August 30, 2016
If you are to tell a lie, make it a big one and repeat it often, is a mantra of many an absolutist regime. Alas, that applies all too often to many businesses. Few epitomize that dictum better than the illegal hotel rental platform Airbnb.
That certainly was the conclusion of a recent, well-researched editorial in the San Francisco Public Press, an independent non-profit focused on local news. The authors concluded: “Fear, disinformation, deception. That’s what San Francisco voters were bombarded with last fall through record-setting, multimillion-dollar TV advertising crafted to crush progressives, defeat restrictions on short-term rentals and reshape the city’s housing map for decades to come.”
The giant tech unicorn is looking for an encore in New York as it faces a sharp curtailing of business in the state, especially New York City, if Governor Andrew Cuomo signs a bill that imposes significant penalties on listings of illegal hotels. Airbnb has put out an avalanche of advertising in Albany and New York City along with pressure from big names like Peter Thiel and Ashton Kutcher, both of whom are early investors in the company.
The narrative, risible to all but the uninitiated, suggests that the ill-intentioned hotel industry is behind the legislation that would boot hundreds of middle class families from their homes on account of their inability to meet mortgage payments without income from renting out their “spare” rooms. In fact, entire apartments, floors, and buildings without any of the mandated attributes of hotels, such as access for the disabled or fire-protection safeguards, are being converted to illegal hotels. There are good, important reasons that hotels are regulated as they are and pay the taxes that they pay.
That so many illegal Airbnb hotels are in the city center area shows as a lie that the company’s business model is reviving the outer boroughs.
A glaring inequity is that real estate and income tax subsidies meant to spur homeownership are being used to gain an unfair competitive advantage over hotels. Unsurprisingly, in New York City a good deal of the illegal transient occupancy growth has occurred in rent-regulated buildings with many beneficiaries of rent regulations quickly snapping up the online arbitrage opportunity by extracting market value for their “ownership” of prime real estate.
An oft-repeated bromide of Airbnb points to their model allowing for better utilization of resources by using homes as hotels. Perhaps. But why not then use dining rooms at homes as restaurants and bars, and conference rooms in offices as banqueting halls? Why not allow private pilots to take on paying passengers in empty seats? The answer is obvious except to those who deliberately refuse to acknowledge it.
Airbnb’s New York City “inventory” now exceeds 20 percent of the total number of hotel rooms. That only underscores the fact that a majority of their rentals are illegal. That the transient lodging industry employs over 50,000 people in New York City alone and has been a pillar of stability during the Great Recession ought to put the “debate” about Airbnb’s spurious claims to societal benefits to rest. But a model where success is predicated on illegality will stop at nothing to ensure its continuity.
With the signing of new regulations by Governor Cuomo, order will be restored to what is now a dangerous, abusive industry that is out of control.