For New Yorkers, it’s a way to help pay the bills, and for tourists, it’s a way to save some money. But to the city and its hotel industry, Airbnb is a staggering threat.
Airbnb, the wildly popular website that allows people to rent out their homes for short periods of time, is now in trouble in one of its most successful cities. New York City officials say the company is taking away millions in hotel taxes that could have gone to the city, but the company has countered with the opposite, claiming it brings unmatched benefit to the city, the tourism industry and city residents.
Airbnb, founded in August 2008 in San Francisco, is now in 192 countries and 34,000 cities around the world. It has served 9 million guests and is rapidly becoming the go-to choice for tourists looking for a more authentic experience or for something cheaper than a hotel room. In New York City, some 15,000 hosts offer rooms for as low as $25 a night—a tantalizing deal for budget-conscious tourists when compared to the average hotel rate of $275.
Despite the popularity among both hosts and guests, many of these New Yorkers are in fact breaking the law. A law passed in 2010, meant to stop slumlords from taking advantage of people, states that people cannot rent out apartments or rooms in them for less than 30 days unless they’re living in the home at the same time.
“The city must continue to crack down on the growth of illegal hotels and online apartment booking sites,” states NYC & Company’s report “New York City Tourism: A Model for Success.” “This illegal practice takes away much-needed hotel tax revenue from city coffers with no consumer protection against fire and health code violations.”
While Airbnb hosts do pay income tax on the earnings they make, the city wants more. Last month, the New York state attorney general Eric T. Schneiderman served Airbnb with a subpoena to turn over data on 15,000 New Yorkers who rent their apartments on the site, blaming them for the loss of millions of hotel tax dollars.
Airbnb wasn’t going down without a fight. “We always want to work with governments to make the Airbnb community stronger, but at this point, this demand is unreasonably broad and we will fight it with everything we’ve got,” said David Hantman, head of public policy for Airbnb.
For hosts like Richard Rabinowitz, who lives in a co-op apartment near Union Square and rented out his daughter’s bedroom while she was away at college, staying with a host offers a better tourist experience.
“You get the benefits of someone who lives there and not just someone looking to get money out of your pocket,” said Rabinowitz. “I think that if the hotels have a strong lobby against Airbnb, it’s not based on the needs of the travelers. It’s based on their commitment to profit for themselves.”
Rabinowitz, who rented the bedroom out for a year until his co-op board told him to stop, said that he had guests from places as varied as Russia, China and India, and his $150 per night room was consistently booked up. He said he offered a one-of-a-kind experience – he gave them suggestions and subway maps, he often cooked meals with his guests, and they got a glimpse of the city’s thriving art scene through the artwork of his wife, who is a notable photographer.
The payoff wasn’t bad, either: Rabinowitz said he made about $20,000 in less than one year, which he used to support his family. “It was wonderful,” he said. “We got to meet people from around the world. And we also got the money.”
Airbnb released a report on October 22 asserting that Airbnb actually aids the tourism industry. According to the report, done by HR&A Advisors, the company generated $632 million in economic activity to New York in one year. Airbnb tourists stay 2.5 days longer and $190 more per trip than the average tourist.
“With cheaper room rates, they have more money to spend on other items besides lodging,” said Rabinowitz. “And with cheaper lodging, people come here who ordinarily wouldn’t.”
The study also showed that Airbnb tourists often stay in apartments outside of Manhattan, benefiting neighborhoods that traditionally wouldn’t be touched by tourism. According to the study, 82 percent of listings are outside of midtown Manhattan, and $104 million was generated outside of Manhattan in one year. Indeed, Flatbush currently has over 300 listings, Bedford-Stuyvesant has over 1,000 listings, and Harlem has almost 2,000. The average guest spends $740 in the neighborhood they stay in.
But Airbnb’s biggest argument is that they’re helping out middle-class New York by allowing them to pay their bills with the extra cash flow. Of the $632 million spent by the tourists, $195 million went directly to the hosts.
“Airbnb is helping regular New Yorkers in all five boroughs pay their bills by sharing the home they live in and the city they love with travelers from around the world,” said Airbnb CEO Brian Chesky.
But despite its popularity among New Yorkers, the next mayor isn’t too keen on Airbnb.
“While I appreciate the potential of the sharing economy, and I do think there’s some historical precedent,” wrote De Blasio in a Reddit discussion on October 8, “the challenges posed by Airbnb today are real, in terms of safety, public tax revenue, etc.”