New York State legislators on Friday passed a bill
banning the advertisement of short-term rental units.
It is the latest salvo in the battle between Airbnb (the largest online marketplace for apartment rentals) and
New York officials and hotel representatives.
The bill, which was drawn up in January, prohibits
“advertising that promotes the use of
dwelling units in a class A multiple dwelling for other than permanent
residence purposes.” The advertising relates to “any form of communication,”
including mail, magazines, newspapers, websites and text messages as well as
television and radio advertising.
First-time offenders will be fined as much as $1,000,
while second-time violators will be fined as much as $5,000. A $7,500 fine
applies for each violation thereafter.
New York City hotel representatives, who have long argued
that many Airbnb units violate the city’s rental laws, celebrated the law
passage.
“Airbnb facilitates the creation of a black market for
illegal and unsafe commercial rental properties that don’t follow any of the
same regulations as legitimate hotels and negatively impact the residential
real estate market by driving up rent and diminishing housing supply, ” said
Vijay Dandapani, chairman of the hotel association of New York City. “This
smart and innovative legislation will allow law enforcement agencies to better
target, track, and penalize lawbreakers, while also protecting one of New
York’s most vital economic contributors — the hotel and hospitality industry.”
Airbnb, in a June 17 blog post, referred to the law as
“wrongheaded legislation that would punish middle-class families who depend on
home sharing to pay the bills and stay in their homes.”
The growth of Airbnb and its impact on the New York
lodging industry has long been a contentious topic. In January, the American
Hotel & Lodging Association (AH&LA) released a study alleging rampant
illegal activity among Airbnb’s most prolific hotels, especially in cities such
as New York. Specifically, Airbnb said “full-time hosts,” i.e. those who book
units at least 360 days out of the year, accounted for about a quarter of
Airbnb’s New York hosts.
The following month, CBRE Hotels (formerly PKF
Hospitality) released a report saying that Airbnb units accounted for almost 23,000,
or about 16%, of New York’s 140,000 total lodging units (hotel and Airbnb
inventory combined) as of September, the most recent month tracked in the
study.
That was followed that same month by a report from STR
saying that Airbnb has “no material impact” on Manhattan’s hotel demand because
Airbnb units compete against a budget and midscale lodging sector that accounts
for just 13% of Manhattan’s hotel rooms. At the time, Dandapani disputed that
report’s findings, saying that the data STR used “was cooked up.”