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Marketplace Morning Report

Philadelphia: the largest city to legalize Airbnb

Gigi Douban Jul 3, 2015
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Philadelphia has legalized Airbnb and agreed to tax rentals booked through the site. The city is preparing itself for two huge events — The 2016 Democratic National Convention a year from now. But first up, the pope’s visit.

According to Philadelphia’s tourism bureau, more than 1.5 million visitors are expected to descend on the city for the Papal event.

Philadelphia has 15,849 hotel rooms. That might not be enough. And when there aren’t enough hotel rooms, prices go way up. Georgios Zervas, marketing professor at Boston University, has studied this. “If people want to be in Philly when the pope is visiting, and prices are extremely high,” Zervas says. “Then they might decide not to visit the city at all.”

Which would explain why the city would legalize and tax Airbnb rentals. But how many people even know that in a lot of cities, Airbnb still isn’t legal? Well, if you’re someone wanting to rent out your place you could look at Airbnb’s “Terms of Service.”

It clearly states it’s up to you to check. But if you’re like most people: “We scroll to the bottom, click on agree, and move on,” says Cait Lamberton, who teaches marketing at the University of Pittsburgh. Usually at this point in the transaction, people intending to rent out some space are going to do it, Lamberton says.

“You know they’ve probably taken some pictures, they’ve probably written a description, they’re probably thinking about the rate they should charge,” she says.

In other words the legality of the transaction is kind of an afterthought.

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