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Airbnb gears up for big legal and legislative battles in New York (skift.com)
33 points by danso on June 6, 2013 | hide | past | favorite | 25 comments



The comments from Senator Liz Krueger buried in the third section are very interesting and I almost missed it!

Unlike most articles blindly debating the pros and cons of the sharing economy, Krueger claims many hosts are professionals who arbitrage by leasing or buying long-term apartments and filling them nightly as a distributed hotel. It seems the money earned hosting -- (cost_of_operation * nightly_rate * occupancy_rate) -- is greater than signing a one year lease.

I used to offer my home on weekends when I was out of town for travel. Eventually, a guest offered to pay for the full month for significantly higher than my mortgage payment (and I contemplated various ways to spend a month away)! Sadly, our co-op board discussed and decided paid nightly guests violate our policies, ending my short hosting stint.

I'm torn. I love Airbnb and have used both sides (host and guest), and I like the idea that some people can use a space more efficiently than others. I'm less worried about taking a rental unit off the market and more worried about the intangible and hard-to-quantify side effects (safety, insurance, tax enforcement, neighbors' rights, etc).


This is not correct, and Liz Krueger knows it since we showed her the specific demographics of who uses our site in NY. Greater than 90% of hosts are renting the home they live in when they are not there (primary dwelling). Simply type NYC in search and see for yourself who is renting. You wil notice most people with just one property. The few property groups we have switched to 30 day rentals long ago. Liz Krueger is the author of the 2010 bill that has been the cause of much of this controversy, so she is trying to protect her legislative legacy.

Most of the city officials we have spoken to are actually supportive of Airbnb, but there are a few that matter like Liz that do not.


I wrote the article, so I'll add some questions for you here.

From all the time I've spent running searches on the site that 90% number seems very high, but since I don't have access to the database like you I can only ask follow up questions rather than refute it.

Does this number represent unique users or simply accounts?

For those that are renting the home they live in, what's the average number of nights they make available per year?

What would you say is the percentage of the available rooms on the site that come from people who have more than one listing in a market? 40%? 50%?

For people who have more than one listing, what's the average number of nights available per year for each unit?

Will Airbnb introduce a system for removing hosts who are in obvious violation of local laws? For instance, the hosts listed in my story, where they shared 19 units between three accounts.


Are 90% of rentals by hosts renting their primary dwelling?


Toshi ruined it for everyone.


He was certainly an impetus for stronger action from what I can tell, but that's an overstatement. The 2010 bill was originally drafted to target property groups that predate Airbnb or him.


I've seen options like those at more than one occasion. Flats rented out by room or bed, with the owner? (operator?) seemingly running it as a business.

Don't get me wrong, I don't necessarily consider that wrong. After all it's likely a little more like a youth hostel and gives you the option to maybe meet with a pre-screened[1] set of occupants? Making an option to meet people with similar interests, whether that's something you'd want to go for or not.

For me Airbnb always seemed covered that middle ground between Couchsurfing and Ho(s)tels.

[1]: what ever screening the host would really do is a completely different question. But having to be approved by the host gives the host a little option to screen those who come and go.


The difference is that in a youth hostel everyone in the hostel signed up to be staying there. In an Airbnb hostel, all the neighbors signed up to be living in a condo/co-op/residential rental building and one guy decided on his own to turn his unit into a hostel.


This++. The 30-day rules are set up to protect the tenant across the hall.


Protect them from what?


Good point but what's the differences between a short term rental an a longer term one? I mean, imagine that someone rents an apartment in a condo for 1yr, and they party all day, we are in a similar situation but with more rotation?


You'd have to be very rich and have an extraordinarily resilient body to party all day all year round. Whereas an ever changing cast of vacationers can each party while on vacation and then return to quiet lives in their home town.


Be young, drink cheap booze. You will pay for it later in life but you underestimate the capacity others have for a "party" life.


I was just discussing over lunch that I really don't understand why AirBnB doesn't just offer cities the ability to add 'tourist-tax' on top of the AirBnB rates.

In the end it all boils down to cities not wanting to give up the revenue stream they get from tourists, which is also reasonable since it does cost the city money to care for tourists.

I'm convinced AirBnB's position would be much stronger if they would just say "Sure we can tax rentals at X%/$ for your city! Sign this document to give us clearance to run AirBnB in your town and we'll flip the switch in our software."


I got the impression that NYC's objection was less about revenue and more about the city's management of housing. New York has a pretty severe supply/demand discrepancy when it comes to housing, and they've taken pains for a long time to try and keep what housing there is available and at least sort of affordable. Having a service that de facto converts long-term residential housing to hotels seems like the sort of thing the city would object to regardless of the revenue implications.

Besides, most of the money that cities get from tourists they get through sales tax or indirectly through property and income taxes on tourist-supported businesses. I would be very surprised if losing the tax revenue on the hotel stay is enough to convert tourism into a net loss for the city.


