Orlando and its environs are no strangers to disruption. All you need to do is hearken back to Oct. 1, 1971, when Disney World opened the gates to the Magic Kingdom — and EVERYTHING changed.
Swampland, cattle pastures and orange groves have been transformed into the most-visited destination in the U.S., with a record 66 million tourists in 2015, Visit Orlando reported in May. Orlando is now the third largest metro area in Florida.
While the word “disruption” wasn’t in the lexicon 45 years ago, it’s thrown around with abandon nowadays. And today, Orlando’s great disruption is getting a tech-based disruption of its own, particularly as it relates to “sharing economy” services such as Uber and Airbnb.
Taxis versus ‘the existential threat’
The worldwide phenomenon known as ride-sharing came to Florida in Orlando in June 2014, and — as has been the case in virtually every other community around the world — the clash between this dynamic new business model and age-old regulations hasn’t been smooth, to say the least.
After several months of negotiations, the city and Uber announced they had reached a compromise in December 2014. Gone was an initial request/demand that Uber and Lyft would have to charge 25 percent more than regular taxis. In was the city’s decision to reduce the cost for vehicles-for-hire permits from $500 to $250. Subsequent negotiations led to the city agreeing to an Uber request to allow new applicants to fill out permit applications online, versus having the drivers make their way to City Hall.
But then Uber failed to follow through on what they had agreed to.
“It’s kind of a lose-lose for the city,” says Roger Chapin, executive vice president of public affairs for Mears Transportation, the self-described “cornerstone of transportation” in the Central Florida region. “They said ‘we’ll lower the price (for permits) and we’ll sign up twice as many drivers.’ Well, they lowered the price and Uber didn’t sign up any of the drivers online,” Chapin added.
There were a few drivers, Orlando officials say, but Bryan Brooks, Orlando’s chief administrative officer, confesses that after all the time it took to negotiate the deal, the lack of follow-through on Uber’s part was a disappointment. “We really went into it with good faith,” he maintains. “We’ve not gotten any evidence that they intend to comply with this.”
Javi Correoso, Uber’s public affairs manager for Florida, would only say regarding this issue that negotiations are continuing between the two parties.
Uber’s battles with the taxi industry and local governments in Florida has been well noted in recent years, and in July 2015 the company dropped out of the Broward County market after complaining of onerous regulations being placed upon them. As angry emails from Uber customers clogged their computers over the course of the next couple of months, and the county commission reversed course last October, allowing Uber and Lyft to self-regulate when it came to vetting drivers’ background and auto inspections.
Subsequent deals came together earlier this year in Miami-Dade and Palm Beach counties, but neither Uber nor Lyft have reached compliance agreements with Orlando/Orange County, Hillsborough County or Jacksonville.
During the 2016 legislative session, Uber was aggressive in calling out Senate President Andy Gardiner as being the obstacle to any deal being sought. The company targeted the Orlando-based legislator in both digital and radio ads during the waning weeks of the session. They also employed old-fashioned daily mail inserts, calling on local residents to contact him to get behind a bill passed in the House by Fort Walton Beach Republican Matt Gaetz that, among its other provisions, would pre-empt local governments like Orlando from creating any regulations when it came to ride-sharing companies.
“It’s not hard to hold an up-or-down vote,” one web ad said. “There are only five days left in the 2016 session for the state Senate to vote on allowing all Floridians access to Uber. A bill that would do just that passed the House 108-10, but Senate President Gardiner is refusing to even let the Senate take a vote.”
Uber officials also said Gardiner was ignoring the people of Florida at the bequest of “one special interest taxi company,” referring to Mears Transportation. Gardiner has been longtime friends with Paul Mears III, the company’s CEO. One mailer took a quote from the Orlando Sentinel from Paul Mears Jr. calling Uber “an existential threat to the legacy taxi industry, and from the Miami Herald, which noted that Mears Transportation has donated more than $150,000 to Gardiner and the Republican Party of Florida.
Gardiner spokeswoman Katie Betta denied the Senate President was being an obstacle, saying that in fact there was no Senate companion to the Gaetz House bill. Although Altamonte Springs Republican Dave Simmons was pushing a ride-sharing bill in the Legislature’s upper chamber all session, that bill wasn’t technically related, Betta maintained, since it only addressed liability and insurance issues, not anything to do pre-empting local governments of regulating the companies.
The Florida Taxicab Association fought back, pushing out its own online digital ad that called Uber’s background check and insurance standards insufficient.
While Uber’s negotiations have ebbed and flowed with the city of Orlando, it took a year before the company came into compliance officials at Orlando International Airport, the 15th busiest airport in the nation. Orlando International charges taxis a $50 application fee, $3.15 per half-hour dwell time and $2.65 for each passenger picked up.
But Uber X drivers In the summer and fall of 2014 picked up fares without paying those fees, prompting the airport to file a lawsuit against the San Francisco-based company after the Uber drivers had been flouting their rules and picking up fares there.
“Guess what, Uber? You’re showing no respect for the people in this community by coming in and saying, ‘We don’t have to follow the law.’ Right, and if you want to come on our property, you will respect our region and community, and you will comply with the law,” Greater Orlando Aviation Authority Chairman Frank Kruppenbacher told WESH 2.
In October 2015 the company and the airport came to an agreement. UberBlack, the company’s more upscale product, was granted permission to pick up and drop passengers at the airport. UberX, the service that is most associated with the company, was not.
With the Legislature not about to do anything regarding Transportation Network Companies until they convene again next spring, officials with Orlando and Uber say they both are looking forward to resuming negotiations this summer.
