New York State Attorney General Eric T. Schneiderman Carlo Allegri/Reuters

Does the home-sharing service really disrupt neighborhoods? Or just commercial hotel profits?

New York State Attorney General Eric T. Schneiderman dropped a bombshell report today on Airbnb. Citing some damning statistics, the report questions the premise of short-term apartment rentals in New York. It's everything critics of Airbnb could ask for.

The biggest find in the AG's nearly review of nearly 500,000 transactions over a 4.5-year period: A tiny minority of commercial operators ruled Airbnb in New York, accounting for a large share of private short-term bookings and revenue, mostly in Manhattan.

Schneiderman doesn't disguise the state's suspicion of Airbnb as a platform. The report poses a series of loaded rhetorical questions by way of introducing short-term apartment rentals in New York ("Are the new platforms fueling a black market for unsafe hotels?"). The report's vision departs from the entrepreneurial image that Airbnb users such as Mishelle Farer worked to project last October, when she and others mounted a "Legalize Sharing" petition to challenge the AG's subpoena of Airbnb records.  

Airbnb host and supporter Mishelle Farer (Seth Wenig/AP)

Now, those records reveal that Farer—a Brooklyn resident who rents a room in her home to bolster her income—is in many ways the exception in New York, not the rule. Between January 2010 and June 2014, the AG report states, 94 percent of Airbnb hosts offered one to two units, much like Farer. Yet just 6 percent of Airbnb hosts "dominated the platform during [the period], offering up to hundreds of unique units, accepting 36 percent of private short-term bookings, and receiving $168 million, 37 percent of all host revenue" (original emphasis).

According to the AG report, Airbnb serves primarily as a dark hotel operation, with a disproportionate share of users earning tens of millions of dollars through thousands of short-term rentals. The top 12 hosts operated some 800 units, booking nearly 15,000 reservations and earning more than $24 million in revenue. The AG report dismisses some Airbnb operations as "illegal hostels." (UPDATE Oct. 17: One source at Airbnb tells me that 10 of these 12 commercial hosts are no longer on the site; the other two are responsible for two and three listings, respectively.)

Noting that both Airbnb reservations and revenue have exploded since 2010, the AG report drops the hammer: 72 percent of Airbnb rentals violate either New York State or New York City regulations. No kidding, says a spokesperson for Airbnb.  

"[E]very single home, apartment, co-op, and living space in New York is subject to a myriad of rules, so it’s impossible to make this kind of blanket statement," said a statement from Airbnb. "That kind of uncertainty and lack of clarity is exactly why we’re advocating for clear, fair rules for home sharing."

Airbnb cofounder and CEO Brian Chesky (Stephen Lam/Reuters)

Airbnb doesn't counter the AG report's accusations, although it does characterize the findings—based on Airbnb's own records—as "incomplete and outdated information." Airbnb has removed some 2,000 listings from their service, according to the statement.

The AG report acknowledges that some of Airbnb's bad-faith operators may no longer be using the service. (In fact, as The New York Times notes, some large-scale operators are now suing Airbnb.) "In April 2014, in direct response to NYAG’s investigation, Airbnb publicly claimed it had barred certain large Commercial Users from accepting additional reservations," the report reads. "The time period covered by the Data does not enable us to gauge whether Airbnb’s purported reform lessened the domination of Commercial Users in the private short-term rental market."

The AG report makes much of the geography of Airbnb in New York. For example, 40 percent of Airbnb revenue in Brooklyn came from reservations in "Brownstone Brooklyn," more commonly known as Williamsburg and Greenpoint. Overall, gentrifying neighborhoods in Manhattan accounted for one-third of Airbnb revenue in New York City. Together, Manhattan and Brooklyn rentals made up 97 percent of revenue for Airbnb in New York City.

(New York State Attorney General)
(New York State Attorney General)

While that's interesting in the way that any map of urban activity is, the takeaway here is rather unclear. It only matters that Airbnb is competing with hotels in New York City's tourist zones if hotels have some inalienable right to the revenue that Airbnb hosts might claim. Responses to the numbers in the report suggest that Airbnb users are robbing somebody of something. "Lower Manhattanites are taking a beating," writes Gothamist's Christopher Robbins. How is that? "Is the influx of out-of-town visitors upsetting the quiet of longstanding residential neighborhoods?" the AG report asks. The LES is a quiet neighborhood?

It's worth asking whether even the strongest accusations in the report—that Airbnb draws most of its revenue through dark hotel operations—represents a true crime. If top operators are still running more-or-less commercial Airbnb enterprises (Airbnb did not respond to a question about whether this is still the case), then that would certainly register as an affront to the hotel lobby, and probably matters to New York home-owners and residents who object to short-term renters in their buildings.

That's not the same as identifying a class of victims, though. There isn't any evidence that "illegal hostels" have harmed anyone. Why shouldn't large-scale Airbnb operators make the millions in revenue that hotels otherwise might?

"The real tradeoff here isn't simply between Airbnb and the hotel, between that 1 percent growth in people listing their spare bedrooms and the 0.05 percent loss in hotel revenue," wrote former CityLab-er Emily Badger back in February. "It's between everyone invested in scenario one vs. everyone invested in scenario two." While it's unclear that dark hotel still dominates Airbnb use today, the AG report appears to be a victory for everyone invested in scenario two.

About the Author

Kriston Capps
Kriston Capps

Kriston Capps is a staff writer at CityLab.

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