Depending on whom you ask, Airbnb is either a platform where regular folks can make a little extra cash by renting out spare rooms or a hotbed of illegal activity that lets unscrupulous landlords convert regular apartment buildings into unregulated hotels. Airbnb’s marketing materials tend to opt for the former description; in New York City, government officials prefer the latter, and have for years attempted to regulate what they say is rampant illegal activity on the platform.
On January 3, a federal judge blocked a New York law that would have expanded the city’s ability to crack down on Airbnb and other short-term listing sites, the Wall Street Journal reported. The law, which the City Council passed unanimously in July and would have gone into effect in February, required Airbnb and similar websites to provide city officials with information on every short-term listing in the city, including hosts’ addresses and identities, in order to crack down on those that violate New York’s short-term rental laws.
Airbnb and another listing site, Homeaway, challenged the law, claiming in a joint lawsuit against the city that it violated hosts’ Fourth Amendment right against illegal searches. Judge Paul Engelmayer of the US District Court in Manhattan agreed — and his ruling is a decisive victory for Airbnb.
“The decision today is a huge win for Airbnb and its users, including the thousands of New Yorkers at risk of illegal surveillance who use Airbnb to help make ends meet,” an Airbnb spokesperson said in an emailed statement to Vox. “The court today recognized the fundamental importance of New Yorkers’ constitutional rights to privacy and the security of their own homes.”
The question of whether Airbnb is a platform people use “to help make ends meet” — and whether most Airbnb hosts are truly renting out “their own homes” — is at the heart of New York’s ongoing battle against the platform. City officials claim the city’s Airbnb listings are dominated by landlords who convert apartments into illegal hotels and, in the process, contribute to the city’s ongoing housing shortage. Airbnb, meanwhile, contends that the city is partnering with the hotel industry to unfairly target regular New Yorkers.
Is Airbnb is a platform for “commercial operators” or home sharers?
The Airbnb origin story is a rosy one. Founders Joe Gebbia and Brian Chesky were having trouble making rent in San Francisco, so in 2007, they started renting out floor space in their living room and cooking breakfast for guests. They made a website and charged people $80 per night to sleep on air mattresses on their living room floor; thus, Airbnb was born. This narrative — one of people struggling to make ends meet and turning to “home sharing” as a way to make extra cash — remains central to the company’s marketing. After all, home sharing sounds a lot nicer than temporary subleases for tourists.
Airbnb used this argument in its suit against the city, arguing that the law “makes no distinction between commercial operators and the ordinary New Yorkers who use Airbnb’s homesharing platform to supplement their income so they can afford to remain in their home and support their families.”
Engelmayer’s decision didn’t go so far as to suggest that New York was primarily targeting private citizens instead of illegal hotels. Instead, the judge claimed the city “has not cited any decision suggesting the governmental appropriation of private business records on such a scale, unsupported by individualized suspicion or any tailored justification, qualifies are as reasonable search and seizure.” In other words, the city doesn’t require other businesses to provide such detailed records, so why should Airbnb?
Regardless of Engelmayer’s intent, Airbnb appears to be using the decision to further the narrative that it’s primarily a gig economy platform and that most hosts are using it to make extra money, not as a primary business.
But a growing body of research suggests otherwise. David Wachsmuth, a professor at McGill University who conducted a January 2018 study on Airbnb’s effect on New York’s real estate market, found that the hosts who make the most money on Airbnb aren’t the ones who rent out spare rooms or charge people to sleep on air mattresses on their living room floor. According to Wachsmuth’s research, the hosts who make the most money on the platform are “commercial operators,” meaning they have multiple listings for entire apartments or lease out many private rooms. Commercial operators make up 12 percent of New York City’s total host population, Wachsmuth found — 6,200 of New York’s total 50,500 hosts — but earned 28 percent of revenue in New York City, or $184 million out of $657 million.
“By and large, there’s a perception that Airbnb is a platform for home sharers, and so much of the research I’ve done has been about saying, ‘Actually, not really,’” Wachsmuth told me. “New York is a special case because of how strong the existing prohibition on short-term rentals is,” he added, referring to the Multiple Dwelling Law, which prohibits rentals of less than 30 days in certain types of apartment buildings. “If you’re a casual home sharer, you’re probably operating an illegal hotel. If you’re renting out your entire apartment while you stay away for the weekend, that’s probably not allowed.”
Airbnb has spoken out against Wachsmuth’s study, arguing that 92 percent of New York City hosts shared their primary residence between 2017 and 2018, and 79 percent of hosts use their Airbnb earnings to afford their apartments. CityLab also notes that the company takes issue with Wachsmuth’s methodology — a data-scraping method that can overestimate how many nights per year people stayed in Airbnb listings — and the fact that it was partly funded by the New York Hotel Trades Council.
Wachsmuth contends that even if the majority of Airbnb hosts aren’t commercial operators, those who are make things worse for everyone. His research also found that these hosts can afford to charge less per night than smaller operators since they control so many properties, which drags prices down for everyone.
If his findings are accurate, commercial operators are a burden not just for the city, but for other hosts who really are using Airbnb to help make ends meet. According to Wachsmuth’s study, a growing number of listings are cropping up in gentrifying neighborhoods like Harlem and Bedford-Stuyvesant, where landlords can make more money by turning otherwise affordable apartments into illegal hotels than they would by renting them out to tenants. In many cases, Wachsmuth said, Airbnb hosts operate like organized, sophisticated businesses.