In the meantime, the Orlando suburb of Altamonte Springs became the first city in the country to come to an agreement with Uber to begin subsidizing the ride-sharing company to help with the vexing “first-mile, last-mile” issue which has confounded transportation officials for years — that is, how to get people to and from their homes to the place where they can take public transit.
“It’s been an unbelievable success,” gushes Uber’s Correoso.
Longwood, Maitland and a couple of other suburban Orlando communities are now also taking part of the project, which Correoso says helps takes cars off the road to alleviate congestion, while also making it easier to connect people to public transportation. “We’ve seen a huge uptick in residents who are leaving their cars at home and relying on this credit that the city is offering to get to work or public transportation,” he says.
Correoso adds that until the state Legislature crafts rules of the road on ride-hailing companies, Uber wants to continue to foster partnerships on issues like first-mile, last-mile. “We don’t see ourselves as the solution to traffic and transportation issues in Miami, Orlando and Tampa, but we want to be a part of the solution, to the traffic and transportation issues that these communities face.”
A more ho-hum response to Airbnb
Like Uber, Airbnb has become a sensation with the public in its earlier infancy, but unlike ride-sharing, giving the traveler another option when it comes to lodging doesn’t appear to have been as disruptive to the Orlando/Orange County establishment. That’s in part because of the vast number of hotel rooms in the Central Florida, where there’s been less complaints about how Airbnb’s avoidance of paying tourist taxes have harmed the area than in many other local communities.
Over the last year, Airbnb has reached agreements with 27 counties and the state of Florida to begin collecting and remitting hotel taxes — the main source of friction with local governments.
Earlier this year, the online home rental firm reached an agreement with Orange County Comptroller Martha Haynie‘s office to begin capturing a tourism tax on each night’s stay.
Airbnb has been a sensation since its development went global in 2008, and while it’s been controversial around the world, there truly haven’t been too many complaints in Orlando, according to Haynie.
“I think from the hotel perspective, what they’re most concerned with is an unfair business advantage and this does the old ‘level the playing field’ thing,” she said. “I doubt that they seem them as any major competition, but they want everybody to follow the same rules and so do I.”
While the American Hotel and Lodging Association (AHLA) has no problems denouncing the company (more on that in a moment), the regional Central Florida Hotel and Lodging Association has been relatively low-key about commenting publicly about Airbnb’s impact in the area. Officials with the agency didn’t return INFLUENCE’s request for comment, but did direct us to their thoughts on the subject in their listing of 2016 legislative priorities.
The CFHLA says they advocate for the distinction between Professional Vacation Rentals and Shared Lodging. “CFHLA opposes Shared Lodging (“Illegal Lodging”) services that allow individuals to rent out all of or parts of their homes or apartments without having to pay the same taxes/fees and follow the same regulations as Hotels and Professional Vacation Rental companies. CFHLA asks for a ‘level playing field,'” their website reads.
Haynie says negotiations with the company went quickly last year, and were nothing like the decadelong battle she previously had with Expedia and other online travel companies. That ended last summer when the Florida Supreme Court ruled those online travel agencies didn’t have to charge the hotel tax on the fees they charge when customers use them to book rooms.
Not every property tax collector in the state is so keen on the deal that Airbnb has made with Orange County and more than dozen other local governments. Hillsborough County Property Tax Appraiser Doug Belden said the company’s refusal to share information about both renters and homeowners made him hesitate to work with them, telling the Tampa Bay Times, “If they’re going to write you a check, they can tell you where it’s coming from.”
A spokesman for Airbnb opted not to respond to our emailed question to respond to Belden, but Orange County’s Haynie isn’t as concerned.
“That’s the reason we do audits,” she said, laughing. “I don’t know what any hotel or dealer remits on a monthly basis is accurate, but we monitor for unusual changes and we audit. We don’t audit everybody all the time every year, but we do do audits and I’ve got those provisions in the agreement with Airbnb.”
While the Central Florida office may be hesitant to weigh in on what the affects the company has had on their industry, the national Hotel and Lodge Association isn’t so shy. In a damning report, the national Hotel and Lodging Association claims that more than three-quarters of Airbnb revenue in Miami came from operators who listed their properties for more than 180 days of the year — which came out to $93 million for the period of October 2014 to September 2015. It also stated that Miami has the highest percentage, at 62 percent, of multiunit operators in the 14 cities the AHLA and Penn State University studied.
Dr. John O’Neill, professor of hospitality management and director of the Center for Hospitality Real Estate Strategy in the School of Hospitality Management at Penn State University, wrote the report, called “From Air Mattresses to Unregulated Business: An Analysis of the Other Side of Airbnb,”
The report’s bombshell was that “landlords” raked in some $76 million on gray or black market transactions last year in Miami alone.
Christopher Nulty, a spokesman for Airbnb, called the report “factually inaccurate,” and said it was the latest attempt by the industry to mislead and manipulate to stifle competition.
“The AHLA is out of touch with the increasing number of consumers and cities embracing the tremendous benefits of home sharing,” said Nulty. “Vacation rentals have always been a driving force in Miami tourism and now home sharing is broadening that impact and bringing visitors’ dollars to new neighborhoods and small businesses. “
Whatever Airbnb’s success in Orange County, it simply doesn’t appear to be hurting the lodging industry that significantly.
The average daily rate with a hotel room in Orlando at the end of 2015 was $112 a night — lower than the average Airbnb rate of $120 a night. And there is major hotel construction, with more than 5,000 hotel rooms expected to enter the market in the next few years, such as the 1,000-room Sapphire Falls Resort at Universal Orlando Resort, and Paramount’s Uniq with 357 rooms coming online in 2017.