Name in the News: Matt Middlebrook, Airbnb’s Hawaii policy manager

Matt Middlebrook’s career preparation had little to do with the visitor industry, and yet here he is, public policy manager for Airbnb for Hawaii as well as his hometown of San Francisco. He does frequently come to Hawaii, of course, but that’s usually to visit his family on Kauai rather than bunking in one of the rentals his company books through its online platform.

His degree from the University of California at Berkeley was in political science, and so it’s not surprising to see his bio includes many political credits, including work in campaigns for U.S. Sen. Dianne Feinstein and in key positions in the office of Jim Hahn while he was mayor of Los Angeles.

Before joining Airbnb, he was a senior executive at the real estate firm Caruso Affiliated.

All of that now has prepared Middlebrook, 51, for the ongoing issue of regulating vacation rentals, an issue that combines matters of policy, politics and real estate. And what he has seen is a conflict that, he argues, has culminated in making vacation rentals essentially illegal.

Yes, Bill 89, which the city enacted in June, establishes the framework for permitting additional bed-and-breakfast units, starting in October. But because a regional plan bars them from the North Shore area altogether, and elsewhere they must be strictly spaced no closer than 1,000 yards from each other, Middlebrook said, that’s tantamount to a total ban.

The answer is for rentals to be limited in number, he said.

“It’s appropriate to put guardrails around how many there are,” he said. “The appropriate number outside the resort area is not infinite. But I also don’t think the right number is zero.”

Question: Can you estimate the proportion of un-hosted rentals (transient vacation units) versus bed-and-breakfast units that advertise on the platform?

Answer: According to the Hawaii Department of Business, Economic Development and Tourism, roughly 18,000 visitors to Oahu per month stay at a bed and breakfast or share someone’s home. Another 45,000 stay at a rental home and approximately 50,000 stay in a condo.

With approximately 500,000 visitors per month to Oahu, nearly 20% of visitors stayed at a rental house or condo while only 3.5% stayed at a B&B or shared someone’s home.

That’s a substantial economic driver for the island and a vital part of the visitor industry. A January 2018 report by Oahu-based Kloninger and Sims found Airbnb guests spent more on non-lodging expenditures, such as food and beverages, entertainment and transportation, than guests using other types of accommodations.

Q: Do you have a primary concern with Honolulu’s ordinance regulating vacation rentals? What changes to the law would Airbnb favor, if any?

A: The visitor industry is the state’s No. 1 economic engine and alternative accommodations alone generate over $5 billion in economic activity per year in Hawaii, including over $2 billion on Oahu. Short-term rentals have long played an important role in supporting the industry, but Oahu’s rules have not kept pace with how people travel.

While we agree that it was long overdue for Honolulu to update its short-term rental regulations, Bill 89 as enacted bans all vacation rentals outside of the resort areas, and while it purports to legalize some number of B&B homes, the onerous rules all but amount to a ban on those as well.

This destruction of a large part of Oahu’s visitor industry will result in hundreds of millions in lost economic activity, and hurt local residents and small businesses who rely on the spending from visitors.

Targeted changes to the law could preserve the benefits these rentals provide and balance community concerns. For example, we recommend targeted changes to support bed-andbreakfast operators who participate in traditional home sharing, including raising the number of permits issued, removing the 1,000 yard restriction between B&B properties, and more affordable permitting and taxes.

These are regular Hawaii residents sharing rooms in their homes — enacting severe limitations doesn’t preserve housing, it only makes it harder for families to keep up with Hawaii’s high cost of living. We also support an enforceable cap of the number of vacation rentals island- wide.

A complete ban on all vacation rentals will hurt Honolulu and the thousands of people that depend on the jobs supported by these visits.

Q: Following the court-approved agreement with the state, what is the status of providing rental operator records to the Department of Taxation?

A: We are in the process of complying with the agreement, including notifying hosts of their tax obligations and our requirement to share certain information with the Hawaii Department of Taxation. We are pleased to have reached an agreement that includes safeguards to protect hosts’ privacy, and provides the state with adequate data to help enforce against individuals who they suspect may have skirted tax laws.

Q: It would seem that some of the demand for rentals on Oahu is now going to the neighbor islands. Has Airbnb encountered resistance from residents there?

A: Oahu’s short-term rental regulations have severely limited the number of accommodations available to visitors, and that will only get worse when the law fully takes effect next October. The Hawaii Tourism Authority predicted this in a 2017 report when 15% of those polled said they would not come to Hawaii if alternative accommodations were not available. You’re seeing that play out for Oahu.

Faced with the choice of paying hundreds of dollars more for a hotel room, or staying on neighboring islands, many families are opting to experience other parts of Hawaii. …

However, we’ve seen lawmakers in other counties take a more balanced approach to regulating short-term rentals.

For example, last year Hawaii County passed Bill 108 to create a permitting process, support the operation of B&B homes, allow for the continued operation of existing vacation rentals, and allow issuance of additional vacation rental permits in commercial and visitor zones.

Our team and host community worked alongside policymakers and dozens of community stakeholders to ensure Bill 108 was a fair, balanced, and constructive policy outcome for all parties. This bill is an example of how Airbnb can work with local jurisdictions to enact reasonable regulations.

Q: What do you think of the city’s plan to begin next year issuing permits for B&Bs?

A: Let’s be clear: The Honolulu City Council has essentially banned B&B homes outside the resort areas regardless of what the law says, and thousands of local residents who rely on the income are getting hurt.

First, the city’s delayed issuance immediately made these properties illegal, potentially subjecting people to crippling fines. For the majority of these hosts, home sharing is their primary source of income and the loss of revenue is making it hard for them to make ends meet. …

But, on top of that, the requirements to get a permit are so onerous that there will be few if any permits actually issued. …

Q: Does this visitor-industry sector have growth potential? Or does the regulatory issue constrain it?

A: Of course it does. Bill 89 is an overreaction that is going to needlessly hurt Oahu and thousands of the people who live there. The mayor initially tried to find a middle path but that got lost along the way. As a result, visitors will go elsewhere and with them will go the jobs that depend on those visitors.

Travel is changing and it’s important for a destination like Oahu to have the full range of accommodation types to best serve travelers. There is absolutely a way to strike a balance that preserves the benefits of the visitor industry while preserving housing stock and neighborhood character.

More and more communities are finding a thoughtful way to strike that balance. We would love the opportunity to work with the city to do just that.