It was the most expensive local referendum in New Jersey history. Airbnb raised more than $4 million this fall to fight one city’s regulations on short-term rentals. But in a high-profile blow as the company prepares to go public next year, the short-term lodging service lost overwhelmingly, defeated by a coalition of groups that spent one-fourth of the money.

Jersey City was not the first local government to fight Airbnb, and now efforts to regulate short-term rentals have come to Capitol Hill. Like the fight in New Jersey, the House legislation has brought together sponsors who more commonly battle each other, including a Democrat in the Progressive Caucus and a Republican in the conservative Freedom Caucus.

The federal fight over regulating short-term rentals is about the scope of one sentence in U.S. code written well before websites like Airbnb were ever imagined. It’s also a classic political story of influence and power pitting two industries, one old and one new, against each other while fostering unexpected alliances.

Each side accuses the other of being purely self-interested.

[New rules for Airbnb could squeeze intern housing options]

“They’re doing anything they can to limit competition,” said Steve Shur, president of the Travel Technology Association, which represents companies like Airbnb and Expedia.

Hotels don’t see it that way.

“It’s an unfair competition issue,” said Chip Rogers, president and CEO of the American Hotel and Lodging Association. “Marriott, Hilton, IHG, Wyndham — they compete against each other every day with the expectation that the guy across the street is playing by the exact same rules.”

But individuals are in the fight too: Travelers, renters, homeowners, workers and neighbors have made this debate more than just a power struggle between two industries.

Besides being a digital competitor to the hotel industry, sites like Airbnb have disrupted neighborhoods and their housing markets, critics say. They see investors buying up large multi-unit buildings to turn into short-term rentals.

“It’s a perfect example of how a major corporate entity and developers were trying to remove greatly needed affordable housing from Jersey City,” said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action.

That’s how the hotel industry ended up partnering with community groups and even some of the labor unions and activists they have battled with on other issues, such as the minimum wage.

“I believe the old saying about politics being the meeting of strange bedfellows,” said Mike Lux, a longtime Democratic strategist who founded AirbnbWATCH, an offshoot of his advocacy organization American Family Voices.

AirbnbWATCH, which has been involved in other cities’ campaigns against short-term rentals but not Jersey City’s, is pushing legislation on Capitol Hill to remove the legal immunity that short-term rental sites have claimed against some state and local restrictions.

American Family Voices has been airing cable TV ads in support of the legislation. It’s working with and receives funding from AHLA, the hotel lobby, which has traditionally donated to more GOP PACs, while spreading donations to candidates more evenly. Airbnb, meanwhile, has given overwhelmingly to Democratic congressional candidates running in 2020.

Both sides in this fight have been using the economic plight of others to bolster their arguments. Airbnb argues that its platform allows people to make extra income, something helpful to residents in high-tax areas like Jersey City.

“I have a lot of friends who are dependent on Airbnb, and not only people with their homes but people who work for the homeowners — the cleaning people, the maintenance people, the people who keep their books,” said Peter Klapper, a Jersey City resident who voted to overturn the city’s restrictions on short-term rentals.

Airbnb has argued that depriving tenants of the ability to rent out their apartments, as Jersey City’s ordinance does, is economic discrimination. That’s one reason the state and local NAACP chapters were opposing the Democratic mayor and governor, as well as many social justice and community groups.

Airbnb and the NAACP are hardly strangers — they formed a partnership in 2017, which included a revenue-sharing agreement to encourage African American usage of the platform. Neither the New Jersey nor the national NAACP responded to multiple requests for comment.

Taking it to the Hill

In 2017, The New York Times obtained internal documents from AHLA laying out how the lobbying group planned to fund opposition to short-term rental sites. That’s given fuel to Airbnb’s argument that the hotel industry — and now, Hawaii Rep. Ed Case — is the boogeyman. 

After his first stint in the House, Case became an executive for Outrigger Hotels and Resorts and eventually joined the board of AHLA, where there was initial talk of trying to amend a piece of federal law known as Section 230 of the Communications Decency Act.

Section 230, which became law in 1996 as part of broader telecommunications legislation, says websites cannot be responsible for what third-party publishers post on their platforms. Short-term rental sites have been arguing in court, largely unsuccessfully, that Section 230 shields them from any violations of state or local regulations.

“So when I was reelected to Congress, it was definitely on my radar to eliminate that argument,” said Case, who won an open seat in 2018.

The Protecting Local Authority and Neighborhoods Act, or PLAN Act, would amend Section 230 so that short-term rental sites are responsible for listings that violate local regulations. Airbnb has responded by attacking Case and the hotel lobby’s involvement in the legislation.

“We remain committed to continue working with any government to create smart, reasonable home sharing rules, but the PLAN Act is not that,” the company said in a September statement.

Case isn’t fazed.

“They figure the way to deal with this is to try to kill the messenger,” he said, with the 2019 Spirit of Hospitality award from AHLA sitting on a table behind him in his office.

Bipartisan backing

The co-sponsor list, so far, is evenly split with five Democrats and five Republicans across the geographic and political spectrum. 

Some of them, including Case, have received money from the hotel industry. 

Three Democrats — Illinois Reps. Mike Quigley and Raja Krishnamoorthi and California Rep. Scott Peters — have taken money from AHLA or a major hotel chain like Marriott this cycle. They’re members of the moderate New Democrat Coalition. Another Democrat, Rep. Chellie Pingree, a member of the Progressive Caucus, owns a lodge on an island in her home state of Maine.

California Rep. Mark DeSaulnier, another Progressive Caucus member, worked as a hotel services employee in Massachusetts and belonged to a hospitality union. 

On the opposite end of the political spectrum is South Carolina Republican Ralph Norman, a member of the House Freedom Caucus, who was one of the earliest co-sponsors and has already accepted $5,000 from AHLA this year.

“I’m in the hotel business,” Norman said. His family’s construction company has made him one of the richest members of Congress.

He expects other members of the hard-line conservative Freedom Caucus to come on board. But there’s a range of Republicans co-sponsoring this legislation so far. Pennsylvania Rep. Brian Fitzpatrick, a moderate from the Philadelphia suburbs who has received $5,000 from AHLA this cycle, signed on in October.

AHLA maxed out last year to Oklahoma GOP Rep. Tom Cole, who’s approaching the legislation from a traditional conservative framework. “The PLAN Act is a commonsense bill that affirms the authority of state and local governments,” he said in a statement to CQ Roll Call.

“The fact that we do have business allies in the hotel industry, for example, has helped us get some Republicans and make the case that what Airbnb is doing is unfair competition,” said Lux of AirbnbWATCH.

Last year, the GOP-controlled House and Senate overwhelmingly passed legislation, signed by President Donald Trump, that amended Section 230 to make it easier to crack down on online sex trafficking and prostitution. But that was a higher-profile political issue.

Lux isn’t expecting much movement on the legislation this year, and he knows that even if his party wins the House, Senate and White House in 2020, uniting Democrats won’t be easy given the coziness between some of them and the tech industry.

Dean DeChiaro contributed to this report.