Airbnb is under pressure in cities around the world. New York, one of its most important markets, passed a bill on June 17 that would ban Airbnb hosts from advertising short-term rentals. This may cause listings on Airbnb in New York to shrink by more than half, according to the estimates.
Those who violate the law will pay a fine of $1,000 for the first violation, $5,000 for the second, and $7,500 for the third and subsequent violations.
It is already illegal to offer short-term rentals however with this new bill it will be illegal to advertise them as well. New York is the only city that wants to ban the advertisements, according to Airbnb.
“It’s disappointing—but not surprising—to see politicians in Albany cut a last-minute deal with the hotel industry that will put 30,000 New Yorkers at greater risk of bankruptcy, eviction or foreclosure,” stated Josh Meltzer, Head of New York Public Policy at Airbnb in an email.
“Let’s be clear: this is a bad proposal that will make it harder for thousands of New Yorkers to pay the bills.”
It is still possible to rent single rooms in New York. The housing laws only restrict renting an entire apartment or a house for less than 30 days unless the tenant remains on site.
“Online home sharing platforms still contain advertisements for the use of units that would violate New York law,” the bill stated.
The New York State Senate approved the bill that was previously passed in the house. Now it will go to New York Governor Andrew Cuomo who will either veto or sign into law.
“Dozens of governments around the world have demonstrated that there is a sensible way to regulate home sharing and we hope New York will follow their lead and protect the middle class,” said Meltzer.
Tech investors have also reacted to the bill. Two of Airbnb’s prominent investors, actor Ashton Kutcher and Paul Graham criticized the New York State Senate on twitter.
“Tech is the future of the NY economy, but the NY Senate might throw it all away with the terrible anti-tech bill,” wrote Kutcher.
Founded in 2008, Airbnb is a social website that connects people looking to rent their homes to people who are looking for local accommodations. It operates in more than 34,000 cities and 191 countries.
The San Francisco-based startup reached a valuation of $25.5 billion in its latest round of funding in November 2015. With this valuation, Airbnb surpasses the market value of major hotel chains like Hilton ($23.3 billion), Marriott ($17.6 billion), and Starwood ($12.9 billion).
The impact of Airbnb on the hotel industry and the broader economy has been hotly debated. Based on a report by the Hotel Association of New York City (HANYC), in the 12-month period starting in September 2014, Airbnb had a negative impact to the tune of $2.1 billion on the hotel industry and the broader economy of New York City.
Airbnb works hard to ease opposition and potential regulatory scrutiny. Hence, it frequently publishes reports on the positive economic impact of Airbnb in various cities.
The company recently commissioned a consulting firm to conduct a poll in New York. According to the poll, two-thirds of voters agree New Yorkers should not be penalized for renting out their homes on a shortterm basis. And 54 percent of voters in New York want legislation to change state law and allow residents to rent their homes for less than 30 days.
In 2010, because of an explosion of illegal hotel operators in single room occupancy buildings in New York City, the New York State clarified and strengthened the housing laws.
“Now, with the proliferation of online home sharing platforms that allow users to advertise their apartments for use that directly violates New York State’s ‘illegal hotels’ law, the purpose of the ’illegal hotels’ law is at risk of being undone,” stated the new bill.
