Laura Bliss is CityLab’s west coast bureau chief, covering transportation and technology. She also authors MapLab, a biweekly newsletter about maps (subscribe here). Her work has appeared in the New York Times, The Atlantic, Los Angeles magazine, and beyond.
The company’s recent NYC data release on rentals reveals relatively few “illegal” hotels, and a fair number of real ones.
Airbnb swears it’s not a ringleader for illegal hotels. In November, the $25 billion company announced it would start collecting hotel taxes, sharing anonymized data about rentals in market cities, and asking hosts in housing-crunched cities to verify that they’re renting their permanent residences—rather than tons of additional properties owned solely for the purpose of renting them. This was largely to push back against the criticism that Airbnb is eating housing markets alive.
In keeping with these new policies—which Airbnb calls its “Community Compact”—last week the company shared data (available to view at their offices, by appointment only) on how many of New York City’s 59,242 active listings are posted by hosts renting out more “entire home” properties beyond their own residence. According to the New York Times, the answer seems to be not many:
From November 2014 until November 2015, some 75 percent of revenue earned by active hosts in New York City who share their entire home came from people who have only one or two rental listings on the platform.
So “illegal hotels” may not be as prevalent as some critics suspect. But in an interesting twist, some of the hosts that do list three or more entire homes on the site—which altogether represent 3,500 listings in New York City — are, well, actual hotels.
Makes sense. It’s no secret that Airbnb’s rise to global accommodation-domination has hurt the hotel industry badly. Listing rooms on the platform puts small, lesser-known hotels in the place travelers are increasingly searching, and it potentially allows them greater visibility than traditional booking services, where large hotel chains rule. Airbnb also takes a much smaller cut—3 percent—than those competitor sites, which take about 10 to 25 percent per booking.
"The commission is so much more attractive," Stephan Westman, a hotel industry consultant who has listed hotel rooms on Airbnb, told Fast Company. "Any hotel that needs to fill rooms, I don’t understand why they wouldn’t need to use it as one of their marketing arms."
In New York City, hotel listings on Airbnb are plentiful. Fast Company reports:
The Box House Hotel in North Greenpoint, Brooklyn, which offers apartment-style suites, lists at least five of nine rooms on Airbnb; The Riff in Manhattan, which recently converted from hostel to hotel, lists one private room in a "hipster hotel/hostel;" and The Union Hotel in Gowanus, Brooklyn, advertises "plush carpeting floors, quilted custom beds, penny-tiled bathrooms, and deco chandeliers," and concludes, "Cutting edge is an understatement."
So are conventional hotel booking services getting uncomfortable with Airbnb as a competitor? "I think it’s a threat that we look at," Expedia CFO Mark Okerstrom said at a conference earlier this month. "We should take it seriously, and I think at the same time, we look at what Airbnb is doing, and we look at that as a potentially attractive opportunity for us."
Which is probably why Expedia recently acquired one of Airbnb’s direct competitors, Homeaway, for $3.9 billion in November.
What about those “illegal hotels” on Airbnb? Some housing advocates see the company’s new Community Compact as a “preemptive strike” against local laws that would stringently limit and monitor short-term rentals. Others are more optimistic. Gabriel Metcalf, CEO of the San Francisco-based urban think tank SPUR and a CityLab contributor, told the San Francisco Chronicle he sees this development as “a real basis for moving forward on an agreement that will work for San Francisco. I think there is a lot of room for reasonable people to agree about how to manage short-term rentals while making sure they don’t unintentionally cannibalize housing stock.”