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Woman fined $33,885 for renting out room on Airbnb

August 18, 2015 Headline News, Online Travel Agents No Comments Print Print Email Email

egtmedia59The world of Airbnb is an uncertain one, with most rental exchanges going well but the occasional renter turning out to be a gangster, a home-wrecker or the organiser of a sex-and-drug orgy. Now, a woman has been fined almost AUD 34,000 for letting out a room in her house on Airbnb.

Rachel Smith, a 70-year old retired schoolteacher, was convicted of running a bed-and-breakfast out of her home. That requires a permit. At least, it does in San Diego, California, where Smith was fined USD 25,000 for failing to obtain the required permit.

The case shines light on Airbnb, the global online room-letting enterprise said to be valued at about USD 10 billion. Local authorities don’t like Airbnb because it circumvents hotel and hostel regulations and taxes. Traditional hoteliers put up with it grudgingly because it lets amateurs compete with hotels without complying with expensive hotel requirements such as fire safety.

Smith may appeal her sentence because she claims she never served breakfast to travellers who rented her guest bedroom through Airbnb. This, she told online news site Vice.com, should technically exempt her from the city’s legal definition of a bed-and-breakfast establishment. The court did not agree.

Smith advertised a guest room in her house for USD 80 a night, with access to a kitchen, laundry room, and backyard.

The trail of travellers heading there reportedly annoyed neighbours, at least one of whom lodged a complaint with the local council.

With guests coming and going, it was like living near a hotel, neighbours said. And their residential area was not zoned for hotel use.

One complainant said cigarette smoke was drifting from Smith’s patio into her children’s bedrooms.

As a result, Smith was told last year she had violated a municipal code by running a bed-and-breakfast without the necessary permit. Smith made several conciliatory gestures, even offering to pay San Diego’s 13% hotel, or occupancy, tax.

That didn’t work.

Administrative law judge Catriona Miller sided with the San Diego city council, ruling that “while [Smith] did not serve breakfast regularly in this establishment, it is the type of establishment where breakfast is typically served”. Smith was fined USD 25,000 for the infraction, which equates to about AUD 33,885.

Airbnb itself, as a company, was not involved in the case, but you can bet their lawyers are studying it closely.

Written by Peter Needham

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