Last week, Airbnb filed a lawsuit against New York City over a new law that the company is calling a “de facto ban” against short-term rentals that threatens $85 million in annual revenue for the home-sharing platform.
Set to go into effect next month, New York City Local Law 18 requires city residents who want to rent out a room or apartment to register first with the New York City Mayor’s Office of Special Enforcement (OSE) and attest that they will comply with what Airbnb calls “the maze of complex regulations in different legal codes governing short-term rentals.”
Those who skirt the law are subject to a civil penalty of up to $5,000 for each violation. Short-term rentals in New York City drove $85 million in annual net revenue for Airbnb in 2022, according to the lawsuit.
While that’s not a small sum by most measures, it’s barely more than 1% of the company’s $8.4 billion annual revenue.
Dan Wasiolek, a senior equity analyst at Morningstar Research Services who covers lodging and online travel, likens the new law in New York to a natural disaster. “Just to put it in perspective,” he explains, “let’s say a hurricane impacts one of your markets and shuts it off for a period of time until the issue gets worked out. I see this as a one-off situation that comes up in a cycle every so often.”
For now, it appears that Airbnb is on the brink of a near-shutdown in New York City, where there are currently 20,000 apartments and homes listed on its site. As of a month ago, the city had approved only nine registrations for short-term rentals, a number that makes up less than 0.04% of active listings that have been booked at least once since the beginning of the year.
“Nine is ridiculous,” says Wasiolek. “A fraction of one percent of Airbnb listings have gotten official verification, which is a sign that the law is extremely restrictive.” And to make matters worse for Airbnb hosts, “it’s my understanding the city isn’t explaining to people why their application is rejected.”
Of course, this isn’t Airbnb’s first civic battle. In the 16 years since the company launched, it has seen major markets—including Tokyo, Miami and Paris—issue ordinances to regulate short-term rentals, resulting in a dizzying global patchwork of laws and city codes of varying degrees of burdensomeness.
It’s a level of complexity that other players in the short-term rental industry would love to simplify. “Our industry is heavily regulated, but nothing much happens at the federal level,” says Nick Scarci, director of state and local government relations at the Vacation Rental Management Association (VRMA), which represents over 1,200 professional rental management companies.
I watch trends in travel. Prior to working at Forbes, I was a longtime freelancer who contributed hundreds of articles to Conde Nast Traveler, CNN Travel, Travel + Leisure, Afar….
Source: Why Airbnb Can Survive A ‘De Facto Ban’ In New York City
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