Airbnb embattled on two coasts over regulation of home-sharing

By Danny King

NYC apartment buildingControversy over Airbnb, the online home- and room-listing service, grew last week as the company found itself grappling with New York state over what the state attorney general calls "truly illegal hotels" and with San Francisco and Portland, Ore., over proposals to regulate the service's hosts.

Closely held Airbnb and New York State Attorney General Eric Schneiderman engaged in a war of words last week after the state asked the company to supply a list of its New York City hosts. Ultimately, prosecutors subpoenaed company executives when they declined to produce the list.

Airbnb submitted a motion to quash the subpoena, and attempts by a judge to broker an agreement between the state and the company had failed to produce an accord as of April 23.

"Today, the Attorney General again made it clear that he remains determined to comb through the personal information of thousands of regular New Yorkers [who are] just trying to make ends meet," Airbnb head of global policy David Hantman wrote on the company's public policy blog on April 22. "We were proud to stand up for our hosts who share their homes and against this over-broad, government-sponsored fishing expedition."

For his part, Schneiderman wrote the following day in an op-ed posted on the attorney general's website, "When my office reached out to Airbnb, the company rejected the idea of self-policing out of hand and refused to provide data that would give us a handle on the scope of the problem."

Meanwhile, officials in San Francisco and Portland are addressing the increased popularity of short-term home and room rentals sold through listing services such as Airbnb by proposing increased regulations, fees and registration requirements on the part of participating homeowners and residents.

This month, San Francisco Board of Supervisors President David Chiu proposed legislation that would subject prospective hosts to proof of residency as well as to the city's rent-control and taxation laws. Residents would be required to prove they live in San Francisco nine months out of the year, while violators would be placed on a "blacklist," Chiu said in an April 15 statement.

And last week, Portland's Department of Planning and Sustainability held a public hearing about a proposed law that would mandate that short-term accommodations providers prove that they are residents of the city, provide information to their neighbors about rental agreements and pay a fee for an annual permit.

The contentiousness and regulatory proposals reflect the growing popularity of peer-to-peer lodging services such as Airbnb, ride-sharing services like Lyft and taxi services like Uber and their impact on the travel industry.

Granted, gauging the size of the peer-to-peer rental market is almost as difficult as regulating it. Still, while Forbes last year pegged the annual revenue generated by the so-called shared economy at about $3.5 billion, consultant and author Rachel Botsman, who writes extensively about collaborative consumption, estimates that peer-to-peer rentals of all products, including lodging, generate as much as $26 billion a year in revenue.

By comparison, U.S. hotels generate about $120 billion in revenue, according to travel-research firm PhoCusWright, while car rentals generate about $25 billion, according to Auto Rental News.

Regardless, the shared-economy sector's growth is reflected in recent investments in the specialists. Airbnb this month finalized an agreement in which a group led by private-equity firm TPG will invest $450 million in the 6-year-old company, valuing it at about $10 billion in the process.

An Airbnb representative did not respond to requests for comment last week.

Meanwhile, Lyft recently raised $250 million in equity funding, while Uber reportedly has raised more than $300 million since its inception.

"We are now living in an online world, one that offers great promise but is also becoming one of the primary crime scenes of the 21st century," wrote Schneiderman, who referenced Uber, but not Lyft, in his post. "Major service providers cannot be allowed to treat it as a digital Wild West."

It is significant that these new regulations are being proposed in New York, San Francisco and Portland. In the case of New York City, it is the sheer size of the market that is significant.

In the San Francisco and Portland cases, Airbnb last month attempted to placate officials in those cities by proposing a plan for its hosts to pay occupancy taxes. The fact that the two cities are insisting on more regulation anyway suggests that the fight might not be over soon.

As of late January, in New York City alone, Airbnb had almost 20,000 listings posted by almost 16,000 hosts. The most prolific host had 80 listings, while four other hosts had at least 28 listings, according to New York State's affidavit.

Some New York City officials are accusing hosts of violating a 2010 law forbidding residents from renting out their dwellings for fewer than 30 days. Airbnb said early last week that it had removed more than 2,000 listings from the site by hosts it said were abusing the service.

Hantman, in an April 21 blog post, estimated that New York City hosts will generate $768 million in economic activity for the city this year.

"The bottom line is clear," Hantman wrote. "Airbnb makes New York more affordable for New Yorkers, and our community generates real benefits for everyone in New York."

Meanwhile, Portland and San Francisco are the first two cities where Airbnb has chosen to collect and remit occupancy taxes on behalf of its hosts. Airbnb announced its "Shared Cities" initiative in March with Portland, and subsequently said it would start collecting and remitting taxes in San Francisco by this summer.

Follow Danny King on Twitter @dktravelweekly. 

Photo of apartment building in Manhattan courtesy of Shutterstock.  

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