“An outsize amount of the money that is being earned on Airbnb in New York is being earned by dedicated operators, people who are running these things as a primary business or as a significant side business,” Wachsmuth said. “They’re not just renting out their spare bedroom.”
New York’s Airbnb law would have given the city invaluable data on Airbnb hosts
Last May, several members of the New York City Council proposed a bill that would have required hosts on short-term rental platforms like Airbnb to provide host data to the city’s Office of Special Enforcement, which investigates and shuts down illegal short-term rentals. The law, which was slated to go into effect in February, would have required Airbnb and similar platforms to give the OSE monthly reports on host activity, including listing addresses, information on when the listings were occupied and on fees received by the platform, the full name, address, phone number, and email for each host, and their bank account information. Platforms faced a fine of up to $1,500 per listing not disclosed in the reports.
Under the current system, the OSE investigates potentially illegal Airbnbs — those that violate New York state’s Multiple Dwelling Law — based on complaints it receives. The law would have given the OSE the ability to comb through data and more easily identify potentially illegal listings.
Airbnb, however, argued that the OSE “has been co-opted by the hotel lobby” and was “wielding its industry to attack Airbnb and the everyday New Yorkers who use Airbnb’s homesharing platform.” The law wasn’t just a violation of hosts’ right to privacy — it was a coordinated attack with the hotel lobby, Airbnb claimed in its complaint against the city. It’s true that the hotel industry has plenty of reasons to oppose Airbnb’s presence in New York City. Short-term rentals are often much cheaper than hotel rooms, since Airbnb hosts aren’t required to hire staff or adhere to certain safety codes. In 2017, Bloomberg reported that the OSE’s Airbnb stings often relied on information provided by private investigators hired by the hotel lobby.
The most charitable interpretation of the bill is that obtaining data from platforms like Airbnb would allow the OSE to reduce its reliance on private investigators, and perhaps even reduce its ties to the hotel lobby and its private investigators. The law would have let the city find out which Airbnb hosts are renting out spare bedrooms and which ones are truly bad actors operating illegal hotels.
The city has said as much. “The Council has said repeatedly throughout this process that the data would be used to enforce existing laws regarding short-term rentals to crack down on the plague of illegal hotels which cause public safety concerns and deepen our affordable housing crisis,” Jacob Tugendrajch, a spokesperson for City Council speaker Corey Johnson, told Vox in a statement.
Airbnb also maintains that the Multiple Dwelling Law is too complicated for people to understand, and that in many cases, New Yorkers who thought they were operating legally end up finding themselves in the OSE’s crosshairs. “These aren’t legal scholars who are sharing their homes,” an Airbnb spokesperson told me, noting that Airbnb supports a bill in the state assembly that would amend the Multiple Dwelling Law to allow short-term listings. “They’re regular New Yorkers.”
It’s not just New York
New York may be a hotbed of illegal Airbnb activity, but it’s not the only city that’s having trouble with the platform. Jake Wegmann, a planning professor at the University of Texas Austin who analyzed Airbnb’s effects on San Francisco, Boston, Chicago, Austin, and Washington, DC, found that a substantial number of listings in these cities are run by commercial operators. In Austin, one-third of all listings are commercially run; in Boston, it’s 44 percent.
“All the studies I’m familiar with, including my own, have confirmed that this ‘superhost activity’ [of hosts with three or more listings] is a substantial piece of the revenue picture for Airbnb,” Wegmann told me. “There’s a reason why they’re fighting efforts to curtail it. There’s a disconnect between the rhetoric and the imagery they’re using and this reality.”
The reality is that in New York and elsewhere, the most lucrative Airbnb listings are operated by hosts who treat it as a business. These listings generate a lot of money for hosts, and they’re also a significant source of revenue for Airbnb, which takes a cut of each listing. In cities with tight housing markets and steadily increasing rents, like New York and San Francisco, Airbnb’s presence often means that a chunk of otherwise available housing is taken off the market indefinitely, which further squeezes the housing market. As a result, cities have attempted to regulate Airbnb, often to mixed results.
In Paris, hosts can only rent properties for 120 days each year, and hosts are required to register their listings with the city. Hosts in Amsterdam have a limit of 30 days each year. Condé Nast Traveler compiled a list of cities that have cracked down on Airbnb, including Los Angeles, where hosts are limited to 120 days per year and can only have one listing, and Barcelona, which requires all hosts to register with the city and hasn’t allowed new hosts to list places since 2014. In New Orleans, Airbnb listings are similarly regulated through a permit system. Hosts in many of these cities are required to post their registration ID on their listings to prove their legitimacy.
The registration system hasn’t always proven to work. Last March, a report by the Jane Place Neighborhood Sustainability Initiative, a New Orleans-based housing advocacy group, found that a significant number of Airbnb rentals in the city are controlled by large operators who run multiple properties and are exacerbating the city’s housing shortage. In San Francisco, 4.8 percent of hosts controlled 18.2 percent of all listings, according to a 2015 report by the San Francisco Chronicle.
If Wachsmuth and Wegmann are right, Airbnb’s rhetoric obscures the truth about who most uses, and benefits from, its platform. Moreover, cities that attempt to regulate Airbnb in cooperation with the company, like New Orleans and London, may not have the best mechanisms in place to prevent commercial operators from taking valuable apartments off the market. The court’s decision means that New York will have to find another path forward — one that isn’t found unconstitutional — if it wants to continue regulating Airbnb and other platforms like it. Whether Airbnb will cooperate remains to be seen.