Airbnb is becoming subject to laws in America that will dampen its appeal
Business travellers are finally warming up to Airbnb—just as it might be cooling down
By A.W. | WASHINGTON, DC
USE of Airbnb by business travellers grew by an eye-popping 249% last year, as they and their employers have become more comfortable with sharing-economy alternatives to hotels. But future growth is under threat from new laws, at least in certain American cities.
New York and San Francisco have, by some measures, the most expensive housing in America. So it is no surprise that they are at the centre of the legal fight against Airbnb and its like. Illegal rentals, they argue, mean fewer apartments on the market, which keeps prices high and makes it harder for low- and middle-income residents to live there. Both cities have passed or are considering laws that could drastically reduce the number of Airbnb properties that are available.
In San Francisco, Airbnb’s hometown, the firm agreed last year to require people who rent out their entire homes to register with the city, and to cap the number of people who can legally do so. But only about one-fifth of the hosts who are supposed to register have actually signed up. And so the city decided to apply pressure, with fines of $1,000 a day for each unregistered San Francisco host on the site.
Last month the company filed a lawsuit, suing the city, as the New York Timesput it, over "the law it helped create". It is asking a judge for a temporary injunction. The city, meanwhile, is considering a revision of its law that would apply the fines only after people actually book the rentals—still a strong disincentive for people to rent out their homes off the books.
In New York, the largest market for Airbnb, the crackdown could be even harsher. The state legislature passed a measure last month that would impose fines of as much as $7,500 on hosts on Airbnb and other sites who violate state law. Owners are legally allowed to rent out a room in their home, or a full unit in a one- or two-family property. But they are barred from renting out their apartments in larger buildings for less than 30 days—a substantial portion of Airbnb’s listings in New York City. The state’s governor, Andrew Cuomo, must now decide whether to sign the bill.
It is a similar conundrum to the one that has befallen ride-hailing apps Uber and Lyft. Such services are growing tremendously in popularity, just as cities confront them with new regulations. In the case of Austin, Texas, the companies found the regulations so burdensome that they withdrew altogether. But the stakes could be even higher for Airbnb, since New York and San Francisco are much bigger markets—and because the fines apply to all illegal rentals, and so new alternatives are unlikely to spring up as they have in the Texan capital.
Airbnb has launched a counteroffensive in New York to try to convince residents that its services are a boon to the city’s middle class, not a threat to affordable housing. The company launched a website that calls the proposed law “a sweetheart deal for well-connected, entrenched special interests” (read: the big hotel chains). It includes a short video featuring a couple that has long resided in the Bedford-Stuyvesant neighbourhood of Brooklyn and uses their rental income to help them continue to live in the fast-gentrifying area.
In another development, Airbnb has agreed to collect hotel taxes in Los Angeles. It is a slightly awkward arrangement, since most short-term rentals through services like Airbnb are not actually legal there. The city is considering a law to regulate them. But if it opts instead for a New York or San Francisco-style crackdown, Airbnb’s rapid expansion could take yet another hit.
The service won’t disappear in any of these cities. But if they—and others in America and elsewhere—impose tight limits on the type of property that can legally be offered, the appeal for those on business trips could diminish dramatically. Corporate travellers tend to seek out Airbnb rentals that are as much like hotel rooms as possible, only with more character and flexibility, and in more interesting neighbourhoods. If they become limited to rooms in shared homes, many of those travellers will turn right back to Hilton or Marriott.
