Jersey City's vote a reflection of rising challenges for Airbnb

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Jersey City skyline
Jersey City's new ordinance will require short-term vacation rental owners to register for a permit, and it puts a 60-day annual cap on how often a short-term vacation rental can be offered without an owner on-site. Photo Credit: f11photo/Shutterstock

With a Nov. 5 plebiscite, Jersey City, N.J., became the latest municipality to join Airbnb's loss column, another setback in the company's war with cities over short-term vacation rental regulations.

And while Airbnb downplayed the significance of the vote, industry insiders said the defeat reflected growing global opposition to the homesharing platform's rapid expansion.

"If I were Airbnb, I’d certainly be concerned by the results in Jersey City," said Daniel Guttentag, assistant professor in hospitality and tourism management at the College of Charleston's School of Business in South Carolina and director of the department's Office of Tourism Analysis. "In part, because they spent a lot of money, and also because the vote wasn't even close."

In the ballot referendum, roughly 70% of voters reportedly came down in favor of tightening short-term vacation rental rules, even after Airbnb allegedly sank more than $4 million into lobbying efforts. Jersey City, located just across the Hudson from lower Manhattan, has seen a boom in vacation-rental listings in recent years. 

That boom was accelerated in part by a wave of vacation-rental restrictions enacted by New York in 2016, making the proximity of Jersey City a favorite alternative among visitors to the Big Apple.

Jersey City's new ordinance, set to go into effect in January, will require short-term vacation rental owners to register for a permit, and it puts a 60-day annual cap on how often a short-term vacation rental can be offered without an owner on-site. 

"The big takeaway from this is not to what degree are we starting to see a pattern of cities trying to crack down on Airbnb but to what degree we now see cities being successful in their efforts," Guttentag said. "There is probably going to be a snowball effect, because each city sets a template for other cities, telling them that if this is something they want to tackle, they can do it."

That snowball might already be reaching critical mass. In addition to New York and Jersey City, major destinations like London, Paris, Barcelona, Miami and San Francisco as well as resort markets like South Lake Tahoe have passed strict vacation-rental regulations. 

David Jacoby, president and co-founder of the property management software and digital guidebook platform Hostfully and board member of the Home Sharers Democratic Club of San Francisco, said, "There are a lot of similarities between what’s happened in Jersey City and the legislation that's happened in San Francisco, where Airbnb also spent a fair amount of money, around $8 million."

In San Francisco, a short-term vacation rental can't be rented out for more than 90 nights per calendar year without an owner present. Additionally, owners must register their vacation rental with the city.

According to Jacoby, the laws, which went into effect in early 2018, resulted in San Francisco's Airbnb listings getting "cut in half overnight." The move was seen as a win by many of the city's progressives, who blamed a surge in vacation rentals for exacerbating San Francisco's high real estate costs.

"People were saying that this was going to have a big impact on rent," Jacoby said. "But two years later, the rents in San Francisco have not gone down."

Despite that precedent, Guttentag is not surprised that affordability issues would also galvanize voters in a high-cost market like Jersey City.

"I think it’s unrealistic to pin all the blame on Airbnb, but I think it's realistic to acknowledge it's got to be contributing, at least to a degree, to this [real estate] issue," Guttentag said. "It's easy to see why this would be on people's radar. Also, if you are a person living next to an Airbnb and you think it’s problematic, it's probably going to make you really upset. A lot of people won’t care that much, but if it is something you do care about, it's probably something you care about a lot and will go and vote on."

Meanwhile, just how quickly a concrete Airbnb clampdown materializes in Jersey City is highly dependent on the local government's ability to enforce the new ordinance. According to Simon Lehmann, CEO and co-founder of private accommodations and vacation-rental industry consulting firm AJL Consulting, markets like London, where vacation rentals can only be rented out a maximum of 90 days per year, are still awash with illegal listings.

"In London, the big regulatory issue is enforcement," Lehmann said. "You might have some clear regulations in place, but if no one’s checking, what’s the point?"

In the wake of the Jersey City loss, Airbnb said in a statement, "Jersey City is not significant to our business -- and even in New Jersey, it pales in comparison to the Jersey Shore. We operate in 191 countries and 100,000 cities, with more than 7 million listings worldwide. There are about 3,000 listings in Jersey City. But we have an obligation to stand up for our hosts and their rights, and that's what we did."

A highly localized and ever-evolving regulatory landscape isn’t the only challenge Airbnb is facing, however. The platform's security and support policies have come under fire in recent weeks, after five people were killed at an unauthorized party at an Airbnb rental on Halloween.

Also, in late October, Vice published a scathing article about Airbnb on its website, exposing the company's inadequate response to fraudulent listings. 

In response, Airbnb unveiled a battery of policy changes. They include a pledge to verify all 7 million Airbnb listings by Dec. 15, 2020; a new "guest guarantee," with the company promising to rebook or refund guests if a listing does not meet accuracy standards; a 24/7 Neighbor Hotline for customer support; and, in order to eliminate unauthorized parties, renewed efforts to screen "high-risk" reservations.

"A lot of these measures are overdue," Guttentag said. "When Airbnb was smaller and more niche, people were more ready to excuse things. But now that it's a company worth tens of billions of dollars, which is going to be public and worth more than any hotel company, with more rooms than any hotel company, people have a different set of expectations."

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