CALinnovates Calls On Hotel Industry Group To Explain "Price Gouging" Comments, Motivations Behind Anti Home Sharing Campaign

SAN FRANCISCO, Jan. 28, 2016 /PRNewswire-USNewswire/ -- Tech advocacy group CALinnovates today called on the American Hotel and Lodging Association to explain whether the increasing foreign ownership of its member hotels and recent member comments about "price gouging" are at the heart of a recent anti home sharing report published by the hotel industry group.

In a letter to American Hotel and Lodging Association President and CEO Katherine Lugar, CALinnovates raised concerns about what is behind the recent negative home sharing report by the association.

"My alarm is based not only on the misinformation included in the report, but the motivation behind it based upon comments made by one of your members," wrote Mike Montgomery, Executive Director of CALinnovates. "The motivation behind your report is called into question by the comments of AH&LA member Jon Bortz, the CEO of the Pebblebrook Trust (which owns hotels operated by Doubletree/Hilton, W/Starwood, Intercontinental Hotels Group and Hotel Monaco/Kimpton, among others), who lamented that Airbnb is making it harder for hotels to price gouge their guests."

Montgomery was referring to Mr. Bortz' comments in the Wall Street Journal, in which he said that the rise of home sharing has left his hotels with less of an "ability to price at maybe what the customer would describe as sort of gouging rates…I'd say we've lost a lot of that ability at this point within the major markets where these events take place." (Wall Street Journal, September 29, 2015)

Montgomery also said it seems that AH&LA's stance towards home sharing has grown more hostile as the number of hotels owned by foreign entities has increased, pointing to recent media reports:

Chinese investors are the top foreign buyers and funders of U.S. hotel acquisitions this year. And they are one of the top offshore players in the office market, according to data from the Urban Land Institute. (Dallas Morning News, December 10, 2015)

A venture of Geller Investment and Wanxiang America Real Estate Group, an Elgin-based unit of Chinese auto parts giant Wanxiang Group, paid $111.9 million for the 189-room hotel at 11 E. Walton St., according to a Cook County transfer tax form. The June 25 sale by Zell's Equity Group Investments equals just over $592,000 per room, a Chicago record. (Crain's Chicago Business, July 21, 2015)

Given these recent trends towards higher rates and foreign ownership, Mr. Montgomery called on AH&LA to disclose the following information:

1. When a guest spends the night in an Airbnb listing, 87 cents out of each dollar charged by the host stays with the local host and benefits that host's community. What proportion of the room rate paid by a guest at your members' hotels remains in local cities? Does this proportion increase when hotels gouge consumers during special events?
   
2. Many of your member hotels are owned by large multinational corporations with       headquarters in Europe, Asia and the Middle East. How many of your hotels are owned or controlled by foreign interests? What percent of your members' profits are diverted outside of the United States?

"People of goodwill can disagree about emerging trends such as home sharing. But when you see comments about 'price gouging' and other troubling developments, it's vital that AH&LA explain what may be behind their stance against home sharing," said Montgomery.

ABOUT CALINNOVATES

CALinnovates represents companies across the Golden State that are improving industries and expanding economic opportunities for Californians through innovative technologies. CALinnovates' members include C-level executives, political leaders, entrepreneurs, technologists and Californian consumers. For more information, please visit http://www.calinnovates.org/

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SOURCE CALinnovates

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