Website Airbnb creates new hospitality market in Israel

Sheltered from regulation, online entrepreneurs flourish.

By EITAN AROM
‘Beautiful German Colony Rental’ in Jerusalem (photo credit: COURTESY MAAYAN LEVY)
‘Beautiful German Colony Rental’ in Jerusalem
(photo credit: COURTESY MAAYAN LEVY)
Hospitality website Airbnb is an important player in the emerging “sharing economy” of peerto- peer renting and sales. But for a new class of market players, sharing has nothing to do with it.
“I take apartments owned by other people and make them available to tourists,” said Maayan Levy, a Canadian-born Jerusalemite who rents out properties around the capital.
“It’s sort of a hotel distributed across the city.”
Levy manages six of the approximately 8,000 Airbnb listings in Israel. Each of these units, properly managed, can bring in NIS 6,000 to NIS 8,000 a month, he said.
The website allows anybody with a profile to list a unit – either a spare room or an entire apartment – for others to rent temporarily.
While Levy owns two of the apartments he rents out, the others are contracted to him, making him one of many entrepreneurs using the website primarily as a business tool.
There is Orna, with eight units in Haifa; Viviane, with four units in Eilat; Sara, with six units in Jerusalem; Dor, with eight units in the capital and Tel Aviv – all of whom appear to potential guests on the site only by their first name.
Airbnb enjoyed a landmark year in Israel, with the number of listings doubling and guest stays skyrocketing 350 percent, according to a spokesperson for the website.
This emerging market has not gone unnoticed by Israeli hoteliers, who quickly sized up the hospitality website as a virulent new competitor.
Even as the site enjoyed explosive growth in Israel, the number of guest nights in Israeli hotels remained roughly the same at about 18 million from September 2013 to September 2014, according to the Central Bureau of Statistics.
A spokesperson for the Israel Hotel Association called Airbnb “a big problem” for the country’s hospitality industry, an NIS 8.8 billion market in 2013. She described it as a “black market” for hospitality services.
In June, the IHA sent a letter to Israel Tax Authority director Moshe Asher accusing short-term rental websites of “non-reporting of income,” with a cost to the state of NIS 300 million in lost tax revenue.
It urged Asher to “take all necessary steps to stop the phenomenon.” Similar letters have been sent to the mayors of Jerusalem and Tel Aviv, the two largest concentrations of Airbnb apartments.
Eli Ziv, the head of the Tel Aviv Hotel Association, said a lack of regulation of Airbnb apartments gives them an unfair advantage over traditional hotels, which face stricter scrutiny from the government despite offering the same service.
The hotel industry and its emerging counterpart respond to similar market forces.
Levy said his occupancy rate stagnated during the war this summer between Israel and Hamas. Meanwhile, the number of guest nights at tourist hotels fell 13.5% between July 2013 and July 2014 at the height of the conflict.
The website has fought tax and regulation battles in municipalities around the world and has been compelled to collect occupancy taxes in San Francisco, Portland and Amsterdam. But it is still largely unregulated in Israel.
Instead, the Airbnb rentals market is regulated by a mixture of trust and guest reviews.
“When I started, it was very slow because it takes time until you get good reviews, and that’s the way of it,” said an Airbnb user in Jerusalem who rents two units adjacent to his home. He declined to be named for fear of causing a conflict with the site.
“Everyone who rents on Airbnb – all those [hospitality] sites – before you get reviews, you don’t get so many responses,” he said. “I got more and more good reviews and it became popular.”
The properties Levy rents out unanimously scored good reviews from the 181 guests who have provided feedback.
“I’m the Airbnb host in Jerusalem with the most reviews,” he said. “I’m not sure if there’s anyone with more than that.”
Viviane, Orna, Sara and Dor all fall short of his benchmark.
Declining via the website to comment for this story, one maverick hotelier said, “Sorry, love my privacy.”
Away from the prying eyes of both reporters and regulatory agencies, privacy is key for these entrepreneurs.