Are tourists taxes ever determined by the principle of estimating the cost of the tourists to the city? Everything I've heard about them is that they are almost pure profit both for the city collecting the tax and for the businesses they frequent, and the mechanism for determining taxes is basically "how much can we charge before we significantly decrease how many people want to come to our city and/or the local business owners revolt?"


Yeah, for all people talk about evil company X and "if you're not a customer you're a product"...

If you're not a resident somewhere, you're not a constituent and the local government has almost unlimited license to tax the daylights out of you. Tourists don't vote, so slapping taxes on everything they buy gets the local government revenue without alienating any voters. My favorite is that, where I live, property taxes -- including school taxes -- are higher for second homes. That is, if you have a weekend or vacation home, you pay more for the schools your children will never attend, because you live somewhere else! But part-year residents also can't vote, so from the political standpoint it's a win-win.


IANAL (I am not a Legislator), but it seems to me that the primary concern from the city/state side of things is that housing is in short supply in NYC for NYC residents.

AirBNB "pros" buy up yearly leases for $x and then sublease them out nightly for a monthly net of a multiple of $x. In other words, it's an arbitrage - they're taking the long-term risk of a yearly lease and gaining the short term reward of nightly rentals by tourists, for which there is strong demand, and which results in fewer hotel bookings and fewer apartments available for local residents.

And, fairly enough, it also puts that arbitrage profit into the hands of the apartment renter, not the landlord, who took the risk of putting the building up (or managing it) in the first place.

So hotels lose, landlords lose, NYC housing consumers lose, and tourists gain and AirBNB hosts gain. Fine.

SO: Rather than making it outright illegal, why not balance out some of the incentives in the name of efficiency? Hosts SHOULD be able to rent out their place when they don't live there (improved efficiency) or rent out a spare room in a multi-room apartment (also improved efficiency), but maybe limit the amount that can be charged to a proportion of rent they themselves pay? If it stops becoming a profit center then you remove the big incentive that "pros" are going for -- sopping up available units and using them solely for tourists. If my lease for an apartment is $3000/month, the max I'd be allowed to charge is $100/night.

It would change the dynamics quite a bit -- now there's zero incentive for a "pro" or landlord to go rent dozens of otherwise available apartmens to use for tourists. In fact, the landlord would go right back to preferring long-term lessors. Rather get an easy, single check per month than dozens of small and unguaranteed checks.

It would remove the profit incentive of regular hosts but still allow the rent-offset incentive.

However, it would make WORSE the imbalance between AirBNB and hotels, and demand for airbnb would increase (and supply would decrease because of fewer hosts). That said, it's not a bad thing. It would be real competition for hotels, and rightfully so -- that's AirBNB's job and the disruption they're causing. And more competition and lower prices for everyone is a Good Thing.

I'm sure I'm missing some untended consequences here, but perhaps it's a start...


> Hosts SHOULD be able to rent out their place when they don't live there

People who own or lease space that they don't live in can do that. Of course, there are a whole set of regulations they have to comply with if they want to with regard to the condition, safety features, etc. of the premises they are renting out, its zoning, notice provided to those renting, taxes, etc.

Hosts that at least purport to comply with these regulations are known as "hotel operators".


>SO: Rather than making it outright illegal, why not balance out some of the incentives in the name of efficiency? Hosts SHOULD be able to rent out their place when they don't live there..

Except that the other tenants get all of the negative consequences of dealing with short-term renters (noise, theft, increased risk of bedbugs) without any of the benefit.


"Hosts" and "Landlords" are not mutually exclusive sets.

or maybe a bit more accurately "Hosts" and "Apartment/House Owners" are not mutually exclusive sets.


They also have the problem of special cases who list in airbnb but are actually professional bnbs/pensions/small hotels etc. who use other commercial listing sites. They're probably on top of their tax vs. amateur users (their spare room is not a sole income stream) who are taking some of that market and heck cities can't lose that cut of tourist/hotel taxes.


I think the greatest problem facing AirBnb is that the "special cases" of people renting their properties out professionally is increasing.

Just like how eBay started as a place for people to get rid of old crap, and then evolved into a marketplace dominated by professional sellers.

In the early days AirBnb can rely on some populist good will - they're helping vacationers fill apartments, they're helping the broke college student crash in a spare room, etc. But as the professional listings increase this story becomes less and less relevant, and the more parallels can be drawn between them and traditional lodging, which makes legal and PR liabilities more and more pressing.

I've stayed in 3 AirBnbs in the last year or so, and every one of them are "professionals" - i.e., they rent the space out full time as a substantial portion of their income.


So following along with that eBay comparison, would forcing hosts to be classified in professional (power seller) and private solve this issue sufficiently? Not sure how you'd detect false positives?


Does anyone know of public research into the makeup of rooms on AirBNB, specifically rooms/house and so forth?

I feel there's often a lot of AirBNB-only properties listed but I'd prefer some actual numbers. If needs be, scraped myself this weekend :-)




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