wrap up Tuesday. The hearing at the Local Planning Appeal Tribunal has squared city lawyers against several property owners who appealed the city’s recently amended short-term rental bylaw.

LA’s Airbnb hosts seek carveout for looming ban on renting out secondary homes
The Real Deal - Los Angeles on Oct 14, 2019
Home-sharing hosts in Los Angeles are organizing to secure a last-minute carveout before the city’s ordinance regulating the industry kicks in. The ordinance, set to take effect Nov. 1, allows Angelenos to rent out only their primary residences.

L.A. hosts fear crackdown on renting out second homes for short stays 
LA Times on Oct 13, 2019
P.J. Lennon had a plan for his retirement: To pay his bills, he would rent out the one-bedroom house that sits alongside his home in the Hollywood Hills. He fixed it up with Buddha sculptures and artwork and began advertising it online through Airbnb and VRBO.

Regulation Catches Up with Innovation - The Case of Short-Term Rentals
Hotel News Resource on Oct 14, 2019
The World Tourism Organization (UNWTO) has published the first systematic overview of how both national governments and local authorities are addressing and managing new business models in the accommodation industry.

Council agrees on short term rental duration; still considering location restrictions
Lebanon Daily News - Home on Oct 9, 2019
Palmyra Borough Council reopened a discussion this week on whether proposed restrictions on short-term rental units should allow the rentals in areas zoned residential.

Miami-Dade judge strikes down Miami Beach short-term rental ban
The Real Deal - Miami on Oct 8, 2019
In a major blow to Miami Beach’s crackdown on short-term rentals, Miami-Dade Circuit Court Judge Michael Hanzman granted summary judgment for Natalie Nichols, a real estate investor who sued the city last year over exorbitant fines approved by local elected officials.

Taxation

City of Corpus Christi to start collecting hotel occupancy taxes from Airbnb, HomeAway.com
Corpus Christi Caller Times - News on Oct 15, 2019
The city of Corpus Christi has been missing out on roughly $60,000 a month in tax revenue. How? It hadn't been collecting hotel occupancy taxes from companies that run short-term rentals in Corpus Christi.That's going to change. The city will now start collecting so-called HOT taxes from companies facilitating short-rentals, including Airbnb and HomeAway.com.

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We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.
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