State AG heavy-handed in dealing with Airbnb
When I traveled to Seattle for a wedding last fall, I didn’t stay with friends or in a hotel.
Instead, I lodged with complete strangers — a quiet, middle-aged couple who lived in a residential neighborhood near the University of Washington. They provided me with a key and a small bedroom in the basement, and I was free to come and go as I liked. In return, I paid them $40 a night.
I found my hosts through the website Airbnb, which allows people to rent their property to travelers and others in need of a place to stay. I had originally planned to book a hotel room, but a look at prices sent me searching for cheaper alternatives. I was already shelling out plenty of money to go to Seattle — why spend over $100 a night on lodging?
From my perspective, Airbnb provided a great service.
It made my trip less expensive and more convenient, as the room I rented was less than a mile from my friends’ house, a bike path and a coffee shop. It wasn’t perfect — the bathroom wasn’t as clean as I would have liked, and it lacked a television. But lodging with strangers involves a certain amount of risk, and the price, as they say, was right.
Airbnb is part of what’s been called the sharing economy, though this is a bit of a misnomer, because nobody’s really sharing anything — hosts make money off users who pay to stay in their homes and apartments. Uber, another sharing economy company, makes an app that connects drivers with people looking to hire a driver, facilitating what essentially amounts to an unregulated ride-sharing service.
Such companies are a threat to well-established and powerful industries, which might explain New York Attorney General Eric Schneiderman’s ongoing battle with Airbnb.
In October, the attorney general filed a subpoena seeking more information about the Airbnb hosts who advertise their properties on the website, and last week Airbnb asked a New York State Supreme Court judge in Albany to block it.
According to Schneiderman, more than half of Airbnb’s New York City revenue comes from people who are operating illegal hotels, rather than renting out a room in their homes. He has also said that because it’s illegal to rent out a room for less than 30 days in New York City, some hosts are breaking the law, and that he wants to find out whether hosts are paying the appropriate state and local taxes.
In response, Airbnb has said that the vast majority of Airbnb hosts are renting out their homes, and that the average host earns $7,350 annually — income that helps them remain in their homes. The company has also argued that Schneiderman has not made it clear how the state’s hotel and sales tax laws apply to hosts.
Schneiderman’s focus is New York City, but he is seeking three years of information about every Airbnb host in New York state, including their name and the method of payment for each transaction made. A quick scan of the company’s website reveals that there are Airbnb rentals throughout the Capital Region, including a luxury townhouse in the Stockade that rents for $350 a night and cheaper one-room rentals that range between $50 and $100. Does Schneiderman really need detailed records on every Airbnb property and host in the area?
More importantly, who is Schneiderman protecting?
Is it consumers? Or is it the hotel industry?
At the Crain’s New York Business breakfast in New York City earlier this week, he suggested the latter. “We’re looking in New York to enforce New York law and frankly protect our hospitality industry, which goes through a lot of trouble to have great hotels,” he said.
Unfortunately for the state’s hospitality industry, there’s an emerging market of people who would rather rent a room from a complete stranger than pay through the nose to stay in an overpriced hotel. Rather than lower their prices, or develop new models for serving travelers, hotels are looking to the state to crack down on an ambitious and innovative company that presents legitimate competition. And if Airbnb wasn’t selling something customers want, it wouldn’t have so many users.
I won’t argue that Airbnb isn’t breaking the law, because it clearly is.
A few weeks ago I went to New York City to see friends from California who were spending the week in an Airbnb rental, an obvious violation of the law that prohibits renting out a room for less than a month. But the questionable legality of the rental was not a concern for my friends, who were happy to save on travel costs.
Whenever I talk to people about Airbnb — and I know many people who have used the service — they sound satisfied. Which is why I’d rather see the state work with Airbnb to ensure that short-term rentals are legal.
I’ve emphasized the cost-savings of Airbnb, but there’s another reason I like the service: It’s fun. Through Airbnb, I’ve booked a trip to a treehouse bed-and-breakfast in Vermont. The last time I checked, Marriott and Hyatt didn’t operate treehouse hotels. Thankfully, I have other options.